UNION OF INDIA & ORS. versus R. C. JAIN & ORS.

Citation: [1981] 2 S.C.R. 854 · Decided: 17-02-1981 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Appeal(s) allowed

Cited by 4 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
c 
D 
854 
UNION OF INDIA & ORS. 
v. 
R. C. JAIN & ORS. 
February 17, 1981 
[R. S. PATHAK, 0. CHINNAPPA REDDY AND BAHARUL ISLAM, JJ,] 
Payn1ent of Bonus Ac:t, 1965-Section 32(iv)-Whether 
applicable 
to 
Delhi Developrnent Authority-Tests for detcnnining ·whether a body is a 
local authority. 
Section 32(iv) of the Payment of Bonus Act provides that nothing in 
the Act shall apply to employees employed by an establishment engaged in 
any industry carried on by or under the authority of any department of the 
Central Government or State Government or a local authority. 
The Delhi Development Authority, a statutory body created 
under the 
Delhi Development Act, 1957 for the development of Delhi 
according 
to 
plan, paid bonus to its employees for a period of ten years upto the 
year 
1973-74, but later discontinued payment of bonus on the a<lvice 
of 
the 
Ministry of La\v. 
The employees' petition impugning the· action of 
th~ Authority in stop-
ping the payment of bonus was allowed by the High Court. 
On the question whether the Delhi Development Authority i.s 
authority" and whether the provisions of the Payment of Bonus 
attracted : 
a 
"local 
A<.:t 
are 
E 
Allowing the appeal, 
F 
G 
HELD : The Delhi Development Authority is endowed with all the usual 
<l'ttributes and characteristics of a 'local authority' and therefore 
the 
provi-
sions of the Payment of Bonus Act are not attracted. [865 A] 
The expression 'local authority' is not defined in the Payment of Bonus 
Act. 
The General Clauses Act defines it to mean a municipal committee or 
other authority legally entitled to or entrusted by the Government with the 
control or management of a municipal or local fund. 
It is not a sound rule 
of interpretation to import the definition of an expression in one Act into another. 
The definition of 'Local Fund' in the Fundamental Rules, Treasury Code and 
elsewhere cannot be imported into the definition of Local Authority in the 
General Clauses Act and thus into the Delhi Development Act. An authority, 
in order to be a local authority, must be of like nature and character as a 
municipal committee etc. possessing among 
others 
many, if not 
all, of the 
distinctive attributes and characteristics of a municipal committee. 
It must 
possess one essential feature, namely, that it is Iega1ly entitled to or entrusted 
by the Government with the control and management of a municipal or local 
fund. 
[857 B-H] 
The distinctive attribut'e5 and characteristics of a local authority are : 
H 
(i) It must have separate legal existence as a corporate body; (ii) it must 
not be a mere governmental agency but a 1ega11y independent entity; (iii) 
it 
must function in a defined area and 1nust ordinarily be elected \.vbo1ly or partly, 
... 
• ' 
, 
' 
• 
UNION V. R· C. JAIN 
855 
directly or indirectly by the inhabitants of the area; (iv) it must enjoy a certain 
<lcgree of autonomy, which, though not complete, must be appreciable; (v) the 
statute must entrust the authority with such governmental functions and duties 
as r.re usually entrusted to a municipal body for providing such amenities, as 
health and education services, water and sewerage, town planning and develop-
ment, roads, markets, transportation etc. to the inhabitants; 
(vi)it n1ust have 
power to raise funds in the furtherance of its activities and the fulfilment of the 
projects entrusted to it by levying taxes, rates, charges, fees etc. all of which 
n1ay be in addition to the moneys provided by Government. What is essential 
is that the control and management of the fund must'vest in the authority. 
[858 B-EJ 
Municipal Corporation of Delhi v. Birla Cotton, Spinning & Weaving Mills 
Delhi & Anr. [1968] 3 S.C.R. 251 @ 288 and Valiibhai Muliibhal So11eii 
and 
Anr. v. The State of Bombay (Now Guiarat) & Ors. [1964] 3 S.C.R. 868, referred 
to. 
The Delhi Development Authority is a body corporate. It consists of a 
chairman, vice chairman and a certain number of official members and non-
official members who are representatives of the Municipal Corporation Dehli to 
be elected by the Councillors and the aldermen of the Municipal Corporation 
A 
B 
c 
and three representatives of the Metropolitan Council to be elected by that 
Counci\. The object with which the Authority is established is ''to 
promote 
D 
and secure the development of Delhi according to plan" in accordance with the 
provisions of the Act. [859 D-F] 
The Authority is required to maintain its o

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