Prayer
Writ Appeal in W.A.(MD) No.1718 of 2011 is filed under Clause 15 of Letters Patent against the Order dated 16.12.2011 made in W.P.(MD) No.3332 of 2006 on the file of this Court.
Writ Appeal in W.A.(MD) No.234 of 2012 is filed under Clause 15 of Letters Patent against the Order dated 16.12.2011 made in W.P.(MD) No.410 of 2012 on the file of this Court.
Writ Appeal in W.A.(MD) No.383 of 2012 is filed under Clause 15 of Letters Patent against the Order dated 18.1.2012 made in W.P.(MD) No.6922 of 2008 on the file of this Court.
Writ Petition in W.P.(MD) No.5396 of 2011 is filed under Article 226 of the Constitution of India seeking for the relief of issuance of writ of mandamus forbearing the respondents from in any manner demanding drainage deposit or contribution or drainage maintenance charges in respect of the houses of the members Poonga Nagar Residents Welfare Association (L.I.G.Colony) at K.K.Nagar, Madurai Town.
COMMON JUDGMENT
R.BANUMATHI,J.
1. Whether Madurai City Municipal Corporation is empowered to levy drainage charges and whether it can claim non-refundable security deposit for underground drainage connection are the points arising for consideration in these intra- Court appeals.
2. In W.A.No.234 of 2012 arising out of W.P.No.410 of 2012, appellant Association challenges G.O.Ms.No.213 dated 31.12.2003 in which Government provided for collection of deposits and contribution for laying underground drainage system and its maintenance. In W.A.No.1718 of 2011 arising out of W.P.No.3332 of 2006, the appellant association sought for writ of mandamus forbearing Madurai City Municipal Corporation (in short, MCMC) from demanding drainage charge or contribution or drainage deposit and maintenance charges in respect of houses of the members of petitioner association at K.K.Nagar. Similar relief has been sought for in W.P.No.5396 of 2011 filed by Poonga Nagar Residents Welfare Association.
3. When W.A.(MD) No.234 of 2012 came up for admission, it was stated that connected W.A.No.1718 of 2011 is pending. With the consent of the counsels on record, both the appeals and connected Writ Petition - W.P.No.5396 of 2011 were taken up together. After we have heard and reserved the matter in Writ Appeals - W.A.Nos.1718 of 2011 and 234 of 2012, W.A.No.383 of 2012 arising out of same common judgment came up for admission. With consent of counsels, we heard the arguments in the main Writ Appeal and W.A.No.383 of 2012 was tagged along with W.A.Nos.1718 of 2011 and 234 of 2012, which were already reserved.
4. Appellant - Madurai K.K.Nagar Veetu Urimaiyalargal Pothu Nala Sangam and writ petitioner - Poonga Nagar Residents Association are registered societies and its members are residents of that locality. Appellant in W.A.No.383 of 2012 is a resident of Manjanakkara Street, Madurai.
5. Case of appellants is that property tax levied by respondent Corporation consist of five components namely i) House Tax at 10%, ii) Drainage Tax at 6%, iii) Education Tax at 5%, iv) Drinking water Tax at 4%, v) To remove filth and sanitation tax at 2%. As per statute and Rules, their payment towards property tax in which 6% of it should go for public drainage maintenance etc., expenses. Both appellant as well as writ petitioner associations filed Civil Suits and those suits were decreed in respect of collection of drainage and maintenance charges. Further case of appellants is that respondents, being statutory authorities, are bound by the decisions of the Civil Court and have no right, whatsoever, to demand drainage charges and deposit. The appellant/writ petitioner alleged that under the guise of redressing public grievance, staff of respondent Corporation used to go round the streets with crow bar, spade and other materials claiming that they have come to disconnect the drainage connections if the residents had not paid either the drainage deposit or drainage maintenance charges to the Corporation. Such a high handed action by the subordinate staff of respondent corporation are arbitrary and illegal, which has to be curtailed. Contending that respondent corporation is not having statutory authority to collect drainage maintenance charges as well as Non- refundable drainage deposit and that it is not open to the authorities to disconnect the drainage system, the appellant association - Madurai K.K.Nagar Veetu Urimaiyalargal Pothu Nala Sangam and the writ petitioner - Poonga Nagar Residents Association have filed a writ petitions seeking writ of mandamus forbearing the respondents from in any manner demanding the drainage deposit, drainage tax or contribution.
6. In the Writ Petition - W.P.No.6922 of 2008 (W.A.No.383 of 2012), appellant averred that Corporation is not empowered to pass any resolution (Resolution No.20 dated 25.4.2003) contrary to the provisions of Madurai City Municipal Corporation Act, 1971 and 1st respondent has got no authority to pass G.O.Ms.No.213 dated 31.12.2003 authorising the Corporation to collect non- refundable deposit from existing drainage connection holders or for new connection. Likewise, monthly maintenance charges levied thereon is contrary to the provisions of MCMC Act. Grievance of appellant is that prior to passing such resolution, no public notice was given nor any objections were called for and considered. Case of appellant is that G.O.Ms.No.213 dated 31.12.2003 passed on the basis of resolution of Madurai City Municipal Corporation is illegal and therefore appellant sought for certiorarified mandamus to quash the said Government Order and consequently directing respondents to restrain from implementing the said Government Order.
7. Respondent Corporation resisted the writ petitions contending that what is demanded is not tax but a mere demand for payment of charges for providing better amenities like underground drainage and that the petitioners/appellants cannot challenge the same.
8. The respondent Corporation is under a statutory obligation to maintain proper drainage system for the welfare and the benefit of the general public. Inspite of resolutions passed in 1982 to provide for underground drainage, it was not properly implemented and drainage water is being let into Vaigai river. Madurai City Municipal Corporation passed a resolution on 25.4.2003 and as per the resolution it was decided to collect from Rs.2,500/- to Rs.10,000/- from various categories as contribution towards underground drainage. In order to stop the environmental degradation, a project was conceived under National River Conservation Project and G.O.Ms.No.213 dated 31.12.2003 was passed providing for collection of deposits and contribution for laying underground drainage system and its maintenance.
9. Learned single judge has taken up number of writ petitions as well as the Second Appeal - S.A.(MD) No.967 of 2007. By an elaborate common judgment, the learned single Judge held that in pursuance to G.O.Ms.No.213 MA &WS Department dated 31.12.2003 Corporation was entitled to charge from the residents for the services rendered towards drainage maintenance and that the same cannot be challenged. Learned single Judge held that by virtue of provisions of MCMC Act as well as Part XI-A to the Constitution and under Article 243X, the Municipality has authority to levy collection of appropriate taxes, duties, tolls and fees in accordance with such procedure and subject to limits. On those findings, the learned single judge dismissed the writ petitions and allowed the Second Appeal.
10. Challenging the impugned judgment, Mr.N.S.Ponnaiah, learned counsel for appellant contended that respondent Corporation has no source of power from any legislation to levy drainage tax, maintenance or contribution separately and the property tax collected encompasses in itself tax and the learned judge failed to delve into this legal position. It was further contended that while the learned single judge made certain observations on the incompetence on the part of officials of the Corporation, such an observation by the learned judge resulted in miscarriage of justice to the appellants.
11. Mr.R.A.Mohanram, learned counsel for appellant made elaborate submissions contending that G.O.Ms.No.213 dated 31.12.2003, which is passed on the basis of the resolution of Madurai City Municipal Council, is illegal and is quite in contravention to the provisions of MCMC Act and the decision to collect non-refundable deposit is exceeding its authority, which the learned judge did not consider in proper perspective.
12. Per contra, learned counsel for respondent corporation has taken us through the various Government orders and also the provisions of MCMC Act and contended that as per Sections 207 and 208 of MCMC Act, the respondent Corporation is under a statutory obligation to maintain drainage and that Section 433 of the Act empowers councils to make by-laws to provide for due performance of the statutory duties. Mr.G.R.Swaminathan, learned counsel for Corporation further contended that the validity of the G.O. cannot be tested on the parameters of provisions of MCMC Act, but the power is traceable to the Constitution.
13. Levy of non-refundable deposit for underground drainage:- As per Sections 207 and 208 of MCMC Act, respondent corporation is under statutory obligation to maintain proper drainage system for the welfare and benefit of general public. In order to effectuate this objective, underground drainage by- laws were formulated by the Council's resolution bearing No.35 dated 28.4.1982.
14. Government of Tamil Nadu sanctioned a scheme of Underground drainage system for Madurai corporation in G.O.Ms.No.14 M.A. & W.S.Department dated 13.12.2000. The total cost of the project was Rs.1,50,00,000/-. The said scheme was sanctioned in order to protect Vaigai river, which is passing through Madurai and also a source of drinking water and irrigation for the Districts viz., Madurai, Sivagangai and Ramanathapuram. In Madurai, Under Ground Drainage system is functioning since 1924. It was felt that it is essential to upgrade the old sewage and to prevent entering of excess sewage into Vaigai river by strengthening the existing canals so as to carry the excess sewer outside Madurai Corporation area. All party meeting was held on 23.4.2003 and it was decided to collect non-refundable deposit from the existing and new drainage connection in accordance with the property tax and to collect maintenance charges as per the resolution No.138, dated 28.3.2002. Regarding this, a resolution was also passed by the Madurai Corporation, vide Resolution No.20 dated 25.4.2003. As per the resolutions, for the contribution of public for Under Ground Drainage system, it has been decided to collect from Rs.2,500/- to Rs.10,000/- among the various categories. The said resolution was also approved by the Government in G.O.Ms.No.213 dated 31.12.2003 and also properly notified.
15. In order to stop environmental degradation, a project was conceived under National River Conservation Project. A sum of Rs.150 crores was allocated for implementing a proper underground drainage system in Madurai, which envisaged contribution not only from the Central Government, State Government and the Corporation, but also from the general public. The Government of Tamil Nadu issued G.O.Ms.No.213 dated 31.12.2003 providing for collection of deposits and contribution for laying underground drainage system and its maintenance. We may usefully refer to G.O.Ms.No.213 MA&WS Department dated 31.12.2003, which reads as under:-
G.O.Ms.No.213 Date: 31.12.2003
Again Read
1.G.O.Ms.No.119/MA&WS (MC II) Dept./dt.19.05.99
2.G.O.Ms.No.189/MA&WS(MCII) Dept./dt.30.12.2000. Further Read
3.Commissioner, Madurai Corporation, MA&WS Letter Ma.P.O.The6/26177/2000, dt.18.12.2003.
4.CMA, Chennai Lr.No.77803/00/WS.3, dated 22.12.2003. Order
In the Govt. order first cited, it has been ordered as per the council resolution about the upgradation of existing underground drainage scheme and implementation of UGD in the unsewered area of Madurai Corporation and to meet out the expenditure by collecting the non-refundable deposit from the drainage connection holders of new connection and monthly maintenance charges thereon.
2.In the G.O.2nd cited, order have been issued for the statement of pollution of River Vaigai and financial pattern allocated among Government of India, Government of Tamilnadu, Lock Body and Public contribution for the implementation of UGD Scheme at a cost of Rs.150 Crores in the entire Madurai Corporation area under NRCP by the Environment & Forest Department by Government of India in accordance with this the approximate cost for the UGC Scheme including 10% of escalation cost is Rs.165 Crores have been fixed and financial sources have been allocated as follows:
S.No.
Details
Rs. in Crores
(A)
Government of India
National River Conservation Department
Ministry of Urban Development
44.00
44.00
(B)
Government of Tamilnadu
22.00
(C)
Assistance from MLA & MP Fund
11.00
(D)
Madurai Corporation
22.00
(E)
Public Contribution
22.00
TOTAL
165.00
3.As the UGD Scheme is functioning in the western part of River Vaigai before 1924 and in some area of North of River Vaigai the UGD Scheme is functioning since 1984, it is essential to upgrade this old sewage system and to prevent the entering of excess sewage into the River Vaigai by strengthening the existing canals, so as to carry the excess sewer by interception and Division works and to replace the damaged drainage sewer pipe and to clear all bottleneck and to replace the 450 mm dis pumping main by new one from sub pumping station at Block 8, further to lay new drainage pumping main from sub pumping station 2,3 & 4 so as to pump the excess sewage without interruption. Besides this, to prevent the pollution of River Vaigai by entering of excess sewage, it is necessary to convey the sewage outside the Madurai Corporation area and to treat this sewage and let out for other usage, it is inevitable to improve the existing old sewage and to integrate the new sewage system with the existing one, so as to implement the UGD Scheme in the whole part of Madurai Corporation, based on this implement this UGD Scheme as a whole, resolution has been passed by Madurai Corporation vide resolution No.20, dt.25.04.2003 as per the decision taken in the all party meeting held on 23.04.2003 earlier in which it has been decided to collect non refundable deposit from the existing and new drainage connection in accordance with the property tax and to collect maintenance charges as per the resolution No.138, dt.28.03.2002.
4.Considering the financial position of Madurai Corporation and as per the Council resolution it has been requested by the Commissioner, Madurai Corporation as read in the letter cited third to issue necessary orders to permit to collect the maintenance charges and deposits from the (old) existing and new drainage connection holders. The same has been recommended by the Commissioner of Municipal Administration, Chennai as read in the letter cited 4th.
5.After careful consideration of all the matters explained above, the Govt. have ordered as follows.
(A)Based on the matter explained above in para 3, it has been accepted to collect non refundable deposit for the UGD Scheme now under execution, from all the drainage connection holders which include old and new connections, in accordance with the property tax as per the Council resolution No.20, dated 25.04.03 and Madurai Corporation has been permitted to collect the deposit as mentioned below, subject to the condition mentioned below in C. House Tax
Domestic connection deposit
Domestic cum commercial deposit
Commercial and institution and other item deposit Upto Rs.500 Upto Rs.500
2500
5000
10000
Rs.501 to 1500
3500
7500
10000
Rs.1501 and above
5000
10000
10000
Institution where property tax exempted - Rs.10,000/- (B) In the Council resolution No.138, dated 22.03.2002, it has been recommended for the reduction of maintenance charges from monthly charges to annual charges and this resolution has been discarded by the Govt. and the recommendation of the resolution No.208, dated 05.02.1999 has been accepted as follows:
Description
Domestic
Commercial
Institution
Date for which collection from 01.04.99
Rs.30
Rs.90
Rs.150
After completion UGD Scheme
Rs.125
Rs.250
Rs.375
(C) The operation and maintenance cost for UGD Scheme have to be met out wholly from the maintenance charges collected from beneficiaries and it should not be met out from the General Fund of Madurai Corporation. The maintenance charges are to be fixed so that it includes the periodic increase of the cost and also it should be correlated to the inflation and the fixation of the charges should be inflation linked one necessary resolution has to be got passed in the council in accordance in the matters explained above and in (B) also.
6) This G.O. has been issued with the permission of Finance Department vide m/rh/F/No.4210/FS/P/03, dated 18.12.2003.
//As per the order of the Government //
L.N.Vijayaragavan
Secretary to Govt.
16. The above G.O.Ms.No.213, M.A. & W.S.Department dated 13.12.2003 is challenged on the ground that the resolution is in contravention to the provisions of MCMC Act. It was contended that already the Madurai Council is levying property tax at 27%, which includes components of drainage tax at 6% and Vaigai Reclamation at 2% and while so the concept of another non-refundable deposit for existing and new drainage connections is quite contrary to the provisions of the MCMC Act.
17. Drawing our attention to the counter, Mr.R.A.Mohanram, the learned counsel for appellant contended that by a Government Order, no tax can be levied and it was further contended that assuming that levy is only a fee, collection of such non-refundable deposit is not in accordance with the provisions of MCMC Act, and as per the Financial rules of MCMC Act, Sections 170 to 174 and its Schedule III, such levy is unsustainable.
18. Learned counsel for Corporation contended that as per Article 243X of the Constitution of India, Legislature of the State may by law authorise the Municipality to levy, collect and appropriate such taxes, duties, tolls and fees in accordance with such procedure and subject to such limits and as per Article 162, the executive power of the State is co-extensive with that of the State Legislature and therefore power is traceable to the Constitution. Learned counsel would further contend that what is left is not a tax but only a fee or charges for providing better services by implementing Under Ground Drainage Scheme.
19. The main point raised by the appellant is that G.O.Ms.No.213, Municipal Administration and Water Supply (MCII) Department, dated 31.12.2003 empowers the Corporation to levy tax/fee has no legal sanction. It was not an order by the legislation. Therefore, the Government Order cannot empower the Corporation to levy the said fee.
20. The next argument of the appellant was that the Government Order was not in concurrence with the order of the Governor. In fact, when we peruse the Government Order itself, it is clearly mentioned that the Government order was issued as per the order of the Governor by the Secretary to Government and definitely, this is within the purview of the Government to permit the municipality or the Corporation, as the case may be, to levy such fee to construct Underground Drainage. The power of Corporation to levy fee can be traced out by the Constitution under Article 243X in Part IX-A of the Constitution of India. It clearly empowers the legislature to authorise the municipality to levy collection or appropriate taxes, duties, tolls and fee in accordance with such procedure subject to such limits.
21. As rightly contended by the learned counsel for respondent, validity of G.O. cannot be tested on the provisions of MCMC Act. The power of the Corporation to levy fee is traceable to the Constitution under Article 243X. Similarly, under Article 243W, the powers, authority and responsibilities of the municipalities have been set out. Article 243W and Article 243X are extracted as under:
243W. Powers, authority and responsibilities of Municipalities, etc Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow
(a) the Municipalities with such powers and authority as may be necessary to enable them to function as institutions of self government and such law may contain provisions for the devolution of powers and responsibilities upon Municipalities, subject to such conditions as may be specified therein, with respect to
(i) the preparation of plans for economic development and social justice; (ii) the performance of functions and the implementation of schemes as may be entrusted to them including those in relation to the matters listed in the Twelfth Schedule;
(b) the Committees with such powers and authority as may be necessary to enable them to carry out the responsibilities conferred upon them including those in relation to the matters listed in the Twelfth Schedule
243X. Power to impose taxes by, and funds, of, the Municipalities The Legislature of a State may, by law
(a) authorise a Municipality to levy, collect and appropriate such taxes, duties, tolls and fees in accordance with such procedure and subject to such limits;
(b) assign to a Municipality such taxes, duties, tolls and fees levied and collected by the State Government for such purposes and subject to such conditions and limits;
(c) provide for making, such grants in aid to the Municipalities from the Consolidated Fund of the State; and
(d) provide for constitution of such Funds for crediting all moneys received respectively, by or on behalf of the Municipalities and also for the withdrawal of such moneys therefrom, as may be specified in the law
22. Entry 5 of List II of Schedule VII of the Constitution of India reads as under:
5. Local government, that is to say, the constitution and powers of municipal corporations, improvement trusts, district boards, mining settlement authorities and other local authorities for the purpose of local self-government or village administration.
Entry 6 of List II relates to public health and sanitation; hospitals and dispensaries. Entry 66 in List II of Schedule 7 of Constitution of India gives power to the State Legislature to levy fees in most general terms in all matters, which are within its legislative field. Entry 66 reads as under: 66. Fees in respect of any of the matters in this list, but not including fees taken in any court.
Entry 20 of List III of of Schedule VII of the Constitution of India reads as under:
20. Economic and social planning
23. Thus, by a combined reading of Entry 5, Entry 6 and Entry 66 of List II and Entry 20 of List III, State Legislature has power to levy fees for social and economic planning and for urban development. As per Article 162, the executive power is co-extensive with that of the State Legislature. It thus follows that the State Executive may pass orders regulating any matter within the legislative competence of the State Legislature.
24. The resolutions passed by the Madurai Municipal Corporation are under the power conferred under Article 243X read with above said entries in List II. G.O.Ms.No.213 dated 31.12.2003 is the order issued as per the Order of the Governor and in exercise of power conferred under Article 154(1) and Article 162 of the Constitution of India. Thus, the power to issue the Government Order authorising the Municipality to collect non-refundable deposit from existing and new drainage connections is traceable to the provisions of the Constitution.
25. Power of the Municipality to pass resolutions to collect such non- refundable deposit is traceable to the provisions of MCMC Act. As per Section 207 MCMC Act, all public drains, pipes and drainage works existing at the date of commencement of this Act or afterwards made at the cost of the preparation or otherwise, and all works, materials and things appertaining thereto shall vest in the corporation. As per Section 208, Corporation shall so far as the means at their disposal permit, provide and maintain a sufficient system of public drains throughout the city. As per Section 210, on application by the owner or occupier of any premises, the Commissioner shall arrange in accordance with by-laws for the connection of house drains with public drains at the applicant's expert. Thus, the respondent Corporation is under statutory duty to maintain the drainage and also had obligation to connect house drains with public drains at the expenses of the applicant. Section 433 of the MCMC Act deals with the power of Council to make by-laws. As per Section 433, the Council may make by-laws not inconsistent with MCMC Act or any other law to provide for all matters expressly required or allowed by the Act to be provided for bye-law and for the due performance of duties assigned to them.
26. By a combined reading of Sections 207, 208 and 210 read with Section 433, the respondent Corporation is under a statutory obligation to maintain a proper drainage system for the welfare and benefit of the general public. In order to effectuate this objective, respondent Corporation is empowered to formulate its own scheme and for discharging its statutory obligations empowered to collect requisite fee.
27. Urban areas, particularly, State of Tamil Nadu is witnessing rapid growth and massive scale of urbanization - vast changing urban structure and urban life style increased in complexities of urban problem and therefore effective steps must be taken to meet out the emerging needs. Undertaking sustainable expansion of urban infrastructure facilities involve: water supply, sewerage, storm water drainage, solid waste management, transport, recreation, health care, education etc. through suitable financing systems with a view to building the basic foundation for city productivity and economic growth. With the increasing urbanization in and around Madurai city, to effectuate its statutory obligation of providing for proper drainage, the Madurai Corporation is empowered to collect the appropriate charges. The resolutions passed by the Corporation and G.O.Ms.No.213 MA&WS Department dated 31.12.2003 and cannot be said to be without any source of legislative authority.
28. As pointed out earlier, even in 1982, underground drainage by-laws were formulated and they were also duly published in Madurai District Gazette dated 8.11.1982. Subsequently, fresh resolutions came to be passed. G.O.Ms.No.213 dated 31.12.2003 provided for collection of deposits and contribution from the public for laying underground drainage system and its maintenance. Unless Madurai Corporation makes upon its contribution and also collects the charges from the public, respondent Corporation cannot avail the benefit of underground drainage as conceived under the National Level Project viz., National River Conservation Project. Hence, the demand for non-refundable deposit cannot be stated to be arbitrary or without basis. What is demanded is not a tax but only a fee for providing underground drainage.
29. Mr.R.A.Mohanram, learned counsel appearing for appellant has drawn our attention to the averments in the counter affidavit filed in W.P.No.6922 of 2008, where Corporation averred that the drainage tax, which form part of property tax, does not include underground drainage system, but it represents only the storm water drainage.
30. Learned counsel for appellant contended that even the Corporation has categorically averred that what is sought to be levied is only tax and that Municipality has no power to levy any tax. The above contention does not merit acceptance. The word tax used in the counter appears to be be only a misnomer. By a careful reading of the counter, it is made clear that the non- refundable deposit sought to be levied is only a fee towards better service rendered or amenities provided by the Corporation. The learned counsel for appellant Mr.R.A.Mohanram contended that even assuming that what is sought to be levied is only a fee, the same cannot be sustained, since spending the amount for underground drainage cannot be said to be a purpose in accordance with the provisions of the Act. It was further submitted that for any such underground drainage only the Corporation has to spend the amount with grants in aid from the State Government and no contribution could be collected from the existing or new drainage connection holders. The learned counsel has drawn the attention to Sections 170 to 174 in Chapter VI - Finance - The Municipal Fund. As per section 174, all moneys received by the Corporation shall constitute a fund, which shall be called the municipal fund and shall be applied and disposed of in accordance with the provisions of this Act or other laws. Section 171 deals with audit of accounts. Section 172 deals with Finance Rules. Section 173 deals with contributions to expenditure by other authorities. Section 174 deals with power of Corporation to borrow money.
31. Section 170 makes it clear that the municipal fund shall be applied and disposed of in accordance with provisions of MCMC Act or other laws. As pointed out earlier, as per Sections 207 and 208, the Madurai Corporation has the statutory obligation of maintaining drainage system. It is further made clear that in Schedule III - Financial Rules were framed under Section 173 of the Act, Rule 3 deals with Objects of expenditure connected with the public health, which include the construction of drains and drainage works. Rule 3(b) reads as under:
The construction, establishment, maintenance, supervision and control of public markets and slaughter-houses; of shops, stalls and plinths, of latrines; of drains and drainage works; of sewage farms and all works for the removal or disposal of sewage; of water-works, drinking fountains, tanks and wells, of wash-houses or salavaithuraikal: of parks, squares and gardens; the reclamation of unhealthy localities and other sanitary measures of a like nature.
32. Under Rule 6 of Schedule III, it shall be the duty of the standing committee to make such provision, as it thinks fit for carrying out the requirements of the city in respect of water supply, drainage, sanitation and lighting. Rule 6(A)(ii) deals with drainage, which reads as under: A. Water- supply, drainage, sanitation and lighting.
i.Water-supply. - .....
ii.Drainage -
Construction of drains (open and underground) including connection of house drains with public drains and the construction of sewage farms and all works for the removal or disposal of sewage.
33. Thus, on a combined reading of above said Rules of Schedule III and also sections 207 and 208 and 210 of MCMC Act, it is amply made clear that construction, establishment, maintenance of drains and drainage works is the statutory obligation and to discharge its statutory obligation, the Corporation has the power to seek for contribution from the public for whose benefit the civic responsibilities are discharged. The primary object of the levy is to provide for better services by constructing and by upgrading the existing Underground drainage Scheme and extending it throughout Madurai City and at the same time protecting Vaigai river.
34. In DEWAN CHAND BUILDERS AND CONTRACTORS VS. UNION OF INDIA AND OTHERS, ((2012) 1 SCC 101), the Supreme Court considered the question whether cess levied under Building and Other Construction Workers' ) Regulation of Employment and Conditions of Service) Act, 1996 is a tax or fee. Examining the concept of tax or fee, in Paras 27, 29 and 30, the Supreme Court held as under: 27. It was further held that: (Hingir Rampur case, (AIR 1961 SC 459 = (1961) 2 SCR 537), , para 13)
13. .... It is true that when the legislature levies a fee for rendering specific services to a specified area or to a specified class of persons or trade or business, in the last analysis such services may indirectly form part of services to the public in general. If the special service rendered is distinctly and primarily meant for the benefit of a specified class or area the fact that in benefiting the specified class or area the State as a whole may ultimately and indirectly be benefited would not detract from the character of the levy as a fee. Where, however, the specific service is indistinguishable from public service, and in essence is directly a part of it, different considerations may arise. In such a case it is necessary to enquire what is the primary object of the levy and the essential purpose which it is intended to achieve. Its primary object and the essential purpose must be distinguished from its ultimate or incidental results or consequences. That is the true test in determining the character of the levy.
28. .....
29. Recently in State of W.B. v. Kesoram Industries Ltd. ((2004) 10 SCC 201 the Constitution Bench of this Court was faced with a challenge to the constitutional validity of the levy of cesses on coal-bearing lands, tea plantation lands and on removal of brick earth. Relying on the decision in Hingir Rampur Coal Co. Ltd., speaking for the majority, R.C. Lahoti, J. (as His Lordship then was), explained the distinction between the terms tax and fee in the following words: (Kesoram Industries case, SCC p. 332, para 146) 146. . The term cess is commonly employed to connote a tax with a purpose or a tax allocated to a particular thing. However, it also means an assessment or levy. Depending on the context and purpose of levy, cess may not be a tax; it may be a fee or fee as well. It is not necessary that the services rendered from out of the fee collected should be directly in proportion with the amount of fee collected. It is equally not necessary that the services rendered by the fee collected should remain confined to the person from whom the fee has been collected. Availability of indirect benefit and a general nexus between the persons bearing the burden of levy of fee and the services rendered out of the fee collected is enough to uphold the validity of the fee charged.
30. In the light of the tests laid down in Hingir Rampur and followed in Kesoram Industries, it is manifest that the true test to determine the character of a levy, delineating tax from fee is the primary object of the levy and the essential purpose intended to be achieved.
35. In Madurai city, underground drainage is functioning for a quite long time from 1982 and in some parts even from 1924. The same has to be upgraded and UGD scheme is to be extended to the whole city, which was designed with the prime objective of preserving Vaigai river from being polluted by resident and industrial waste. Corporation has to bear huge expenditure in constructing, maintaining and operating underground drainage. Applying the ratio of the above decision, the deposit collected is in the nature of fees collected for the services rendered by respondent Corporation. The element of Quid pro quo is established. Applying the ratio of the above decision, we find that the levy is only a fee and not a tax. Fund is set apart and applied for specific purpose of establishing underground drainage.
36. Learned counsel for appellants then contended that the tax levied is 29% of the annual rental value of the property i.e., house tax - 10%; drainage tax - 6%; education tax - 5%, drinking water tax - 4%, sanitation tax - 2% and another 2% for Vaigai Reclamation. Learned counsel contended that the property tax levied already is the component of drainage tax at 3% and the Corporation is bound to construct and maintain the drainage system from out of the said 6% levied and while so extra levy of non-refundable deposit for UGD Scheme is arbitrary and illegal.
37. Of course, the property tax levied is the component of drainage tax at 6%, but the Municipal Corporation has the key activities of maintenance of sewerage and drainage i.e., (i) draining of waste water, both resident, commercial and industrial; (ii) operation and maintenance of different drainage pumping stations; (iii) cleaning and maintenance of sewers., open and covered drains, (iv) remove water logging and cleaning choked sewers; (v) maintain storm water drain. For performing the above key activities, Corporation has to necessarily generate revenue for which the drainage tax is levied as a component in the property tax. The drainage tax so levied is only for operating and maintaining the existing system and the appellants are not justified in contending that the 6% is to be used for construction of underground drainage in the entire city.
38. Demand or levy of drainage charges:- Earlier, the property tax levied by respondent Corporation was 27% of rental value. The property tax consisted of general tax - 10%;
scavenging tax - 2%;
drainage tax - 6%;
water supply tax - 4%;
Education tax - 5%
Total : 27%.
39. Though there is a drainage tax component of 6% within the property tax, that amount was only meant for regular maintenance of the existing open drainage underground drainage system. The amount was not sufficient for the maintenance of drainage. Since the Corporation was spending excess amount for drainage and more funds are needed to be mobilized, for updating of existing underground drainage system and for underground system in the unsewaged wards Government sanctioned certain amount in 1999 which has to be repaid. Consequent to the resolution of the Corporation in 1999 revising the non-refundable deposit for connection to the underground drainage, demand notices were sent to the house owners calling upon them to pay non-refundable deposit for connecting their house drains with underground drainage and also increasing the drainage charge. It was at that stage suit - O.S.No.723 of 2000 came to be filed before the Principal District Munsif, Madurai by a resident at Kamala thope challenging the demand notice dated 1.4.2000 as illegal. In the said suit, declaratory relief was sought for that the revision of drainage tax (wrongly described as tax) was illegal and not valid. They also sought for permanent injunction restraining the Commissioner from demanding and charging the amount. The said suit was decreed, against which Corporation filed first appeal in A.S.No.232 of 2003. By judgment dated 29.3.2005, the said first appeal also came to be dismissed, against which a Second Appeal -S.A.(MD) No.967 of 2007 was filed.
40. Challenging the demand notice, a similar suit - O.S.No.541 of 2000 was filed by K.K.Nagar Residents Association. By the judgment dated 30.4.2003, the said suit was decreed, against which First Appeal was preferred in A.S.No.231 of 2003. By judgment dated 29.3.2005 the said First Appeal - A.S.No.231 of 2003 also came to be dismissed, against which Second Appeal - S.A.No.977 of 2008 was filed, which is said to be pending.
41. Of the two Second Appeals, S.A.(MD) Nos.967 of 2007 was clubbed along with batch of Writ Petitions - W.P.No.6922 of 2008 and other Writ Petitions and heard by the learned single judge. After elaborate discussion, the learned judge allowed the Second Appeal and observed that the officials of the Corporation and its legal wing are not taking proper stand before the legal forums. The learned judge also pointed out as to how allowing of one suit to be decreed has led to proliferation of several litigations in the form of writ petitions and observed that it is high time that the Corporation tone up its legal Cell so as to meet future challenges. It is pertinent to note that the judgment in the Second Appeal has not been challenged and became final.
42. In view of the statutory authority as well as the constitutional provisions, the levy of drainage charges and also non-refundable deposit for underground drainage cannot be said to be without any authority or basis. Based on the resolution passed by the Corporation to collect non-refundable deposit from the existing and new drainage connections, G.O.Ms.No.213 M.A. & WS Department came to be passed. As discussed earlier, quid pro quo for the service rendered and the levy is also established. The Government Order cannot be said to be arbitrary or lacking statutory authority. The learned single judge rightly dismissed the writ petitions - W.P(MD) Nos.3332 of 2006, 6922 of 2008 and 410 of 2012 and other Writ Petitions. We do not find any reason warranting interference with the well considered order of the learned single judge.
43. In the result, all the Writ Appeals and Writ Petition are dismissed. However, there is no order as to costs. Consequently, the connected miscellaneous petitions are also dismissed. Interim injunction granted on 29.4.2011 stands vacated.