Holding

The initial notification dated 6 October 2008 upgrading Napasar Gram Panchayat to a Nagarpalika is unconstitutional as it does not comply with the parameters required under Article 243Q(2).

Summary

The State of Rajasthan issued a notification on 6 October 2008 upgrading the Gram Panchayat of Napasar village to a Nagarpalika, which was subsequently challenged in the Rajasthan High Court. The High Court dismissed the challenge, the State later withdrew the notification, issued a fresh one in 2016, and the matter reached the Supreme Court on appeal. The Supreme Court examined the constitutional scheme under Part IX‑A, particularly Article 243Q(2), which requires the Governor to specify "transitional", "smaller urban" and "larger urban" areas by a public notification based on multiple parameters such as population, density, revenue, non‑agricultural employment and economic importance. The Court found that the notifications issued by Rajasthan, including those of 1995 and 2012, considered only population and did not satisfy the parameters mandated by Article 243Q(2); consequently, no valid notification existed. Therefore, the initial 2008 notification was unconstitutional, rendering the upgrade to Nagarpalika invalid and all subsequent actions based on it void. The appeals were disposed of, effectively dismissing the petitioners' claims.

Issues considered

Whether the Governor's notification under Article 243Q(2) must be based on the parameters enumerated in the Constitution and not merely on population.
Whether the notifications issued by the State of Rajasthan qualify as valid notifications contemplated under Article 243Q(2).
Whether the upgradation of Napasar Gram Panchayat to a Nagarpalika is constitutionally valid in the absence of a proper notification.

Legislation cited

Constitution of Indias. Article 243Q, s. Part IX A
Rajasthan Municipalities Act, 2009
Rajasthan Municipalities Ordinance, 2008s. 3(1)(A)
Rajasthan Municipality Act, 1959 (repealed)

Subjects

Constitution of IndiaArticle 243QMunicipalitiesNagarpalikaGovernor's notificationPart IX AUpgradation of Gram PanchayatRajasthanConstitutional validity

Judgment

628 [2018]
SUPREME COURT 5 S.C.R. 628
REPORTS [2018] 5 S.C.R.

A CHAMPA LAL
v.
STATE OF RAJASTHAN AND ORS.
(Civil Appeal No. 4554 of 2018)
B APRIL 26, 2018
[J. CHELAMESWAR AND SANJAY KISHAN KAUL, JJ.]
Constitution of India: Art.243Q – Interpretation of –
Notification dated 6.10.2008 envisaging upgradation of Gram
Panchayat of Napasar Village as Nagar Palika (Municipality) –
C
On challenge to the validity of said Notification, the State withdrew
it by Notification dated 18.09.2009 – Validity of Notification dated
18.09.2009 challenged – Fresh Notification issued again for
establishing a Nagarpalika for the Napasar village – Validity of,
challenged – Held: Art.243Q contemplates constitution of three
D different categories of bodies known as Nagar Panchayat for a
transitional area, Municipal Council for a smaller urban areas and
Municipal Corporation for a larger urban area – It is declared
under Art.243Q(2) that the expressions “a transitional area”, “a
smaller urban area” and “a larger urban area” (‘Areas’) would
mean such areas as may be specified by the Governor by a public
E
notification for the purpose of Part IX A of the Constitution of India
– Art.243Q(2) further obligates the Governor to have due regard
to the various factors mentioned therein before specifying the Areas
i.e. population of the area, the density of the population, the revenue
generated in the area for local administration, percentage of
F employment in non-agricultural activities, the economic importance
or such other factors as he may deem fit – It, therefore, appears
from the scheme of Art.243Q(2) that the Governor is not free to
notify ‘Areas’ in his absolute discretion but is required to fix the
parameters necessary to determine whether a particular Area is a
transitional area or a smaller urban area or a larger urban area
G
with due regard to these factors – Such parameters must be uniform
for the entire State – It is only after the determination of the
parameters, various municipal bodies contemplated under
Art.243Q(1) could be constituted – In the absence of any
notification which meets the requirements of Art.243Q(2), the entire
H
628
CHAMPA LAL v. STATE OF RAJASTHAN AND ORS. 629

exercise undertaken by the State of Rajasthan in upgrading the A
Napasar village Gram Panchayat to be a Nagarpalika is
unconstitutional – Therefore, the initial notification dated 6.10.2008
itself is unsustainable and, thus, the legality of various actions which
followed that notification and the judgments of the High Court which
examined the legality of those actions, need not be examined – All
B
such subsequent action of the State which led to litigation suffer
from a fundamental constitutional flaw – The impugned judgments
of the High Court rendered without examining the true scope and
scheme of Part IXA of the Constitution and more particularly
Art.243Q(2) are per incuriam – Rajasthan Municipalities Ordinance,
2008 – s.3(1)(A) – Municipalities. C
Disposing of the appeals, the Court
HELD: 1. The establishment of municipalities and their
organisations is governed by Part IX A (consisting of Articles
243P to 243ZG) of the Constitution of India inserted in the
Constitution by the Constitution 74th (Amendment) Act, 1992 D
with effect from 1.6.1993. Article 243P(e) defines the expression
“Municipality” to mean an institution of self-government
constituted under Article 243Q. Article 243Q contemplates the
constitution of three different categories of bodies known as (i)
Nagar Panchayat for a transitional area, (ii) Municipal Council for E
a smaller urban areas and (iii) Municipal Corporation for a larger
urban area. It is declared under Article 243Q(2) that the
expressions “a transitional area”, “a smaller urban area” and “a
larger urban area” (‘Areas’) would mean such areas as may be
specified by the Governor by a public notification for the purpose
of Part IX A of the Constitution of India. Article 243Q(2) further F
obligates the Governor to have due regard to the various factors
mentioned therein before specifying the Areas i.e. population of
the area, the density of the population, the revenue generated in
the area for local administration, percentage of employment in
non-agricultural activities, the economic importance or such other G
factors as he may deem fit. It, therefore, appears from the scheme
of Article 243Q(2) that the Governor is not free to notify ‘Areas’
in his absolute discretion but is required to fix the parameters
necessary to determine whether a particular AREA is a
transitional area or a smaller urban area or a larger urban area
H
630 SUPREME COURT REPORTS [2018] 5 S.C.R.

A with due regard to the factors mentioned above. It is implicit
that such parameters must be uniform for the entire State. It is
only after the determination of the parameters, various municipal
bodies contemplated under Article 243Q(1) could be constituted.
[Paras 6, 7, 8 and 9] [632-F-G; 633-E-H; 634-A-B]
B 2. In response to a specific query whether any notification
contemplated under Article 243(Q)(2) had been issued by the
State of Rajasthan, two notifications dated 4.7.1995 and 30.4.2012
were produced. A plain reading of both the notifications shows
that these notifications had been issued in exercise of the statutory
powers conferred on the State Government by two different
C enactments known as “The Rajasthan Municipality Act, 1959
(since repealed) and the Rajasthan Municipalities Act, 2009.
Apart from the declaration regarding the source of power for the
issuance of these notifications to be authority conferred by the
various provisions of these two enactments, it appears from the
D tenor and scheme of the notifications that these notifications
purport to classify municipalities only on the basis of population.
The various other parameters to which regard is required to be
had under Article 243Q(2) were not taken into consideration for
the purpose of classification made under the above mentioned
two notifications. Therefore, these two notifications cannot be
E treated as notifications contemplated under Article 243(Q)(2).
In the absence of any notification which meets the requirements
of Article 243Q(2), the entire exercise undertaken by the State
of Rajasthan in upgrading the Napasar village Gram Panchayat to
be a Nagarpalika – [that is equivalent to Nagar Panchayat as
F mentioned in Article 243Q(1)(a)] is unconstitutional as it is
inconsistent with the requirements of the Constitution under
Article 243Q of the Constitution of India. Therefore, the initial
notification dated 6.10.2008 itself is unsustainable. Unfortunately,
this aspect was not noticed by the High Court obviously because
it was not brought to the notice of the High Court. The fact that
G a litigant before the court does not point out the relevant
principles and provisions of law does not prevent the court from
examining the issues involved in the lis, more particularly, when
the process which is the subject matter of litigation before the
court is inconsistent with the mandate of the Constitution. It is a
H
CHAMPA LAL v. STATE OF RAJASTHAN AND ORS. 631

settled principle of law that courts are bound to take note of the A
constitution and the laws. [Paras 10, 11] [634-C-G; 635-A]
3. The initial notification dated 6.10.2008 is unconstitutional.
Therefore, the legality of various actions which followed that
notification and the judgments of the High Court which examined
the legality of those actions need not be examined. All such B
subsequent action of the State which led to litigation suffer from
a fundamental constitutional flaw. The impugned judgments of
the High Court rendered without examining the true scope and
scheme of Part IXA of the Constitution and more particularly
Article 243Q(2) are per incuriam. [Para 12] [636-A-B]
C
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4554
of 2018.
From the Judgment and Order dated 12.09.2016 of the High Court
of Judicature for Rajasthan at Jodhpur in D. B. Civil Special Appeal
No. 667 of 2016. D
Ms. Aishwarya Bhati, Amit Verma, Ms. Tanya Patra, Ms. Ritu
Apurva, Vishwajeet Singh, Advs. for the Appellant.
Guru Krishna Kumar, Sr. Adv., Shiv Mangal Shrma, Jayant Bhatt,
Umang Verma, Ms. Jyoti Sharma, Ms. Shikha Sandhu, Rohit K. Singh,
A. Subba Rao, Annam D. N. Rao, A. Venkatesh, Sudipto Sircar, Rahul E
Mishra, Ms. Tulika Chikker, Advs. for the Respondents.
The Judgment of the Court was delivered by
CHELAMESWAR, J. 1. Leave granted.
2. These two appeals are inter connected tossing up an important F
question of law regarding the interpretation of Article 243 Q of the
Constitution of India.
3. It is not necessary for us to give the complete factual details
and history of the case for the purpose of this order except the bare
minimum. The litigation revolves around the upgradation by a notification G
dated 6.10.2008 of Gram Panchayat of Napasar Village as Nagar Palika
(Municipality) Class IV1 category by the State of Rajasthan purportedly
1
State Government while exercising power conferred to it under section 3 (1) (A) of
the Nagar Palika ordinance 2008, State Government hereby declares Gram Panchayat
Napasar as Nagar Palika Fourth category. Existing limit/area of the Gram Panchayat
Napasar will be the area of Nagar Palika Napasar. H
632 SUPREME COURT REPORTS [2018] 5 S.C.R.

A in exercise of power conferred under Section 3(1)(A) of the Rajasthan
Municipalities Ordinance 20082. Legality of the said notification was
challenged before the Rajasthan High Court in a writ petition. It was
dismissed by a learned Single Judge. Aggrieved by the dismissal, the
matter was carried in a writ appeal. During the pendency of the writ
appeal, the impugned notification dated 6.10.2008 was withdrawn by
B
another State of Rajasthan by a notification dated 18.9.2009. The writ
appeal was therefore, rendered infructuous.
4. Challenging the notification dated 18.9.2009, another writ petition
came to be filed. The said writ petition was allowed by a Division Bench
by its judgment dated 13.5.2015 quashing the notification and directing
C the State to take consequential steps.3 Aggrieved by the same,
SLP(C)No.11091/2017 came to be filed. Pursuant to the direction of
the High Court, a fresh notification dated 2.6.2016 came to be issued
once again for establishing a Nagarpalika for the Napasar village.
Challenging the said notification, another writ petition came to be filed
D before the Rajasthan High Court. It was dismissed by a judgment dated
3.8.2016. On appeal, the same was confirmed by the Division Bench by
its judgment dated 12.9.2016. Aggrieved by the same, SLP(C)No.38618
of 2016 is filed.
5. The correctness of the two judgments of the High Court
E impugned in these two appeals, is questioned on various grounds. In our
opinion, it is not necessary to examine the various submissions made
before us. The impugned actions of the respondent State which culminated
in the two impugned judgments of the High Court suffers from a
fundamental infirmity which goes to the root of the matter.

F 6. The establishment of municipalities and their organisations is
governed by Part IX A (consisting of Articles 243P to 243ZG) of the
Constitution of India inserted in the Constitution by the Constitution 74th
(Amendment) Act, 1992 with effect from 1.6.1993. Article 243P (e)
defines the expression “Municipality” to mean an institution of self-
government constituted under Article 243 Q. Article 243 Q of the
G Constitution of India declares as follows:

2
The ordinance was eventually replaced by Rajasthan Municipalities Act, 2009.
3
The consequent act referred to by the court is that a new notification was directed
to be issued.
H
CHAMPA LAL v. STATE OF RAJASTHAN AND ORS. 633
[CHELAMESWAR, J.]

“243Q. Constitution of Municipalities:- (1)There shall be A
constituted in every State-
(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 smaller urban area; and B

(c) a Municipal Corporation for a larger urban area,
in accordance with 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 C
may, having regard to the size of the area and the municipal 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 be an industrial township.
(2) In this article, “a transitional area”, “a smaller urban area” D
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 therein, the revenue generated for local administration,
the percentage of employment in non-agricultural activities, the
economic importance or such other factors as he may deem fit,
E
specify by public notification for the purposes of this Part.”
7. Article 243Q contemplates the constitution of three different
categories of bodies known as (i) Nagar Panchayat for a transitional
area, (ii) Municipal Council for a smaller urban areas and (iii) Municipal
Corporation for a larger urban area.
F
8. It is declared under Article 243Q(2) that the expressions “a
transitional area”, “a smaller urban area” and “a larger urban area”
(hereinafter collectively referred to as “AREAS”) would mean such
areas as may be specified by the Governor by a public notification for
the purpose of Part IX A of the Constitution of India. Article 243Q(2)
further obligates the Governor to have due regard to the various factors G
mentioned therein before specifying the AREAS i.e. population of the
area, the density of the population, the revenue generated in the area for
local administration, percentage of employment in non-agricultural
activities, the economic importance or such other factors as he may
deem fit. H
634 SUPREME COURT REPORTS [2018] 5 S.C.R.

A 9. It, therefore, appears from the scheme of Article 243Q(2) that
the Governor is not free to notify ‘AREAS’ in his absolute discretion but
is required to fix the parameters necessary to determine whether a
particular AREA is a transitional area or a smaller urban area or a larger
urban area with due regard to the factors mentioned above. It is implicit
that such parameters must be uniform for the entire State. It is only
B
after the determination of the parameters, various municipal bodies
contemplated under Article 243Q(1) could be constituted.
10. In response to a specific query whether any notification
contemplated under Article 243(Q)(2) had been issued by the State of
Rajasthan, Mr. Guru Krishnakumar learned senior counsel appearing
C for the State of Rajasthan, produced two notifications dated 4.7.1995
and 30.4.2012. On a plain reading of both the notifications, it appears
that these notifications had been issued in exercise of the statutory powers
conferred on the State Government by two different enactments known
as “The Rajasthan Municipality Act, 1959 (since repealed) and the
D Rajasthan Municipalities Act, 2009. Apart from the declaration regarding
the source of power for the issuance of these notifications to be authority
conferred by the various provisions of the above mentioned two
enactments, it appears from the tenor and scheme of the notifications
that these notifications purport to classify municipalities only on the basis
of population. The various other parameters to which regard is required
E to be had under Article 243Q(2) were not taken into consideration for
the purpose of classification made under the above mentioned two
notifications. Therefore, in our opinion, these two notifications cannot
be treated as notifications contemplated under Article 243(Q)(2).
11. In the absence of any notification which meets the requirements
F of Article 243Q(2), the entire exercise undertaken by the State of
Rajasthan in upgrading the Napasar village Gram Panchayat to be a
Nagarpalika – [that is equivalent to Nagar Panchayat as mentioned in
Article 243Q(1)(a)] is unconstitutional as it is inconsistent with the
requirements of the Constitution under Article 243Q of the Constitution
G of India. Therefore, the initial notification dated 6.10.2008 itself is
unsustainable. Unfortunately, this aspect has not been noticed by the
High Court obviously because it was not brought to the notice of the
High Court. The fact that a litigant before the court does not point out
the relevant principles and provisions of law does not prevent the court

H
CHAMPA LAL v. STATE OF RAJASTHAN AND ORS. 635
[CHELAMESWAR, J.]

from examining the issues involved in the lis, more particularly, when A
the process which is the subject matter of litigation before the court is
inconsistent with the mandate of the Constitution. It is a settled principle
of law that courts are bound to take note of the constitution and the
laws.4
B
4
S.C. Prashar & Another v. Vasantsen Dwarkadas & Others, AIR 1963 SC 1356
98. The Department in this case had relied on the amending Act of 1953 before the
High Court. Though the High Court considered the case from the angle of the second
proviso to sub-section 3 of Section 34 and also struck it down as unconstitutional it
did not take into consideration Section 31. sub-sections (1), (2) and (3) of Section 34
of the principal Act (including It was argued before us that we cannot take C
Section 31 into account if it was not referred to by the High Court. But a court
is required to take judicial notice of statutes and if Section 31 of the Act 1953
said that of course the amendments as made by the 1953 Act) shall apply and shall
be deemed always to have applied to any assessment or re-assessment for any year
ending before April 1, 1948, it is the duty of court, and tribunals to read Section
34 in that manner and in no other. In our opinion it was not open to the High
Court to read Section 34 without Section 31 which contained a legislative construction D
and made Section 34 retrospective. This omission has vitiated the High Court’s
reasoning.
121. The questions as framed refer to the provisions of Section 34(3) of the
Income Tax Act. They also mentioned two sets of dates, namely, the dates of the
returns (7-3-1951 and 14-1-1952) and the date of the assessment (17-11-1953).
Now we know that before the first day of April, 1952, there was a four-year limit for
E
assessments or re-assessments under sub-section 3 of Section 34 but thereafter that
limit was removed by the proviso added by Section 18 of the amending Act of 1953
and by Section 31 of the same Act assessments made before or after the commencement
of the amending Act of 1953 (1-4-1-952) were declared valid if proceedings commenced
after September 8, 1948. The question as framed cannot be answered without
reference to Section 31 and even if parties did not bring it to the notice of the
High Court it was the duty of the High Court to look into the validating F
provisions of Section 31. If the High Court did not, we know of no rule or
decision of this Court which prevents us from looking into a validating provision
which existed at the time of the High Court’s decision and was overlooked by
it and which by itself furnished the answer to the question propounded for the
opinion of the High Court. No decision of this Court lays down that in determining
the true answer to a question referred under Section 66, this Court is confined only
to those sections to which the Tribunal or the High Court referred. Indeed, there are G
many cases which say the contrary: see Kusumben Mahadevia v. CIT [(1960) 3 SCR
417], Zoraster & Co. v. CIT [(1961) 1 SCR 210] and the recent case of Scindia Steam
Navigation Co. v. CIT [(1961) 42 ITR 589]. We must, therefore, look into Section 31
to determine these appeals.

H
636 SUPREME COURT REPORTS [2018] 5 S.C.R.

A 12. We, therefore, have no choice but to hold that the initial
notification dated 6.10.2008 is unconstitutional. Therefore, the legality
of various actions which followed that notification and the judgments of
the High Court which examined the legality of those actions, in our view,
need not be examined. All such subsequent action of the State which
led to litigation suffer from a fundamental constitutional flaw. The
B
impugned judgments of the High Court rendered without examining the
true scope and scheme of Part IXA of the Constitution and more
particularly Article 243Q(2) are per incuriam.
13. Mr. A. Subba Rao, learned counsel appearing for the non-
State respondents in SLP(C)No.11091/2017 submitted that in view of
C the findings recorded by the High court that in the interregnum, lot of
development (such as the establishment of industries, educational
institutions and hospitals etc.) took place in the geographical area in
question, and therefore, this Court may not interfere with the notification
upgrading the area in question to a Nagarpalika as such interference
D would have the effect of reducing the Nagarpalika into a Gram Panchayat
once again. Confronted with the question as to what would be the
prejudice the non-State respondents would suffer by such consequence,
Mr. Rao submitted that there is a possibility of the industries being shifted
away from the area in question. It is only an apprehension. We find no
basis in the pleading for such apprehensions nor do we see any reason
E which might lead to such a possibility. Therefore, the submission is
rejected.
14. The appeals are disposed of accordingly.

F Devika Gujral Appeals disposed of.

G

H