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1979 Supreme(P&H) 39
PUNJAB & HARYANA HIGH COURT
S.S.Sandhawalia and Harbans Lal JJ.
Des Raj Juneja
Versus
Union Of India
C.W.P. No. 3958 of 1977,
Decided On : FEBRUARY 19, 1979
Headnote:
Levy of house tax in Chandigarh was challenged on the grounds of promissory estoppel and excessive delegation of legislative powers. The court held that the assurance by the then Punjab Government in 1959 not to levy any tax including the house tax on lands and buildings in the city of Chandigarh for a period of 25 years, was binding on the Union Territory Administration of Chandigarh as a successor state after reorganisation in 1966. The court also held that the provisions relating to the levy of house tax as contained in Sections 61 and 62 of the Municipal Act had not been enforced in the city of Chandigarh by the then Punjab Legislature. The subsequent notification by the Chief Commissioner in July, 1968, including these provisions in the Second Schedule of the Principal Act and another notification by the Chief Administration in July, 1968, enforcing these provisions in the city on Chandigarh were vitiated as they suffer from the vice of excessive delegation of essential legislative functions.
Fact of the Case:
In May, 1959, the then Government of Punjab took decision in a meeting of the Cabinet giving assurance to the citizens of Chandigarh that for 25 years no house tax or property tax etc. as envisaged in the Punjab Municipal Act or the Punjab Urban Immovable Property Act will be levied.
Finding of the Court:
The court held that the assurance by the then Punjab Government in 1959 not to levy any tax including the house tax on lands and buildings in the city of Chandigarh for a period of 25 years, was binding on the Union Territory Administration of Chandigarh as a successor state after reorganisation in 1966. The court also held that the provisions relating to the levy of house tax as contained in Sections 61 and 62 of the Municipal Act had not been enforced in the city of Chandigarh by the then Punjab Legislature. The subsequent notification by the Chief Commissioner in July, 1968, including these provisions in the Second Schedule of the Principal Act and another notification by the Chief Administration in July, 1968, enforcing these provisions in the city on Chandigarh were vitiated as they suffer from the vice of excessive delegation of essential legislative functions.
Issues: 1. Whether the assurance by the then Punjab Government in 1959 not to levy any tax including the house tax on lands and buildings in the city of Chandigarh for a period of 25 years, was binding on the Union Territory Administration of Chandigarh as a successor state after reorganisation in 1966? 2. Whether the provisions relating to the levy of house tax as contained in Sections 61 and 62 of the Municipal Act had been enforced in the city of Chandigarh by the then Punjab Legislature?
Ratio Decidendi: 1. The court held that the assurance by the then Punjab Government in 1959 not to levy any tax including the house tax on lands and buildings in the city of Chandigarh for a period of 25 years, was binding on the Union Territory Administration of Chandigarh as a successor state after reorganisation in 1966. The court relied on the principle of promissory estoppel, which prevents a party from going back on a promise or assurance made to another party, if that party has acted on the promise or assurance to their detriment. 2. The court held that the provisions relating to the levy of house tax as contained in Sections 61 and 62 of the Municipal Act had not been enforced in the city of Chandigarh by the then Punjab Legislature. The court found that these provisions were not included in the Second Schedule of the Principal Act, which was annexed to the Punjab Reorganisation Act, 1966. The court also found that the subsequent notification by the Chief Commissioner in July, 1968, including these provisions in the Second Schedule of the Principal Act and another notification by the Chief Administration in July, 1968, enforcing these provisions in the city on Chandigarh were vitiated as they suffer from the vice of excessive delegation of essential legislative functions.
Final Decision: The court allowed all the writ petitions and quashed the levy of the house tax in Chandigarh.
Harbans Lal, J.
1. This order will dispose of Civil Writ Petition Nos. 7218 of 1976; 519, 2538, 3880, and 3958 of 1977 and 319, 1046, 1241, 1877 and 4733 of 1978, as most of the questions of law and fact arising therein are identical.
2. House tax was levied by the Union Territory Administration, Chandigarh, with effect from October 1, 1976. The legality and validity of the same has been impugned in all these writ petitions under Articles 226 and 227 of the Constitution mainly on the basis of the following two important propositions of law :
(1) The then Punjab Government of which the Union Territory Administration of Chandigarh is the successor, after reorganisation in 1966, had given an assurance in 1959 that no taxes including the house tax will be imposed in the city of Chandigarh for 25 years. Consequently, the Chandigarh Administration was estopped from levying the house tax under the doctrine of promissory estoppel, and
(2) The decision to levy house tax was based on notifications by the Chief Commissioner, and the Chief Administrator, Union Territory, Chandigarh, which were hit by the vice of excessive delegation of legislative powers.
3. At this state, it is appropriate to enumerate, in brief, the relevant facts as referred to in Civil Writ Petition No. 3958 of 1977, which have a bearing on the dispute.
4. As a result of the historical holocaust and the consequential partition of the country in 1947, Lahore, the Capital of Punjab, was left in Pakistan and the remaining part of Punjab, known as East Punjab, was left without any capital. In order to carry out the day to day administration, all the major offices of the new State of Punjab were shifted to Simla in the first instance. After a good deal of discussion at the highest level, finally it was decided to locate its new capital at the place which is now called Chandigarh. In 1952, the Capital of Punjab (Development and Regulation) Act, 1952, (Punjab Act, No. XXVII of 1952) (hereinafter called the Principal Act), was promulgated. Its purpose was, as is clear from the statement of Objects and Reasons as under :-
"The construction of the new capital of Punjab at Chandigarh is in progress. It is considered necessary to vest the State Government with legal authority to regulate the sale of building sites and to promulgate building rules on the lines of Municipal Bye-laws so long as a properly constituted local body does not take over the administration of the city."
Under Section 7 of this Act, the State Government was authorised to levy "such fees or taxes as it may consider necessary to provide, maintain and continue any amenity at Chandigarh. This Act was amended by the Punjab Act No. 37 of 1957. The capital of Punjab (Development and Regulation) (Amendment) Act, 1957 (hereinafter to be called the Amendment Act), which received the assent of the Governor on November 11, 1957. According to the Objects and Reasons for the promulgation of the Amendment Act, the purpose of the amendment was to "give powers to the Chief Administrator at Chandigarh similar to those vested in the local bodies under the Municipal Act of 1911, which he would exercise within the capital area of Chandigarh. Section 7-A was newly added by Section 2 of the Amendment Act, which is reproduced below :-
"7-A (1) The Chief Administrator may, from time to time by notification in the Official Gazette, and with the previous approval of the State Government, apply to Chandigarh or any part thereof, with such adaptations and modifications, not affecting the substance as may be specified in the notification, all or any of the provisions of the Punjab Municipal Act, 1911 , specified in the Second Schedule appended to this Act insofar as such provisions are not inconsistent with the provisions of this Act.
(2) On the issue of a Notification under Sub-section (1), the Chief Administrator, shall in relation to Chandigarh or any part thereof, as the case may be, exercise the same powers and perform the s
