MGR INDUSTRIES ASSOCIATION AND ANR.versusSTATE OF U.P. AND ORS.

                            [2017] 1 S.C.R. 604



A            MGR INDUSTRIES ASSOCIATION AND ANR.
                                    v.
                       STATE OF U.P. AND ORS.
                      (Civil Appeal No. 1362 of2017)
B                         FEBRUARY 03, 2017
          [RANJAN GOGOi AND ASHOK BHUSHAN,.JJ.]
           Uttar Pradesh Industrial Area Development Act, 1976 - s.
    12-A - Area declared as industrial development area - Exclusion
    fi·om Panchayat area treating the same as Industrial Township -
c   Zila Panchayat initiated proceedings undr Uttar Pradesh Kshetra
    Panchayat and Zila Panchayat Adhiniyam, 1961, for realizing tax -
    The appellants filed writ petition objecting the same on the ground
    that the area since was declared as industrial development area,
    was excluded from Zila Panchayat area u/s. 12-A of 1976 Act and
D   thus was ·exempted from the tax - High Court dismissed the
    petition - On appeal, held: Exclusion of industrial development area
    is consequent and dependent upon notification issued under Proviso
    to Clause (1) of Art. 243-Q - Mere declaration of development area
    under 1976 Act is not sufficient to treat an area as an industrial
    Township - In the present case no notification under Proviso to Art.
E
    243-Q (1) was issued - Therefore, exemption u/s. 12-A of 1976 Act
    was not available to the appellants and hence they were not entitled
    for exemption from tax levied under 1961 Act - Constitution of
    India - Art. 243-A (1) Proviso - Uttar Pradesh Kshetra Panchayat
    and Zila Panchayat Adhiniyam, 1961.
F
          Dismissing the appeal, the Court
           HELD: 1. Article 243-Q of the Constitution mandates
    constitution ofa municipality in every State, constitution ofNagar
    Panchayat, Municipal Council and Municipal Corporation in every
    State respectively for a transitional area, a smaller urban area
G   and a larger urban area respectively. The provisio to Article 243-
    Q(l) contemplates a circumstance where a Municipality under
    Article 243-Q(lfmay not be constituted in an urban area or part
    thereof, when such area is specified by a notification having regard
    to the following circumstances: "(i) Having regard to tile size of
H   tile area, (ii) Municipal services being provided or proposed to be
                                     604
  MGR INDUSTRIES ASSOCIATION AND ANR. v. STATE OF                          605
                   U.P. AND ORS.

provided in that area, and (iii) such other factors as may deem fit."      A
Thus, exemption from non-constitution of Municipality.-is
dependent upon consideration of aforesaid factors and a public
notification thereof. [Para 14] [610-C-F]
      2. Section 12-A ,has been inserted in the Uttar Pradesh
Industrial Area Development Act, 1976 in consonance with
proviso to Article 243-Q(l). Section 12-A specifically
contemplates issuance of notification under proviso to clause (1)
of Article 243-Q and exclusion from Panchayat ar.ea is consequent
and dependent upon such notification. Notification under proviso
to clause (1) of Article 243-Q has to be subsequent to declaration
of an area as industrial development area, which itself indicates           c
that declaratio~ of development area under 1976 Act is not
sufficient to tr.eat an area as .an industrial township. Industrial
township as contemplated by, Article 243-Q(l) proviso has to be
specifically a public· notification after c9nsideration of relevant
statutory ingredients referred therein. The exclusion of ind_ustrial       D
development area from Panchayat has a serious consequence
since persons residing within the industrial development area.
are immediately deprived of facilities and benefits extended to.
them by the respective Panchayats. The deprivation of the said
benefits ilas to be thus a conscious decisioq)n accordance with
condition as contained in Article 243-Q. In the present case, it            E
has not been pleaded that any notification referable to proviso to
Article 243(Q)(l) has yet been issued. It was rightly held by the
High Court that exemptiun under Article 12-A of the 1976.Act
was not available in the facts of the case. The appellants were not
entitled for t].te reliefs claimed _in the writ petition. [Paras 15, 11]    F
 [610-F-G; 611-A-C, E; 613-D]
      Saij Gram Panchayat vs. State of Gujarat and Ors. 1999
      (2) SCC 366 '. 1999 (1) SCR 263 - r.elied on.
      Rishipal & Ors. vs. Staff! of U.P. & Ors. 2006 (i) AWC
      426 - referred to.                                                   G

                        Case Law Reference
2006 (1) AWC 426                 referred to             Para4
1999 (1) SCR 263                 relied on               Para 16
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606            SUPREME COURT REPORTS·                         [2017] l S.C.R.


A          CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1362
      of2017.
            From the Judgment and Order dated 17.07.2014 of the High Court
      of Judicature at Allahabad, in Civil Misc': Writ (Tax) No. 447 of2014.
            Ms. Meenakshi Arora, Sr. Adv., Vikram Patralekh, Ms. Sarika
B     Singh, Braj Kishore Mishra, Aviral Saxena, M. C. Dhingra, Advs. for
      the Appellants'.
          P. N. Mishra, Sr. Adv., Sandeepan Pathak, C. D. Singh, Sanjay
      Kumar Visen, Advs. for the Respondents.
C           The Judgment of the Court was delivered by '
            ASHOK BHUSHAN, J. I. Leave granted.
             2. This appeal has been filed against the judgment and order dated
      17'h July, 2014 of High Court of Judicature at Allahabad by which
      judgment Civil Misc. Writ (Tax) No.447of2014 filed by the appellants
D     has been dismissect.
            3. The brief facts of the case are:
             Appellant No. I is an Industries Association registered under the
      Societies Registration Act, 1860 whose members are running small
      industries. Zila Pal)chayat, Hapur initiated proceedings for realisation of
 E    tax from members of the appellant -Association which was objected to
      and a representation was submitted to the District Magistrate. Appellant
      also represented the matter to the Upper Mukhya Adhikari, Zila
      Panchayat, Bulandshehar and filed a Civil Misc.Writ Petition (Tax) No.4
      of2013 which was disposed of by the Allahabad High Court by order
 F    dated 6'" January, 2014, directing the State Government to consider the
      appellant's representation. The representation submitted by the appellant
      was rejected by the Principal Secretary, Panchayat Raj vide its order
      dated 23" June, 2014. The State Government held that although the
      area has been declared as industrial area under U.P. Indusrial Area
      Development Act, 1976 but no notification having been issued as
 G    industrial township within the meaning of Article 243-Q(l) proviso of
      the Constitution, the Zila Panchayat!Nagar Panchayat is entitled to realise
      tax and appellants cannot claim ex~mption from taxation by local authority.
      Aggrieved by the order of the State Government, appellants filed a Civil
      Misc. Writ (TIDI:) No.447 of2014 claiming the following reliefs:
 H
 MGR INDUSTRIES ASSOCJATIO)'J AND ANR. v. STATE OF                            607
        U.P. AND ORS. [ASHOK BHUSHAN, J.]

      "A. Call for the records of the case; and issue writ, order or          A
      direction in the nature of certiorari quashing the order dated
      23-6-2014 pass~d by respondent No.1 (Annexure 8 to this
      writ petition)'.
      B. Issue writ, order or direction in the nature of mandamus
      directing the respondent Nos.2, 3 and 4 not to realise any    B
      taxes'jrom the members of petitioner No.I (as mentioned in
      paragraph No. I 0 of the writ petition and other members of -
      petitioner No. I).
      C. Issue any other writ, order or.direction the Hon 'b/e Court
      deems just and proper on the facts and circumstances of the              c
      case.
      D. Award cost of this petition to the petitioner. ".
       4. The writ petition was heard by the High Court and the same
was dismissed by its judgment dated 17"' July, 2014. The Division Bench
of the High Court relying on an earlier I;>ivisiQn Bench judgment in          D
Risllipal & Ors. vs. State of U.P. & Ors., 2006 (l)AWC 426, dismissed
the writ petition. The Division Bench also held that the area having not
been declared as industrial township, exemption as sought to be cla\med
by the appellants under Section 12-A of 1976 Act is misconceived.
Aggrieved by the judgment of the High Court, the appellants have filed .       E
this appeal.
       5. We have heard Ms. Meenakshi Arora, learned senior counsel
for the appellants, Mr. Aviral Saxena has appeared on behalf of respondent·
No.5. We have also heard learned counsel appearing for the State of
U.P.
                                                                               F
      6. Learned counsel for the appellant contends that area in question
having been declared as· industrial area by issuing a notification dated
5'" September, 2001 in exercise of power under Section 2( d) of U.P.
Jndusrial Area Development Act, 1976 (hereinafter referred to as' 1976
Act'), the appellants are entitled for the benefit of exemption as
                                                                              G
contemplated by Section 12-A of the 1976Act and by virtue of Section
12-A no Panchayat is to be constituted.for the said area. Hence, the Zila
Panchayat is not entitled to realise any tax under the Uttar Pradesh
Kshetra Panchayat and Zila Panchayat Adhiniyam, 1961.
      7. The Authority constituted under ihe 1976 Act fully satisfied
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608             SUPREME COURT REPORTS                           [2017] I S.C.R.


A     the condition under Section 12-A of the 1976 Act, hence, there is no
      requirement of issue of any separate notification as contemplated by
      Article 243-Q of the Constitution of India. It is submitted that once
      industries have been set up under the notified industrial development
      area c.1d taxes under Section 11 of the 1976 Act are levied, the industries
      are exempted from liability of any tax under 1976 Act and the appellants
B
      are put on double jeopardy.
              8. Learned counsel appearing for the State of U .P. refuting the
      submission oflearned counsel for the appellants contended that the State
      Government by its detailed order dated 2J•d June, 2.014 after referring to
      all relevant provisions ofl 976 Act has found that unless industrial township
c     is 11otified the provisions of Section 12-A are not attracted. It has been
      stated by the State that no notification notifying the area as industrial
      township has yet been issued. Learned counsel appearing for the U.P.
      State Industrial Development Corporatio.n submits that in the.writ petition
      the appellants have only prayed for mandamus restraining respondent
D     Nos.2 to 4 from realising any tax. No relief having been claimed against
      respondent No.5 the writ petition has rightly been dismissed by the High
      Court.
            9. We have considered the submission made by the learned
      counsel for the pai1ies and perused the records.
E            10. The U.P. Industrial Area Development Act, 1976 has been
      enacted to provide for the constitution of an authority for the development
      of certain area in the State into industrial township and for matters
      connected therewith. Section 2 sub-section ( d) defines industrial
      development area which is, to the following effect:
 F           "Section 2(d)- "industrial development area" means an area
             declared as such by the State Government by notification. "
             11. Under Section 3, the State Government, by notification, can
      constitute an Authority to be called Industrial Development Authority
      for industrial development area. By notification dated S" September,
G     200 I which is in exercise of power under Section 2(d) of the 1976 Act,
      various areas as mentioned in the Schedule were declared as industrial
      development areas. There is no dispute that area in question has been
      declared as industrial development area. The claim which has been laid
      in the writ petition before the High Court by the appellants was for
      exemption from taxation by Zila Panchayat, Hapur under Section 12-A.
H
 MGR INDUSTRIES ASSOCIATION AND ANR. v. STATE OF                            609
        U.P. AND ORS. [ASHOK BHUSHAN, J.]

Section 12-A of 1976 Act which has been added by U.P. Act 4 of2001          A
is as under:
       "Section 12-A. NO pancliayat for industrial township.-
      Notwithstanding anything contained to the contrary inany
      Uttar Pradesh Act, where an industrial development area or
      any part thereof is specified to be an industrial township under . B
      the proviso to clause (I) of Article 243-Q of the Constitution,
      such industrial development area or part thereof. if included
      in a Panchqyat area, shall; with effect from the date of
      notification made under the said proviso, stand excluded from
      such Panchayat area and no Panchayat shall be constituted
      for such industrial developmentarea or part thereof under          c
      the United Provinces Panchayat Raj Act, 1947 or the Uttar
      Pradesh Kshettra Panchayats and Zita Panchayats
      Adhiniyam, 1961, as the case may be, and may Panchayat
      constituted for such industrial development area or part
      thereof before the date of such notification shall cease to        D
      exist. "
      12. Zita Panchayat, Hapur against whom reliefs have been
claimed by the appellants, is Zita Panchjlyat constituted under the Uttar
Pradesh Kshetra Panchayats and Zila Panchayats Adhiniyam, 1961 as
amended from time to time.                                                   E
      13. Part IX A was inserted by the Constitution (Seventy-fourth
Amendment) Act, 1992. Article 243-Q is contained in Part IX A of the
Constitution dealing with Municipalities which provides as follows:
      "243Q. Constitution of Municipalities.- (])There shall be
      constituted 'in every State,-                                          F
      (a) a Nagar Panchayat (by whatever name called) for a
      transitional area, that is to say; an area in transition from a
      rural area to an urban area;
      (b) a Municipal Council for a smaller urban area: and          '
                                                                            G
      (c) a Municipal Corporation for a larger urban area. in
      accordance with the ·provisions of this Part:
         Provided that a Municipality under this clause may not be
      constituted in such urban area or part thereof as the Governor
      may. having regard to the size of the area and the municipal          H
610           . SUPREME COURT REPORTS                          [2017] l S.C.R.


A           services being provided or proposed to be provided by an
            industrial establishment in that area and such other factors
            as he may deem fit by public notification. specify to he an
            industrial township.
            2. In this article, "a transilional area". "a smaller urban
B           area" or "a larger urban area" means such area as the
            Governor may, having regard to the population of the area,
            the density of the population !herein, the ,;evenue generated
            fi,r local administration. the percentage of employmenl in non-
            agricultural activities, the economic importance or such olher
            factors as he may deem fit, specify by public notificalion for
c           the purposes of !his Part. ".
              14. Article 243-Q mandates constitution ofa municipality in every
      State, constitution ofNagar Panchayat, Municipal Council and Municipal
      Corporation in every State respectively for a transitional area, a smaller
      urban area and a larger urban area respectively. The provisio to Article
D     243-Q(l) contemplates a circumstance where a Municipality under Article
      243-Q( 1) may not be constituted in an urban area or part thereof, when
      such area is specified by a notification having regard to the following
      circumstances:
             "(i) Having regard to the size of the area,
E
            (ii)Municipal services being provided or proposed to be
            provided in that area, and·
            (iii) such other factors as may deem fit. ·:
                       '
    Thus, exemption from non-constitution ofMunicipality is dependent upon
F · consideration of aforesaid factors and a public notification thereof.
               15. Section 12--A has been inserted in the 1976 Act in consonance
      with proviso to Articie 243-Q( 1). Section 12-A specifically provides that
      " .... where an industrial development area or any part thereof is specified
      to be an industrial township under the pr~viso t~ clause ( 1) of Article
G     243-Q of the Constitution, such industrial development area or part
      thereof, if included in a Panchayat area, shall, with effect from the date
      of notification made under the said proviso, stand excluded from such
      Panchayat area and no Panchayat shall be constituted for such industrial
      development area or part thereof....... ". Section 12-A thus, specifically
      contemplates issuance of notification under proviso to clause ( 1) ofArticle
H
  MGR INDUSTRIES ASSOCIATION AND ANR. v. STATE OF                                 611
         U.P. AND ORS. [ASHOK BHUSHAN, J.]

 243-Q and exclusion from Panchayat area is consequent and dependent               A
upon such notification. Notification under proviso to clause (I) ofArticle
243-Q has to be subsequent to declaration of an area as industrial
 development area, which itself indicates that declaration of development
 area under 1976 Act is not sufficient to treat an area as an industrial
township.As noted above, industrial township as contemplated by Article
                                                                                   B
 243-Q(I) proviso has to be specifically a public notification after
 consideration of relevant statutory ingredients referred therein. The
 exclusion of.industrial development area from Panchayat has a serious
 consequence since persons residing within the industrial development
 area are immediately deprived of facilities and benefits extended to them
 by the respective Panchayats. The deprivation of the said benefits has            c
 to be thus a conscious decision in accordance with· condition as contained
 in Article 243-Q. In the case before us, it has not been pleaded that any
 notification referable to proviso to Article 243(Q){I) has yet been issued.
 The Division Bench of the High Court has also referred to a~d relied
 upon an earlier judgment of the Allahabad High Court in Rishipal
                                                                                   D
 (supra). In the above case, the appellants who were residents of industrial
 development area prayed for direction that no election for constituting
 Panchayat in various villages including the said industrial development
 area should be allowed since, notification under Section 2(d) of the 1976
 Act has already been issued on 11" July, 1989. The State Government
 categorically stated that no notification under proviso to Article 243-           E
 Q( 1) has been issued. The Divisjon Bench of the High Court referring
 to Section 12.-A has rejected the contention and dismissed the writ petition .
.In paragraphs 6, 7 and 8 following was stated:
       "6. From a plain reading of Section 12A of the Act it is clear
       that after declaration of any industrial development area u/s.              F
       2 (d) of the Act two things are required for excluding them
       from existing panchayat area. First is, specification to be an
       industrial township and secondly a notification under Proviso
       to Article 243Q of the Constitution of India.
       7. From Section 12A it further reveals that if the said area is             G
       includeq in panchayat area, such area with effect from the
       date of notification made under proviso··(proviso to Article .
       243Q) stands excluded from such panchayat. Thus,
       specification to be an industrial township as well as a
       notification under proviso to Article 243Q are condition
                                                                                   H
612            SUPREME COURT REPORTS                           [ZO 17] I S.C.R.


A           precedent for excluding from any panchayat area. There is
           -nothing on the record to come to conclusion that the area in
            question has been specified as an industrial township. Further
            no notification, as stated by Chief Standing Counsel, has bee1J
            issued under proviso to Article 243Q by the State Government, ·
            hence, question of exclusion of the area from panchayat area
B
            does not arise.
            8. Merely because the villages in question are covered uls. 2
            (d) does not ipso /Acta exclude them from panchayat area. As
            noted above neither it has been specified as Industrial
            Township nor a notification under Article 243Q has been
c           issued. The relief claimed by the writ petitioner in the writ
            petition cannot be granted. "
            16. It shall also.be relevant to refer the judgment of this Court in
      Saij Gram Panchayat vs. State of Gujarat and others, 1999 (2) SCC
      366, where this Court had occasion to consider the proviso to Article
D     243-Q sub-clause (1) in the context of Gujarat Industrial Development
      Act, 1962. After insertion of Part IX-A in the Constitution, the Gujarat
      Municipalities Act, 1962 was also amended by adding Section 264-A. It
      was provided under Section 264-A that notified area means an urban
      area or part thereof specified to be· an industrial township area under the
E     proviso to Article 243-Q(l )of the Constitution oflndia. Paragraphs 10
      and 11 of the judgment are extracted below:
            "10. The Gujarat Municipalities Act, 1962 was amended on
            20-8-1993 in. view of the insertion of Part IX-A in the
            Constitution. Section 264-A was substantially amended. It now
 F          provided:
               "264-A. For the pprpose of this chapter, notified area
            means an urban area· or part thereof specified to be an
            industrial township area under the proviso to clause (1) to
            Article 243-Q of the Constitution of India. "
G            Thus, as a result of this amendment in the Gujarat
             Municipalities Act, as industrial area Uf!der the Gujarat
             Industiral Development Act, which is notified under Section
             16 of the -Gujarat Industrial Development Act, would become
             a notified area under the new Section 264-A of the Gujarat
             Municipalities Act and would mean an industrial township
H
  MGR INDUSTRIES ASSOCIATION AND ANR. v. STATE OF                                613
         U.P. AND ORS. [ASHOK BHUSHAN, J.]

       area under the proviso to clause(l) of Article 243-Q of the                A
       Constitution of India.
       II. On 7-9-1993, the Government of Gujarat issued a
       notification under _Section 16 of the Gujarat Industrial
       Development Act declaring Kaloi Industrial Area as a notified
       area under Section 264-A of the Gujarat Municipalities Act.               B
       By another notification of the same date 7-9-1993, the
       Government of Gujarat excluded the notified area from Saij
       Gram Panchayat under Section 9(2) of the Gujarat
       Panchayats Act, 1961."
Thus, fortreating industrial area asindustrial township notification under        c
proviso to Article 243-Q(1) was contemplated which is also the statutory
scheme under the 1976 Act.
       17. In view of the aforegoing discussion; we are of the view that
it was rightly held by the High Court that exemption under Article 12-A
of the 1976 Act was not available in the facts of the above case. The             D
appellants were not entitled for the reliefs claimed in the writ petition. In
the result, the appeal is dismissed.           '


Kalpana K. Tripathy                                          Appeal dismissed.