Holding

The Delhi Development Authority is a local authority within the meaning of Section 3(31) of the General Clauses Act, and therefore Section 32(iv) of the Payment of Bonus Act does not apply to its employees.

Summary

The Delhi Development Authority (DDA) had paid bonus to its employees for ten years until 1973‑74, after which it stopped the payments on advice of the Ministry of Law. The employees challenged the stoppage by filing a writ petition, which the Delhi High Court allowed. The Union of India and the DDA appealed to the Supreme Court, raising the question of whether the DDA qualifies as a "local authority" under Section 3(31) of the General Clauses Act, 1897, and consequently whether Section 32(iv) of the Payment of Bonus Act, 1965, exempts its employees from the bonus obligation. The Court examined the definition of "local authority", identified the essential attributes of such bodies, and found that the DDA possesses all the distinctive features – corporate existence, autonomy, defined territorial jurisdiction, elected representation, statutory functions akin to municipal bodies, and power to raise funds. The Court also held that the DDA’s power to levy betterment charges amounts to a tax‑like compulsory exaction, satisfying the funding attribute. Accordingly, the DDA was held to be a local authority, making the Payment of Bonus Act inapplicable to its employees. The appeal was allowed and the writ petition dismissed.

Issues considered

Whether the Delhi Development Authority falls within the definition of "local authority" under Section 3(31) of the General Clauses Act, 1897.
Whether Section 32(iv) of the Payment of Bonus Act, 1965, applies to employees of the Delhi Development Authority.
Whether the DDA's power to levy betterment charges constitutes a tax for the purpose of qualifying as a local authority.

Legislation cited

Subjects

Local authorityPayment of Bonus ActDelhi Development AuthorityGeneral Clauses ActBonus entitlementStatutory interpretationTax vs feeMunicipal functions

Judgment

854

A UNION OF INDIA & ORS.
v.
R. C. JAIN & ORS.
February 17, 1981
[R. S. PATHAK, 0. CHINNAPPA REDDY AND BAHARUL ISLAM, JJ,]
B
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
c 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.
D 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 a "local
authority" and whether the provisions of the Payment of Bonus A<.:t are
...
attracted :
E Allowing the appeal,
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
F 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
G 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 A
<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 B
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. c
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
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 own Fund which was not a Con-
solidated Fund or a separate Development Fund but is the Fund of the Deve-
lopment Authority. To this Fund are to be credited all the moneys received
from the Central Government by way of grants, loans, advances or otherwise;
all moneys received by way of loans of debentures; all fees and charges received E
by the Authority; all moneys received from the disposal of lands, buildings and
other properties, all moneys received by way of rents and profits or in any
other manner. The fund is required to be applied towards meeting the
expense~ incurred by the Authority in the administration of the Act and for no
other purposes. The Act empowers the Authority to impose penalties on per-
sons for undertaking or carrying out development in contravention of the
master plan or without permission, approval or sanction reQ_uired to be given F
by the Authority. [860 E·G]
An equally important feature with which the Authority is clothed is its
pov.'er to make regulations-a power which is analogous to the power given to
municipalities to frame bye-laws. [862 G]
The salient features of the Act show that the Delhi Development Authority
is constituted for the specific purpose of planned de;ve]opment of Delhi which G
is a governmental function ordinarily entru~ted to municipal bodies. It has an
element of popular representation though some of the members are indirectly
, e~i;cted. It enjoys a considerable degree of autonomy within the bounds pres-
' cribed by the Act. The fact that some supervision is exercised by the Central
Government does not detract from the autonomy because the supervision exer-
cised is the usual supervisory power which every State Government exercises
over municipalities, District Boards etc. [863 A·D] H
• The tern1 "taxation" used with reference to the power of a local authority
to raise funds is to be understood not in any fine a-nd nan·ow sense to include
856 SUPREME COURT REPORTS [1981] 2 s.c.R.

A only compulsory exactions but in a broad generic sense to include fees levied
essentialiy for services rendered. Today the distinction between a tax and a fee
bas withered away both being compulsory exactions of money by a public
authority. The crucial test is to see whether the public authority is authorised
by statute to make a compulsory extension of money adn not to see whether
the money so exacted is to be utilised for specific or general purposes.
•
[863 G-HJ
B
There is no valid reason to hold that the betterment charge which the
Authority can impose upon an owner of a property in respect of the increase •
jn the value of the property is a fee and not a tax. The charge is not levied
on the basis of the increase in the value of property consequent on the deve~
lopment of the area. In other words it is a charge on the accrued capital gain
\\
1
hich may bear no proportion whatsoever to the cost of development. [864 El
c The fact that the Delhi Development Act refers in several sections to
"local authority concerned" meaning thereby the ordinary local authority (as
for example the Delhi Municipal Corporation) functioning in the area dis-
charging a multiplicity of civic functions as distinguished from the Delhi
De·velopment Authority, which performs one of the several functions that a
Joca·l authority performs, is no ground for holding that rhe Delhi Develop--
D ment Authority is not a local authority. The Authority is endowed with alt
the usual attributes and characteristics of a local authority. [864 H]

Nor does the fact that other Municipal Acts provide for the reconstitution
of a dissolved or superseeded municipality while the Delhi Developn1ent Act
does not provide for such reconstitution of the Authority after it fulfills its
assigned functions ma·ke it any the less a local authority. By the very nature
of the work entrusted to it its life is transcient; \vhen the work is accomplished
E and there is no need for its continued existence it is dissolved. It is by what it
is during its life and not by what its shape would be after it has performed
its assigned functions that 1t can be determined '\'hether the authority is a local
authority as defined in the General Clauses Act. [865 B-D]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3351 of 1979.
F Appeal by Special Leave from the Judgment and Order dated
27-2-1979 of the Delhi High Court in Civil Writ No. 1139/78.
Abdul Khader, S. P. Nayar and Miss A. Subhashini for the
Appellant.
P. R. Mirdul and P. N. Gupta for Respondents 1-5.
G The Judgment of the Court was delivered by
CHINNAPPA REDDY, J.-The question for consideration in this
appeal is whether the Delhi Development Authority is a 'local Autho- •
rity' whose employees are taken out of the purview of the Payment of '
Bonus Act 1965, by Sec. 32(iv) of that Act, which provides that
B nothing in the Act shall apply to employees employed by an establish-
ment engaged in any industry carried on by or under the authority of
any Department of the Central Government or State Government or
•
UNION v. R. c. JAIN (Chinnappa Reddy, !.) 857

a Local Authority. It appears that for about ten years prior to 1973- A
74 bonus was paid to the employees of the Delhi Development Autho-
rity but it was stopped thereafter on the advice of the Ministry of
Law. The employees questioned the stoppage of the payment of
bonus by filing Civil Writ Petilio'n No. 1139/79 in the Delhi High
Court. The High Court allowed the Writ Petition and the Union of
India and the Delhi Development Anthority have preferred this appeal, B
• after obtaining special leave of this Court under Art. 136 of the
Constitution. The expression 'Local Authority' is not defined in the
payment of Bonus Act. One must, therefore, turn to the General
Clauses Act to ascertain the meaning of the expression. S.3 (31)
defines Local Authority as follows :
c
"Local Authority shall mean a Municipal Committee,
District Board, Body of Port Commissioners or other autho-
rity legally entitled to, or entrusted by the Government with,
the control or management of a municipal or local fund".

'Local Fund' is again not defined in the General Clauses Act. I)
Though the expression appears to have received treatment in the
Fundamental Rules and the Treasury Code, we refrain from borrow-
ing the meaning attributed to the expression in those rules as it is not
a sound rule of interpretation to seek the meaning of words used in
an Act, in the definition clause of other statutes. The definition of
an expression in one Act must not be imported into another. "It E
would be a new terror in the construction of Acts of Parliament if we
were required to limit a word to an unnatural sense because in some
Act which is not incorporated or referred to such an interpretation is
given to it for the purposes of that Act alone" (per Loreburn L.C. in
Macbeth v. Chislett.('). For the same reason we refrain from bor-
rowing upon the definition of 'Local Authority' in enactments such as F
the Cattle Trespass Act 1871 etc. as the High Court has done.
Let us, therefore, concentrate and confine our attention and
enquiry to the definition of 'Local Authority' in Sec.3(31) of the
General Clauses Act. A proper and careful scrutiny of the language
of Sec.3(31) suggests that an authority in order to be a local Autho- G
rity, must be of like naturo.,, and character as a Municipal Committee,
District Board or Body of Port Commissioners, posses2ng, therefore,
• many, if not all, of the distinctive attributes and characteristics of a
' Municipal Committee, District Board, or Body of Port Commissioners,
bu1, possessing one essential feature, namely, that it is legally entitled
' to or entrusted by the Government with, the control and management. H
of a municipal or lqcal fund. What then are the distinctive attributes
------·-
(!) [1910] AC 220
858 SUPREME COURT REPORTS (1 Q8l] 2 S.C.R.

A and characteristics, all or many of which a Municipal Committee,
District Board or Body of Port Commissioners shares with any other
local authority? First, the authorities must have separate legal exis-
tence as Corporate bodies. They must not be mere Governmental
agencies but must be legally independent entities. Next, they must
function in a defined area and must ordinarily, wholly or partly,
B
directly or indirectly, be elected by the inhabitants of the area. Next,
they musl enjoy a certain degree of autonomy, with freedom to decide •
for themselves questions of policy affecting the area administered by
them. The autonomy may not be complete and the degree of the
dependence may vary considerably but, an &])preciablc measure of
c autonomy there must be. Next, they must be entrusted by Statute
with such Governmental functions and duties as are usually entrusted
to municipal bodies, such as those connected with providing amenities
to the inhabitants of the locality, like health and education services,
water and sewerage, town planning and development, roads, markets,
transportation, social welfare services etc. etc. Broadly we may say
0 that they may be entrusted with the performance of civic duties and
functions which would otherwise be Governmental duties and func-
tions. Finally, they must have the power to raise funds for the
furtherance of their activities and the fulfilment of their projects by
levying taxes, rates, charges, or fees. This may be in addition to
moneys provided by Government or obtained by yorrowing or other-
E wise. What is essential is that control or management of the fund
must vest in the authority.
In Municipal Corporation of Delhi v. Bir/a Cotton, Spinning &
Weaving Mills Delhi & Anr.,(1) Hidayatullah, J., described some of
the attributes of local bodies in this manner :
F "Local bodies are subordinate branches of governmental
activity. They are democratic institutions managed by the
representatives of the people. They function for public
purposes and take away a part of the government affairs
in local areas. They are political sub divisions and agencie~
which exerdse a part of State !unctions. As they are
G intended to carry on local self-government the power ot
taxation is a necessary adjunct to their other powers. They
function under the supervision of the Government''.
•
In Valjibhai Muljibhai Soneji and A nr. v. The State of '
Bombay (Now Gujarat) & Ors.(') one of the questions was
H whether the State Trading Corporation was a local Authority as
(1) [1968j 3 S.C.R. 251@ 288.
(2) [19641 3 S.C.R. 686
UNION v. R. c. JAIN (Chinnappa Reddy,!.) 859

A
defined by Sec. 3(31) of the General Clauses Act, 1897. It was held
that it was not, because it was not an authority legally entitled to or
entrusted by the Government with, control or management of a local
fund. Jt was observed that though the Corporation was furnished
with funds by the Government for commencing its business that
would not make the funds of the Corporation 'local funds'. B
t

• Keeping in mind what we have said above, we may now take a
close look at the provisions of the Delhi Development Act. The
Delhi Development Act, 1957, is 'an Act to provide for the develop-
ment of Delhi according to plan and for matters ancillary thereto'.
The act extends to the whole of the Union Territory of Delhi. Sec. c
2(d) defines "development" as meaning, with its grammatical vari-
ations "the carrying out of building, engineering, mining or other
operations in, on, over or under land or the making of any material
change in any building or land and includes redevelopment'.' Sec. 3
empowers the Central Government to constitute an authority !o be
called the Delhi Development Authority. The Authority is to be a D
body corporate having perpetual succession and a common seal, with
the usual corporate attributes. The authority is to consist of a chair-
man, a Vice Chairman and a certain number of official and non-
•
official members. The non-official members are to include two
representatives of the Municipal Corporation of Delhi to be elected
·by the Councillors and aldermen of the Municipal Corporation from E
among themselves and three representatives of the Metropolitan
Council for the Union Territory of Delhi to be elected by the members
of the Metropolitan Council from among themselves. The objects of
the authority as set out in Sec. 6 are "to promote and secure the
development of Delhi according to plan" and for that purpose to "have
the power to acquire, hold and dispose of land and other property", F
and "to carry out building, engineering, mining and other operations,
to execute works in connection with supply of water and electricity,
disposal of sewage and other services and amenities and generally to
do anything necessary or expedient for purposes of such development
and for purposes incidental thereto". Sec.7 requires the Authority to
G
carry out a civic survey of, and prepare a master plan for, Delhi.
The master plan is to define various zones into which Delhi may be
divided for the purposes of development and indicate the manner in
• which the land in each zone is proposed to be used (whether by the
' carrying out thereon of development or otherwise) and the stages by
which any such development shall be carried out. The master plan
may also provide for any at.her matter which is necessary for the H
proper development of Delhi. Scc.8 provides for the preparation of
zonal development plans and Sec.8(2) prescribes what a zonal deve-
860 SUPREME COURT REPORTS [1981] 2 S.C.R.
A Iopment plan may contain or specify. Sec.9 provides for the sub-
mission of all plans to the Central Government by the Authority for
approval. Sec. 12 empowers the Central Government to declare any
area in Delhi to be a 'development area' for the purposes of the Act.
It further provides that after the commencement of the Act no deve-
lopment of land shall be undertaken or carried out, without the per-
B mission of the Authority, if the area is a development area, and
without the approval or sanction of the local authority concerned if •
the area is an area other than a development area. Sec.13 prescribes
the procedure to be followed. ft provides for a fee (to be prescribed
by the Rules) to accompany every application to 9btain permission
under Sec. 12. Sec. 15 empowers the Central Government to acquire
c any land which is required for the purpose of development or for any
other purpose under the Act. After acquiring the land the Central
Gowrnment may tra'nsfer the land to the Authority or any local
authority on payment by the Authority or the local authority of the
compensation awarded under the Land Acquisition Act and all the
charges incurred by the Government. Thereafter, subject to any
D
directions given by the Central Government the Authority or, as the
case may be, the local authority concerned may dispose of the land,
after or without undertaking or carrying out any development thereon,
to such persons, in such manner and subject to sucbi terms and condi-
tions as it considers expedient for securing the development of Delhi
E according to plan. Sec. 22 authorises the Central Government to
place at the disposal of the Authority all or any developed and un-
developed lands in Delhi vested in the Union for the purpose of deve-
lopment in accordance with the provisions of the Act. Sec. 23
obliges the Authority to have and maintain its own fund to which are
to be credited-
F
" (a) all moneys received by the Authority from the Central
Government by way of grants, Joans, advances or
otherwise;
( aa) all moneys received by the Authority from sources other
than the Central Government by way of loans or deben-
G tures;
(b) all fees and charges received by the Authority under this
Act;
•
( c) all moneys received by the Authority from the disposal '
of lands, buildings and other properties, movable and
fl immovable; and
( d) all moneys received by the Authority by way of rents and •
profits or in any other manner or from ~ny other source."
UNION v. R. c. JAIN (Chinnappa Reddy, J.) 861

The fund is required by S.23(2) to be applied towards meeting A
the expenses incurred by the Authority in the administration of the ·
Act and for no other purposes. Sec. 24 enjoins a duty on the autho-
rity to prepare a budget in respect of the financial year next ensuing
showing the estimated receipts and expenditure. Copies of the
budget are to be forwarded to the Central Government. Sec. 25
requires the accounts of the Authority to be audited annually by the B
' Comptroller and Auditor General of India. Sec. 26 requires the
• Authority to prepare a report of its activities and submit the same
to the Central Government. Sec. 27 provides for the constitution of
pension and Provident Funds. Sec. 28 empowers the authority to
authorise any person to enter into or upon any land or building with
or without assistance of workmen for the purposes specified in the C
Section. Sec. 29 provides for penalties for persons undertaking or
carrying out development in contravention of the master plan or
zol\al development plan or without permission, approval or sanction
required by Sec. 12. Sec. 30 provides for the making of an order
of demolition of a building where development has been commenced D
or completed in contravention of the master plan, zonal plans or the
permission, approval or sanction referred to in Sec. 12. Sec. 31
enables the Authority to make an order requiring development to be
discontinued where development has been commenced in contraven-
tion of the master plan or zonal development plan or without
obtaining permission, approval or sanction as required by Sec. 12. E
Sec. 33 provides that all fines realised in connection with prosecutions
under the Act shall be paid to the Authority or, as the case may be,
the local authority concerned. Sec. 36 empowers the Authority lo
require the local authority within whose local limits an area has
been developed to assume responsibility for the maintenance of
amenities which have been provided in the area by the Authority and F
for the provision of the amenities which have not been provided by
fhe Authority. Sec. 37 empowers the Authority to levy upon the
owner of a property or any person having an interest therein a
betterment charge in respect of the increase in value of the property
as a consequence of any development having been executed by the
Authority in any development area or as a consequence of any area G
other than a development area having been benefi~d by the deve-
lopment. Sec. 38 provides for the assessment of betterment charge
• by the Authority and Sec. 39 provides for the settlement of better-
ment charges by Arbitrators to be appointed by the Central Govern-
ment. Sec. 40(2) authorises the recovery of any arrear of better-
ment charge as an arrear of land revenue. Sec. 40A further pro- H
•
• vides that any money due to the Authority on account of fees or
charges, or from the disposal of lands, buildings or other properties
862 SUPREME COURT REPORTS [1981] 2 S.C.R..

A to be recovered by the Authority as arrears of land revenue. Sec. 41
obliges the Authority to carry out such directions as may be issued
to it from time to time by the Central Government. Sec. 42
requires the Authority to furnish reports, returns and other informa-
tion to the Central Government as may be required from time to
time. Sec. 46 provides for the authentication of permissions, orders,
B decisions, notices and other documents by the Secretary or any other
officer authorised by the Authority in that behalf. Sec. 47 declares •
every rn~mber and every officer a'nd other employee of the Authority
to be a public servant within the meaning of Sec. 21 of the Indian
Penal Code. Sec. 52 enables the Authority to delegate any power
c exercisable by it under the Act except the power to make regulations
to such officer or local Authority as may be ment:oned in the noti-
fication. Sec. 56 empowers the Central Government to make rules
and Sec. 57 enables the Authority, with the previous approval of the
Central Government to make regulations consistent with the Act and
the rules made thereunder to carry out the purposes of the Act.
D Every rule and every regulation made under the Act is rcqu:red to
be laid before each House of Parliament by Sec. 58. Sec. 59 em-
powers the Central Government to dissolve the authority if it is
satisfied that the purposes for which the authority was established
have been substantially achieved so as to render unnecessary its
continued existence.
E We see that the Delhi Dcveloprn.;nt Authority is constituted for
the specific purpose of 'the development of Delhi according to plan'.
Planned development of towns is a Governmental function which is
traditionally en\rusted by the various Municipal Acts in different
States to municipal bodies. With growing specialisation, along with
the growth of titanic metropolitan complexes, legi,latures have felt
F the need for the creation of separate town-planning or development
authorities for individual cities. The Delhi Development Authority
is one such. It is thus an authority, to which is entrusted by Statute
a Governmental function ordinarily entrusted to municipal bodies.
An important feature of the entrustment of Governmental function
is the pcwer given to the Authority to make regu!jltions (which are
G
required to be laid before Parliament). The power to make regu-
lation is analogous to the power usually given to municipalities to
[rame bye-laws.
•
The activities of the Authority are limited to the local area of •
the Union Territory of Delhi. The High Court appears to have
B assumed that the Delhi Development Authority has extra-territorial
powers extending to peripheral areas in the adjoining States. There •
is no basis in the Statute for the assumption made by the High Court.
UNION v. R. C••JAIN (Chinnappa Reddy, J.) 86:J

There is then an element of popular representation in the consti- A
tution of the Authority. Representatives of the inhabitants of the
locality, three elected from among the members of the Delhi Munici-
• pal Corporation and two elected from among the members of the
Delhi Metropolitan Council, figure among its members.
What of autonomy? The Master Plan and the Zonal plans B
' prepared by the Authority have to be approved by the Central Gov-
ernment, the budget has to be forwarded to the Central Government,
annual returns have to be submitted to the Government and the
directions that the Central Government may give have to be carried
out. But within these bounds, the Authority enjoys a considerable
degree of autonomy, as is seen from the summary of the provisions C
of the Act which has been set out by us. The powers of the Central
Government over the Delhi Development Authority are the usual
supervisory powers which every State Government exercises over
municipalities, district boards etc. Such powers of supervision do
not make the municipalities disautonomous and mere satellites.
D
We finally come to the important question whether the legislature
has vested any power of taxation in the Authority.
One of the submissions of the learned counsel for the respondent
was that the fund of the Authority, required to be maintained by
~.cc. 23 of the Delhi Development Act, was not a local fund as no
part of it flowed directly from any taxing power vested in the Delhi E
Development Authority. The submission of the learned counsel was
that the fees collected under Sec. 12 of the Act and the charges
levied under Sec. 37 of the Act did not part-take the character of
tax but were mere fees which were the quid pro quo for the services
which were required to be performed by the Delhi Development
Authority under the Act. We were referred to Hingir-Rampur F
Coal Co. Ltd. & Ors. v. The State of Orissa & Ors.(I) We are
unable to agree with the submission made on behalf of the respon-
dents. In the first place when it is said that one of the attributes of
a local authority is the power to raise funds by the method of taxa-
tion, taxation is to be understood not in any fine and narrow sense
G
as to include only those compulsory exactions of money imposed for
public purpose and requiring no consideration to sustain it, but in a
• broad generic sense as to also include fees levied essentially for services
' rendered. It is now well recognised that there is no generic difference
between a tax and a fee; both are compulsory exactions of money by
public authority. In deciding the qnestion whether an authority is a R
• local authority, our concern is only to find out whether the public
(!) [196lj 2 S.C.R. 537
864 SUPREME COURT REPORTS (1981] 2 S.C.R.

A authority is authorised by Statute to make a compulsory exaction of
money and not with the further question whether the money so exacted
is to be utilised for specific or general purposes. In the second place
the Delhi Development Authority is constituted for the sole purpose •
of the planned development of Delhi and no other purpose and there
is a merger, as it were, of specific and general purposes. The statu-
B tory situation is such that the distinction between tax and fee has
withered away. In the third place we see no reason to hold that the
charge contemplated by Sec. 37 is a fee and not a tax. The case
•
cited: The Hingir-Rampur Coal Co. Ltd. & Ors. v. The State of Orissa
& Ors.,(1) hl!s no application. That was a case .where the Govern-
ment was empowered to levy a cess for the purpose of the develop-
c ment of the mining areas in the State. The cess levied was not to
become a part of the consolidated fund and was not subject to an
appropriation in that behalf; it went into the special fund earmarked
for carrying out the purpose of the Act. There was a definite co-
relation between the proposed services and the im11ost levied and it
D could e legitimately claimed that the rate-payer in substance was
compensating the State for the services rendered by it to him. In the
present case there is no consolidated fund and no separate development
fuad. There is only one fund, the Fund of the Delhi Development
Authority. What is more important, nor is there any question of any
co-relation between the betterment charge and the expenditure incurred
E by the Authority in carrying out the purposes of the Act. The charge
is not levied on the basis of the expenditure incurred. It is levied
on the basis of the increase in the value of the 11roperty consequent
on the development of the area; one may say the charge is on the
accrued capital gain; it may bear no proportion whatsoever to the
cost of development.
F A submission of the learned counsel was that the Delhi Develop-
ment Act itself referred in several places to local authorities as dis-
tinguished from Delhi Development Authority. It is true that in
Sections 12, 15, 30, 31, 34, 36, 42 and some other provisions we find
a reference to 'local authority concerned' meaning thereby the ordinary
G local authority functioning in the area discharging a multiplicity of
civic functions. The Delhi Municipal Corporation for example is one
such local authority. The Delhi Development Authority is constituted
for performing one of the several functions which a local authority
•
may perform. That the local authorities performing other functions •
are referred to as 'local authorities' in the Act by which the Delhi
H Development Authority is created, while the Delhi Development
Authority is referred to as the Authority, is no ground for holding
•
(1) [1961] ~ S.C.R. 537
UNION v. R. c. JAIN (Chinnappa Reddy, !.) 865

... that the Delhi Development Authority is not a 'local authority' as A
defined by Sec. 3(31) of the General Clauses Act. The Delhi Deve-
lopment Authority is endowed with all the usual attributes and
characteristics of a 'local authority' and there is no reason to hold
that it is not a 'local authority'.

Another submission of the learned counsel which was pressed B
upon us was that every statute dealing with municipalities and pro-
• viding for their supersession .and/or dis~olution invariably provided for
reconstitution of the municipality after a stipulated period wherea1
dissolution in the case of the Delhi Development Authority meant a
complete extinction of the authority since the Act did not provide for
r its reconstitution. Our attention was drawn to the municipalities c
Acts of various States. We are unable to see the force of the sub-
mission. The very nature of the work entrnsted by the legislature to
the development authority is such that its life can be but transient.
When the work is accomplished and there is nu need for its continued
existence it is dissolved and its life becomes extinct. It is by what it
D
is during its life and not by the consideration whether there is life
after death and whether it can have many lives, that we determine
whether the Delhi Development Authority is a local authority as
defined in S.3(31) of the General Clauses Act.
On a consideration of all the aspects of the matter placed before
us we are of the opinion that the Delhi Development Auhority is a E
Local Authority and therefore, the provision of the Payme"nt of
Bonus Act are not attracted. The result, therefore, is that the appeal
is allowed and the Writ Petition filed in the High Court is dismissed.
However, we do wish to observe that the Delhi Development Authority
may not only be a model for development activities but may strive to
F
be a model employer too. Bonus was paid to the employees for over
ten years and we were not told of any reason for withdrawing this
J_,.-- benefit from the employees. Merely because the Law Department
advised that they were not bound to pay bonus, they were not obliged
to withd.raw the benefit. The question which ought to have been
considered was not whether they were legally bound to pay bonus but G
whether in the context of sound management-labour relations, bonus
should continue to be paid. It is a matter which we earnestly desire
the Delhi Development Authority may reconsider. There is no order
• as to costs.

• P.B.R. Appeal allowed . "
8-2!4SCI/81