MUNICIPAL CORPORATION OF GREATER MUMBAI & ORS versus PROPERTY OWNERS’ ASSOCIATION & ORS.

Citation: [2022] 14 S.C.R. 679 · Decided: 07-11-2022 · Supreme Court of India · Bench: UDAY UMESH LALIT · Disposal: Disposed off

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Judgment (excerpt)

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   [2022] 14 S.C.R. 679
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MUNICIPAL CORPORATION OF GREATER MUMBAI & ORS.
v.
PROPERTY OWNERS’ ASSOCIATION & ORS.
(Civil Appeal No 8239 of 2022)
(SLP (C) No. 17009 of 2019)
NOVEMBER 07, 2022
[UDAY UMESH LALIT, CJI AND AJAY RASTOGI, J.]
Mumbai Municipal Corporation Act, 1888 – s.154(1A)(a)-
(e), (1B) – Factors and Categories of Users of Buildings or Lands
(Assignment of Weightages by Multiplication) Fixation of Capital
Value Rules, 2010 – Factors and Categories of Users of Buildings
or Lands (Assignment of Weightage by Multiplication) Fixation of
Capital Value Rules, 2015 – High Court rejected the challenge as
to the validity of various provisions of the MMC Act however, held
rr.20, 21 and 22 of the Capital Value Rules 2010 and 2015 to be
ultra vires the provisions of the MMC Act – On appeal, held:Width
of clauses (a) to (e) read with sub-Section (1B) do not by any stretch
of imagination contemplate taking into account the future prospects
of the land in question – The empowerment in terms of clauses (a)
to (e) r/w with sub-Section (1B) or the conferral of rule-making
power would not permit the Corporation to determine the capital
value beyond the scope of said clauses (a) to (e) – Thus, for the
purpose of determining capital value, only the present physical
attributes and status of the land and building can be considered
and not the future prospects of the land – Conclusion arrived at by
the High Court are correct – Also, the High Court was right in
concluding that r.20 of the Capital Value Rules of 2010 and the
Capital Value Rules of 2015 would be ultra vires the provisions of
sub-Sections (1A) and (1B) of s.154 of the MMC Act – Further, the
Rules having come into force on 20.3.2012, the levy and
computation of property tax on capital value would be available
and possible on and with effect from 20.3.2012 and not with any
retrospective operation – Challenge raised by the Corporation fails
– Challenges raised by the original writ petitioners on various
grounds including the grounds of legislative competence; validity
of certain provisions and basis of alleged violation of Article 14 of
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SUPREME COURT REPORTS
[2022] 14 S.C.R.
the Constitution, were considered by the High Court in extenso – No
reason to take a different view – Therefore, the said view is affirmed.
Constitution of India – Article 243Y, 243X – Mumbai
Municipal Corporation Act, 1888 – Plea that any proposal for
change or modification in the methodology adopted for levy of
property tax ought to have been initiated through the Finance
Commission alone – Held: It is the Legislature of the State which
will ultimately take an appropriate action with respect to the
recommendations made by the Finance Commission and the papers
placed before it – If the Legislature itself has taken into account
certain prevailing situation, which according to the Legislature is
causing some prejudice to the financial health and condition of the
municipalities and, therefore, the method of imposition of property
tax ought to be changed, then it cannot be said that the matter must
necessarily and ought to have emanated from the Finance
Commission or that in the absence of such recommendations by the
Finance Commission, no steps could have been taken by the
Legislature – In the instant case, the exercise undertaken by the
Legislature is completely consistent with the empowerment relatable
to Article 243X and does not in any way go counter to said
empowerment.
Dismissing the appeals, the Court
HELD: 1.1 Article 243Y of the Constitution deals with
constitution of Finance Commission whose principal duty is to
review the financial position of the municipalities and to make
recommendations to the Governor as to the relevant principles
which should govern distribution of the net proceeds of the taxes
and the measures needed to improve the financial position of the
municipalities. It is true that certain functions are entrusted to
the Finance Commission and the recommendations made by the
Finance Commission must carry great weightage. However, the
matter has to be seen from the perspective: whether any
“measures needed to improve the financial position of the
municipalities” must necessarily emanate from the
recommendations of the Finance Commission. Sub-Article (2)
contemplates that the recommendations made by the Finance
Commission along with the explanatory memorandum as to the
action taken thereon must be laid before the Legislature of the
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