Home case analysis Bangalore Development Authority vs. Air Craft Employees Coop. Society (2012)

Bangalore Development Authority vs. Air Craft Employees Coop. Society (2012)

August 31, 2024

This article is written by Arya Senapati. It attempts to analyse the case of Bangalore Development Authority vs. Air Craft Employees Coop. Society through its factual background, legal issues, arguments of both sides and the judgement delivered by the court. It shall also cover all related case laws and legal provisions discussed in the case. Through a critical analysis of the judgement, this article attempts to highlight the significance of this case for the Indian legal system.

Introduction

In the realm of governance of a nation, separation of power is inevitable for smooth functioning. In the Indian context, the legislature, executive, and judiciary are entrusted with their own spheres of functions and operations. This work division ensures efficiency in the meticulous governance of the state and its instrumentalities. While the legislature creates laws, the executive implements them, and the judiciary interprets them. The functions through which state machinery implements laws are often known as administrative functions, wherein the state administers particular legislation to fulfil the purpose for which it was created. The executive is largely responsible for the execution of administrative functions. Most times, by creating such laws, the legislature also clears certain executive or administrative authorities through it who are responsible for manifesting the interests of the law and fulfilling its purpose. They are also given the power to create rules and regulations for the implementation of the law. This conferment of power, in the sphere of administrative law, is referred to as the delegation of power. In essence, the legislature’s expertise is limited to certain matters and it’s unreasonable to expect the legislature to go into the details of every subject matter in legislation. Therefore, delegation of rule-making power is necessary to preserve the purpose of the legislation and create efficient machinery. While the importance of delegation is well-established, there are checks and balances in place to ensure that delegation is not excessive in nature. Cases like Bangalore Development Authority vs. Air Craft Employees Coop. Society (2012) are landmarks in nature and significant to a large extent as they expand the ambits of this theory of excessive delegation and help courts ascertain whether a particular delegation of power is reasonable or not.

Details of the case

Appellant: Bangalore Development Authority

Respondent: Aircraft Employees Coop. Society

Court: Supreme Court of India

Bench: Asok Kumar Ganguly, G.S. Singhvi

Date decided on: 24.1.2012

Provisions involved: Article 14, 265, 300A of the Indian Constitution

Factual background

The case arises as an appeal against the order given by the Division Bench of the Karnataka High Court. The order was made on writ petitions filed by the respondents and the main contention of the petition was that Section 32(5A) of the Bangalore Development Authority Act, 1976 (hereinafter referred to as the ‘1976 Act’) was violative of Article 14 of the Indian Constitution (Right to Equality).
The order declared the 1976 Act to be violative of Article 14 and held that it was void and inoperative. As a consequence of the order, the High Court held that all the conditions incorporated under the orders passed by the Bangalore Development Authority by virtue of this provision sanctioning residential layout plans or work orders through which the respondents were required to pay multiple amounts in form of charges must be quashed and the refund must be issued immediately.

Developments leading to the case

Due to an imperceptible increase in the population of Bangalore from the year 1970 to 1980, the available public amenities like roads, water, and electricity were stretched beyond a limit to meet the additional requirements of such necessities as well as to address the traffic problems. New development schemes were drafted and approved in 1984 for Bangalore city. The plan included the augmentation of the supply of water and the creation of a ring road. The Bangalore Water Supply and Sewerage Board sought to take up the Cauvery Water Supply Scheme for the necessity of an additional 270 MLD of water at a cost of Rs. 240 crores. After analysing the situation and meeting the demand for additional water, the government approved this proposal.
The state government issued an order and directed the BDA to make a grant of 30 crores to BWSSB as the most amount of water is required for BDA activities. The grant was to be paid in installments from 1987-88 to 1989-90 by adding an additional amount of water supply component at the rate of Rs. 10,000 on average per site for all the layouts formed by BDA.
As per the directions, BDA started collecting the amount per site and later on, the levy was increased to Rs. 1 lakh per acre. By 1992, it was found that BDA had not been able to develop and distribute the sites as it was expected to do. A proposal was submitted by the Commissioner of BDA to the State Government to state that the contribution towards the Cauvery Scheme must be distributed among those applying for change of land use and the private layouts developed by house building societies and major housing projects. The state government agreed to the suggestion and passed the order for levying the tax at the rate of Rs. 2 lakh per acre.
In the year 1992, BDA planned to construct 63 kilometres long Outer Ring Road and a 3.5 kilometres long Intermediate Ring Road, which assumed a cost of Rs. 115 crores and a possible enhancement of up to Rs. 130 crores. Almost 37 km of the Outer Ring Road was supposed to go through the BDA layouts and the rest through land outside the BDA layouts. The cost of construction of the area within the BDA layout was covered by charging the allottees of the site and for the rest, financial assistance was sought from the World Bank. Later, it was decided that the partial burden of the cost could be taken by the beneficiaries of the private layouts and just like the Cauver Scheme, a surcharge for the Ring Road was to be levied on sites formed by BDA and private housing societies at the cost of Rs. 1 lakh per acre. BDA passed a resolution laying such charges at different rates based on changes in land use in different areas and at Rs 1 lakh per acre on housing societies and private lands.
The AirCraft Employees Cooperative Society Ltd. sought permission for a layout in respect of 324 acres and 30 guntas of land situated in Singasandra and Kudlu villages, Surjapur Hobli, and Begur Hobli. The proposal was reviewed and approved on the condition that Rs 2 lakh per acre was to be paid for the Cauvery Scheme and Rs lakh per acre was to be paid for Ring Road Surcharge. It also imposed the condition that for whatever civil part of the work is done by the respondents, it shall be done as per the supervision of the BDA and this decision of the BDA was communicated to the respondent through a letter dated 12.1.1993.
The decision taken by the BDA was considered unfavourable by the AirCraft Employees Cooperative Society Ltd., as the conditions imposed by them were not fair as per the respondents. The respondents challenged the said decision through a writ petition and demanded the quashing of the condition, which imposed Rs. 2 lakhs per acre towards the Cauvery Scheme and Rs. 1 lakh per acre as the Ring Road Surcharge.

Grounds of challenge by the respondent

The respondent challenged the order on various grounds. They are:

The order that was passed by the state government was only applicable to the sites that were formed by the BDA and it was not equally imposed on the private house building societies, as the Chairman of the BWSSB believed that it won’t be practical to assume the responsibility of providing water supply and underground drainage systems to those particular layouts. Due to this order, the societies had to handle their own water demands through other arrangements.
The Cauvery Scheme, as it had been planned, will only be able to meet the requirements of those residing within the municipal area and some new layouts close to the city.
There exists no provision in the Bangalore Water Supply and Sewerage Act, 1964, which deals with the burden of capital necessary for executing schemes that could be passed on to private house-building societies. The provisions of the law do not even mention anything regarding BWSSB recovering costs from private house-building societies.
The 1976 Act does not empower the BDA to transfer the burden of costs from the Cauvery Schemes to any private layouts.
Considering the fact that 20,000 acres of land have been acquired by the BDA to form layouts in proximity to Bangalore and 10,000 acres have been acquired by the government for House Building Cooperative Societies, in a situation where Rs. 1 lakh or 2 lakh per acre is charged, the government gets up to Rs. 600 crores from BDA only, even though the contribution of BDA was initially fixed to be Rs. 30 crores.
The condition for demanding Rs 1 lakh and 2 lakh per acre towards the Cauvery Scheme is against the provisions of Article 265 of the Constitution of India (no tax can be imposed without the authority of law).
The sanction of Rs 1 lakh per acre as ring road surcharge is not provided by any law and therefore the state and the BDA cannot impose such a burden on any private layout without ascertaining whether the ring road would be of any use to the members of the house building societies.

Post-challenge situation

While the writ petition was pending, the State Legislative Assembly amended the 1976 Act and added Section 32(5A), which authorised the BDA to demand any amount of money in addition to those mentioned in the section to fulfil the requirements of executing any scheme for augmenting water supply, electricity, roads, transportation and other amenities within the Bangalore metropolitan area.
Based on the amendment of the law, the respondents amended the writ petition and challenged the constitutional validity of the newly added provision on the ground that it is discriminatory and therefore violates Article 14 of the Indian Constitution. The provision provided uncontrolled and unchecked power to the BDA to demand money for various schemes. The respondents stated that the new provision was inserted only to legitimise the imposition of charges for the cauvery scheme and the ring road.
During the pendency of the litigation, the respondent sought approval from the BDA for starting civil work and it was permitted with certain charges: a supervision charge at the rate of 9% on civil work, an improvement charge, an examination charge, a slum clearance development charge, an MRTS tax, and other miscellaneous charges.
The respondent further challenged the conditional approval of the civil work through a writ petition The challenge was based on the ground that the 1976 Act doesn’t provide BDA with the authority to impose such taxes and even the legislature has not laid down any guidelines for such demands from private housebuilding societies. They also contended that the BDA was under the mistaken impression that the layout fell under its jurisdiction.
As per the respondents, no notification was issued by the state government to include the villages of north and south talukas within the Bangalore metropolitan area. The respondents also pleaded that the state government had already collected conversion fines and BDA has no jurisdiction to levy any betterment fee on the same. A similar plea was raised in respect of the mass rapid transport system cess and slum clearance charges.
Many other house-building cooperative societies had also filed several writ petitions between the years of 1994 and 1998 to strike down Section 32 (5A). The general contentions of such housing societies were that the BDA has no jurisdiction over making demands for payment of certain amounts under various heads for sanction of residential layout plans in areas that do not fall within Bangalore metropolitan area.

High Court division bench decision

The Division Bench of the High Court primarily considered the legal issue i.e. whether the notification declaring certain villages to be under the jurisdiction of BDA is invalid as the names of the villages and other specified areas were not published in the official gazette and if in the absence of such notifications, the villages in which house societies have formed layout can be treated as part of Bangalore metropolitan area or not.
By referring to the definition of “Bangalore metropolitan area” mentioned under Section 2(c) of the 1976 Act, as well as the contents of the notification, the High Court held that the description of the area mentioned in the notification was in consonance with the definition of Bangalore metropolitan area as reference had been made to the villages in Schedule I. By reading the notifications passed on 13.3.1984 and 1.3.1988, it is clear that the particular villages form part of Bangalore metropolitan area.
The division bench made no decision on the plea of the respondents that some of the villages were not included in the schedules, as the decision of this question requires investigation into a question of fact and can be considered during the approval of a plan for the layout of a particular society.
By referring to Article 265 and 300A of the Indian Constitution, the division bench held that the BDA has no authority to levy and recover sums specified in the demand notice. It was held that the approval of a layout plan or work order could not be made while having conditions of deposit of the sums demanded by BDA.
By analysing the provisions of Section 32 of the 1976 Act, the Division Bench held that there is no principle regarding the determination of expenditure to be incurred while executing any scheme or work. There is no doubt that the developmental schemes for augmenting water supply and other amenities only provide for the benefit of the Bangalore Metropolitan Area but the real question is what rate of expenditures the Bangalore metropolitan area bears for such expenses has to be paid by the applicant seeking approval for a layout plan.
As per the Division Bench, there is no provision or guideline regarding the same and there are no rules framed under the provisions of the Act to determine the amount.
By relying on the decision of Ram Krishna Dalmia vs. Shri Justice S.R. Tendolkar and Ors. (1958) as well as the decision of Jyoti Pershad vs. The Administrator for the Union Territory of Delhi (1967), the division bench observed that in the current case, Section 32 (5A) doesn’t provide any guidelines to determine the portion of expenditure to be borne by the applicants. The entire expenditure cannot be imposed on the applicant, either. The section is vague in its language and doesn’t answer any important questions regarding the imposition of the burden of expenditure and therefore, it can be said that it confers unbridled powers without providing any guidelines. The section also doesn’t provide any remedy against the order of the authority.
While there is a remedy mentioned under Section 63 of the 1976 Act to allow for revision by the government where it shall consider the legality of the order, it truly lacks substance. The non-obstante clause of Section 32 (5A) confers unbridled power on the authority, which paves the way for unequal and discriminatory treatment of the applicants. The division bench ultimately held that the demand of BDA under Section 32 (5A) is illegal and has no jurisdiction.

Creation of Town Planning Act, 1961

As the new State of Mysore was formed, a necessity for a standardised law for growth planning, use of land, and development of town planning schemes was felt to be needed. In lieu of such a necessity, the State Legislative Assembly legislated the Mysore Town and Country Planning Act, 1961.
The primary object behind the creation of this law was to plan or replan urban and rural regions of the Mysore state and provide all sorts of civic and social amenities to the people through efficient planning. It also intended to prevent unsupervised land development through land speculation and profiteering, to safeguard and enhance various recreational amenities and work towards the sustainable use of land resources, and to manage the growth prospects of populated regions of the state to maintain a good standard of environmental health and hygiene, create facilities for the growth of trade and commerce and promote the general living standards of the people of the state.
In the year 1973, the State of Mysore was renamed Karnataka, and the nomenclature of the Town Planning Act was also changed accordingly. Section 4 of the Town Planning Act talks about the creation of a State Town Planning Board by the state government. The state government shall have the power to issue a notification and declare any region in the state a “local planning area,” and constitute a “Planning Authority” for the development of the region.
The Planning Authority will have jurisdiction over the said area and by virtue of Section 9(1) of the Act, it shall have a duty to conduct a survey of all the areas under its jurisdiction and, henceforth, prepare and publish a blueprint development plan for the said area. The blueprint should then be submitted to the state government for preliminary approval. As per Section 12(1), the blueprint development plan must mention the manner in which the planning is to be supervised, implemented, executed, and regulated. Section 19(1) states that a detailed development plan must be created in the next stage and submitted to the state government for final approval. Section 21 dealt with factors that must be considered while drafting the development plan and Section 26 imposed a duty on all of the Planning Authorities to develop town planning schemes.
The contents of the blueprint or initial development plan must consist of the general use of land resources and the creation of zones for residential, commercial, industrial, agricultural, recreational, and educational purposes. It shall create proposals for the construction of roads and highways, reservation of land for union and state authorities and their functioning, the declaration of special control over certain lands for developments of building lines, and other such proposals for public amenities.
The comprehensive or detailed development plan as engaged under Section 19 must consist of detailed zone declarations and zone-based regulations, detailed street patterns highlighting all the major and minor roads, national and state highways, traffic circulations, and all other areas reserved for farming, parks, and playgrounds. It shall notify housing areas, road developments, plans for future expansions, stages of implementation, need for land acquisitions, financial responsibilities, and source of funding or finances.
The Town Planning Scheme as envisaged under Section 26 dealt with various aspects such as laying out or relaying out of the land, filling the low-lying swampy and unhealthy areas and levelling those lands, laying out new streets, constructions, extensions, diversions, etc, construction or removal of buildings, bridges, and other structures, reserving land for public facilities, drainage, sewerage, lighting, water supply, preservation of historical and natural objects, imposition of construction conditions, etc.

Creation of Bangalore Development Authority

The 1976 Act was created against the backdrop of a national plan to create a single authority for the development of metropolitan areas. Earlier, before the creation of the Bangalore Development Authority (BDA), there were many authorities like the City of Bangalore Municipal Corporation, The City Improvement Trust Board, etc., which led to confusion as the jurisdictions of various authorities and their functions overlapped with each other. Owing to this, the State of Karnataka came to realise that a unified authority would be more feasible for developing the metropolitan area of Bangalore and therefore Section 81-B was introduced to the Town Planning Act, which sought a deemed dissolution of the City Planning Authority in relation to all the areas falling under the jurisdiction of the Bangalore Development Authority.
Section 14 of the 1976 Act tasked the BDA to promote and conserve the development of the Bangalore Metropolitan Area and as a consequence of this object, it shall have the power to acquire, hold, maintain, and do away with moveable as well as immovable property, within or outside its jurisdiction. These land areas shall be used for construction, building, engineering, and other necessary implementations necessary for the development of the area.
Section 15 of the 1976 Act describes the power of the BDA and states that the authority can chart out detailed developmental schemes for developing the Bangalore Metropolitan Area and, with the permission of the government, undertake certain work for developing the area while bearing expenditures for those works. It can also undertake additional development schemes on its own if it feels it has enough resources to implement them.
The development scheme formed under Section 15 shall mention the acquisition of any land required for executing the plan, laying and relaying of all necessary lands for construction and reconstruction of buildings, drainage, water supply, electricity, reservation for public spaces, sanitary arrangements, construction of houses, etc.
The Authority shall also have a duty to maintain the streets adequately and manage the drainage and sanitation of the streets. It shall also have the power to levy taxes on lands and buildings within its jurisdiction. It can impose various cess like education cess, health cess, library cess and beggary cess. It can form new extensions and layouts and make new private streets within its jurisdiction from time to time.
With the passage of time, Section 81-B was inserted, which stated that from the date of the constitution of the Bangalore Development Authority under the 1976 Act, the BDA shall be the local planning authority for local planning of the city of Bangalore. It shall exercise the same powers, and functions and have the same duties as the Local Planning Authorities envisaged under the 1976 Act.
On 1.3.1988, the state government issued a notification under Section 2(c) of the 1976 Act, which specified the villages that are mentioned under the First Schedule and within the boundaries indicated within the Second Schedule to Notification dated 13.3.1984.

Contentions of the appellants

The appellants contended that the lands mentioned as the respondents’ residential layout fall well within the boundaries of the local planning area of the authorities and hence, they are liable to pay layout charges with respect to the cauvery scheme, ring road surcharge, slum clearance charge, betterment charges, supervision fees, etc.
The charges have been levied through the power and directions given by the state government and on the decision of the BDA.
It is essential that the societies carry out civil work under the able supervision of the BDA and hence they are liable to pay supervision charges.
Regarding Section 32(5A), it does not suffer from any kind of constitutional infirmity and the guidance for levying such charges can be found in the scheme of the Act.

Legal issues raised

There are many legal issues and questions of law that the bench had to deal with in this case. They are:

Whether Section 32(5A) of the 1976 Act violative of Article 14, Right to Equality mentioned in the Constitution of India?
Whether Section 32(5A) prone to excessive delegation of legislative power?
If the demands of the charges made under cauvery scheme amount to tax and are hence violative of Article 265 of the Constitution of India?
Has the BDA collected charges in excess of its contribution towards the cauvery scheme from the house building societies and allottees of sites for the layouts prepared by it?

Supreme Court’s decision

The Apex Court first dealt with the question of whether the area in which the respondents had formed layouts fell within the ambit of the Bangalore metropolitan area or not. In the challenged order of the division bench, the judges recorded their grounds for negating the challenge of the respondents to this question. By referring to the decision made in Bondu Ramaswamy vs. Bangalore Development Authority (2010), the Supreme Court held that the villages mentioned in the schedules that were added to the notifications of 1.11.1965 and 13.3.1984 were parts of the Bangalore metropolitan area. The question of whether the Bangalore development authority had lost its territorial jurisdiction over the regions in which the house building societies had formed layouts couldn’t be decided by the Apex Court as it was not challenged by the respondents while observations were made by the High Court Division.
There were a few more important legal issues or questions that the Supreme Court dealt with next. They were:

Is Section 32(5A) of the 1976 Act violative of Article 14, Right to Equality mentioned in the Constitution of India?
If Section 32(5A) is prone to excessive delegation of legislative power.
If the demands of the charges made under the cauvery scheme amount to tax and hence violative of Article 265 of the Constitution of India?
Has the BDA collected charges in excess of its contribution towards the Cauvery Scheme from the House Building Societies and allottees of sites of the layouts prepared by it?

The argument made by Shri Altaf Ahmed, the senior counsel representing BDA, and Shri Sanjay Hegde, the senior counsel representing the State of Karnataka, that Section 32(5A) was not violative of Article 14 as it didn’t discriminate between the allottees of the layout sites made by the house building societies and the BDA layouts but rather treated them equally with the burden of charges for the cauvery scheme as well as the ring road surcharge, was not sustained in the High Court. Similarly, as per the Supreme Court, the High Court division bench committed a severe error while deciding the constitutionality of Section 32(5A) and stating that it is violative of Article 14.
The High Court ignored the principle that a statutory provision is presumed to be constitutionally valid unless it is proved to be unconstitutional. The burden of proof to establish discrimination lies on the person alleging such discriminatory behaviour. Unless a strong factual foundation is provided to prove that the provision violates Article 14, it shall be presumed to be constitutional.
Referring to the principle of presumption of constitutionality, the Apex Court referred to its previous judgement in the case of Charanjit Lal Cowdhuri vs. Union of India (1950) wherein the court stated that a law could be constitutional even if it relates to a single person and in cases where, under special circumstances, a law is only applicable to a single person and not others, the single person can be treated as a class on his own for the purposes of reasonable classification. Secondly, the well-established doctrine of the American Courts was well-formed and stated that presumption is always in support of the constitutionality of a law and therefore, the burden of proof of unconstitutionality falls on the one who is attacking the law. The person attacking the law has to prove a clear transgression of constitutional principles. It is always presumed that the legislature understands and appreciates the needs of its own people and therefore laws are made to meet those requirements and whatever discrimination arises is based on adequate grounds.
Referring to its own decision in the case of M.H. Qureshi vs. State of Bihar (1959), the court held that: courts, while deciding upon the constitutionality of a law, must presume that the legislative authority had correctly acknowledged and understood the needs of the people that it represents and were directed towards the problems of the general populace. Whatever discrimination was manifested by the law was presumed to be done on valid grounds. In order to preserve the constitutionality of a law, the court must take into consideration subjects of common knowledge, common report, and the history of the time in which the legislature drafted the legislation in question
Referring to Ram Krishna Dalmia vs. Justice S.R. Tendolkar (1958), upon which the impugned order of the High Court relied, the Apex Court had stated in the case that there is forever a presumption in support of the constitutionality of a law and the burden to prove unconstitutionality falls on the party attacking it. The party attacking must show a clear violation of constitutional principles to effectively challenge the law. It also reiterated the fact that while determining the constitutionality of a provision, to sustain the presumption, the court must consider the situation at the time in which the law was made. All the facts which can be conceived at the time of the creation of the legislation must be considered by the court to presume the constitutionality of the law.
Referring to the case of R.K. Garg vs. Union of India (1981), the Apex Court reiterated the observations of the case, which were: While determining the constitutionality of a law and if it is violative of Article 14 or not, it is important to consider certain well-established principles developed by the courts that act as guidelines for other courts to discharge their constitutional function of judicial review. The primary rule is that there shall always be a presumption of constitutionality unless it is challenged and the burden to prove unconstitutionality falls on the alleged party.
Keeping the decisions of all the cases mentioned in mind, it was held that even if the writ petitions filed by the respondents challenged Section 32(5A) as discriminatory, they did not mention any valid grounds or basic foundations for supporting their claim of unconstitutionality. Therefore, the High Court division bench was not right to reach the conclusion that the provision is discriminatory and violative of Article 14 of the Indian Constitution.
While talking about the problem of hostile discrimination in relation to Section 32(5A), the court must not ignore the facts of unexpected growth in the population of the city of Bangalore. The policy decision was taken to encourage house-building societies to form private layouts, and the BDA was obligated to take effective steps to enhance the civic facilities within Bangalore metropolitan area. Therefore, it became necessary for the BDA to augment necessary resources through itself and other state agencies by making adequate contributions. Therefore, the observation of the High Court that by restricting the scope of loading the burden of expenses on the allottees of the sites in the layouts developed after 1987, the legislature violated Article 14 was absolutely wrong and inconceivable. This observation made by the High Court cannot be sustained in law. The imposition of such burdens was held not to be a violation of Article 14.
Coming to the next question, the High Court had observed that Section 32 (5A) is a piece of excessive delegation, as the sums mentioned in the provision were supposed to be paid by those who intended to form an extension or layout so as to meet the expenditures required for roads, drains, water supply, lighting, etc. The respondents had argued that the provision suffers from excessive delegation as the legislature mentioned no policy for recovering the cost of infrastructure necessary for augmenting water, electricity, roads, etc.
On the question of excessive delegation, the Supreme Court first referred to the case of Devi Das Gopal Krishnan vs. State of Punjab (1967), wherein the Apex Court went against the idea of liberal application of the concept of delegation of legislative power but while referring to other judgements like Jyoti Pershad vs. The Administrator for Union Territory of Delhi or Ajoy Kumar Banerjee vs. Union of India (1984), the Court had recognised that it is impossible for the legislature to draft laws with small details to deal with the increasing complications of governance in political democracy and therefore, the legislature can lay down broad policies and guidelines and let the executives manage the details through State agencies and instrumentalities. The delegation of power on such authorities cannot be claimed as an excessive delegation of legislative power.
In the case of Jyoti Pershad vs. The Administrator for the Union Territory of Delhi, it was argued that the power vested in the state authority to withhold eviction under orders passed through the Slum Areas (Improvement and Clearance) Act, 1956 is ultra vires to the constitution as it is a matter of excessive delegation. Based on this argument, the court observed that in modern situations, a wide range of complications arise seeking possible solutions, and therefore it is impossible for the legislature to foresee every detail and possibility while drafting legislation; therefore, the legislature finds it necessary to leave the details to the authorities. The authorities created by the legislature thus have ample discretion, limited by the guidelines provided by the Act. This is the primary principle behind delegated legislation. As long as the legislature creates a piece of legislation with enough substance to guide the authorities and make the objects and purposes of the legislation clear, it is immaterial if discretion is left to the authorities and the legislation is skeletal. The skeletal nature of legislation, which has enough substance to guide the authorities created by it, cannot be a ground for claiming excessive delegation or unrealised discretion being vested in the authorities. If discretion is conferred in a legal manner, the fact that the legislature could have gone into the details while drafting the legislation cannot be a ground for invalidating the enactment.
By referring to the case of Maharashtra State Board of SHSE vs. Paritosh Bhupeshkumar Sheth (1984), the Apex Court emphasised upon its observation that as long as the body tasked with drafting rules and regulations function within the scope of the authority bestowed upon it and as long as the rules and regulations have a rational nexus or connection with the object and the purpose of the legislation, the court need not deal with the wisdom or efficaciousness of the rules and regulations. It is within the powers of the legislature and its authorities to decide the way in which they seek to implement particular legislation and what measures they can take, either substantial or procedural, to fulfil the objectives of the legislation. The court cannot examine the merits of the policy as its supervision is only limited to the question of the right use of rule-making power conferred by the law on the delegates of the statute.
In the case of Ajoy Kumar Banerjee vs. Union of India (1984), the Apex Court held that the growth of the legislative power of the executive was a mark of evolution and progress. The theory of laissez-faire has become ancient and currently, the large powers are being yielded by the State to improve the social and economic well-being of people. The legislatures, due to their own limitations, cannot go into the details of all the matters while dealing with the creation of legislation. Therefore, the practice of bestowing the power of creating subordinate legislation to the executive is a necessary practice for a welfare state in modern times.
On the topic of delegated legislation, the Apex Court observed that the legislature should lay down the guidelines and policy principles and then the authority tasked with implementation can be entrusted with the task of creating subordinate legislation. The courts simply cannot interfere with the extent of delegation that is provided by the legislature to its authority in any particular case. The simple existence of guidelines is enough.
Moving ahead, the Supreme Court referred to the case of Kishan Prakash Sharma vs. Union of India (2001), wherein the entire principle of delegated legislation was summarised as follows: In the Indian context, legislatures have excessive law-making subjects and due to their own limitations, they cannot delegate essential legislative functions like determining or choosing a legislative policy or formally enacting a policy. The legislature also cannot delegate canalised and uncontrolled power. Therefore, it is important for the legislature to set its own limits and set limits on the power it confers upon the delegates by stating the policy and object of the law clearly and by creating standards of guidance for the execution of the law. The delegation of such power is only valid when there is adequate legislative policy and guidelines to guide the delegates on the true purpose and object of the legislation so that it is implemented in the way it was intended and the power conferred doesn’t go beyond the limits of the permissible extent. When the law-making power is entrusted to the Parliament and State Legislature through the Constitution, it implicitly prevents them from doing away with the responsibilities and imposing them on some other authority. Therefore, a compromise that is struck between the Parliament and the legislature is that the Parliament cannot work out the details of various requirements of legislation and therefore that area is left to be filled by the delegatee. Therefore, the question of whether any legislation suffers from excessive delegation must be ascertained by taking into consideration the scheme, the provisions of the preamble, the facts and circumstances of the time in which it was enacted, the historical background of the legislation, and the complexity of the problems it seeks to address. This allows for a liberal construction of the statute and reiterates the opinion that even if a statute is skeletal, it simply needs to have essential guidelines, objects, and policy measures to guide the authorities upon whom the delegated power is vested. This liberal approach is a testament to the balance of power and the compromise between the constitution and the parliament, essential for the smooth functioning of society and the well-being of the people.
Referring to the case Union of India vs. Azadi Bachao Andolan (2003), the Supreme Court reiterated its own decision on the case, which stated that: while ascertaining whether a particular delegated legislation is made in excess of the power supplied to it, it has to be ascertained through the purpose and object of the Act conferring such power and not only through the assessment of the impugned provision.
By referring to all these previously decided cases and precedents, the Supreme Court reached the observation that when the constitutionality of a legislative provision is challenged on the ground of excessive delegation, it is important for the courts to look into the policy which forms the legislation. To examine the policy, the court must look into the preamble of the legislation and the statements of object. It is not the duty of the court to sit over the wisdom of the legislature and nullify a provision that has been enacted through the rule-making power delegated to an authority
Based on this reasoning, it was concluded that the policy which laid out under the 1976 Act could be ascertained from its preamble. The policy behind the Act was the development of the city of Bangalore and the adjacent areas. The Town Planning Act, 1976, was enacted with the view of regulating the planning of growth, land use, and execution of town planning schemes in the whole of the state, including the city of Bangalore. Through Section 67 of the Act and the insertion of Section 81-B, the BDA was made the local authority for the city of Bangalore and was provided adequate jurisdiction over the area. It was empowered to exercise all powers and perform its functions and duties as a Local Planning Authority defined under the Town Planning Act.
The object that guided the formation of the legislation was the creation of favourable conditions for the planning and replanning of the urban and rural regions of the state so as to make all the civic and public amenities accessible to the propeller and to counter the uncontrolled land development. It also dealt with the creation of town planning schemes and the execution of them. Based on the brief reading of all the provisions of the Act, it is clear that the object of the Act is to ensure the planned development of the Bangalore Metropolitan Area through BDA. BDA has the power to make developmental schemes and incur the burden of the expenditures from the beneficiaries of the scheme.
Based on the notifications, it is clear that hundreds of villages in the vicinity of the Bangalore Metropolitan Area were merged into it and BDA therefore was bound to take care of the civic amenities for those areas too. It is impossible for BDA to alone handle the task and therefore the state government, BDA, and other instrumentalities like the BWSSB had to augment their resources to manage the supply of water, electricity, and roads. BDA had to contribute to the funds and that was clear from the state directions. With the addition of Section 32(5A), BDA received the power of calling upon applicants who wished to form new extensions or layouts or private streets to pay a certain amount so as to meet the portion of expenditure incurred in providing civic amenities.
The preamble, object, and provision of the legislation provided enough guidance to the BDA to exercise its power under Section 32(5A) therefore it is not a matter of excessive delegation.
The next question that the Supreme Court dealt with is whether the demand for charges under the Cauvery Scheme amounts to tax and, therefore, is ultra vires of Article 265. In this regard, the debate is whether a specific levy can be treated as a “fee” or “tax” and in the absence of any direct evidence, quid pro quo can the levy be called a tax?
The court first referred to the case of Kewal Krishan Puri vs. State of Punjab (1980), wherein, the constitutional bench of the Apex Court had dealt with the question and had given certain principles for determination. The amount of fee realised must be given for the purpose of services rendered to the licensees. The services must be in relation to transactions. While rendering services, it is not necessary to confer the entire benefit on the licensees but simply certain special benefits are enough to levy an amount of contribution. The essence of this judgement was diluted by the decision of Southern Pharmaceuticals and Chemicals vs. State of Kerala (1981), wherein the Apex Court dealt with the distinction between tax and fees and stated that fees are amounts paid for a certain privilege and they are not an obligation. The payment of fees is voluntary. The primary object of tax is to raise funds for supporting the government or for any public purpose while a fee is charged for any privilege or benefit or service rendered.
Under the 1976 Act, the BDA was obligated to provide various types of amenities to the people of Bangalore metropolitan area, which included the allottees of the sites in the layouts prepared by the house-building societies. Even though they did not directly benefit from it, some indirect benefits still arose from the work of BDA for the allottees. They also benefited from the cauvery scheme. Therefore, the charges levied by the BDA under Section 32(5A) couldn’t be termed taxes and were therefore held to be constitutional.
On the final question of whether the burden imposed is in excess of the actual expenditure incurred, the Apex Court stated that the High Court had not assigned any grounds for declaring the levy as unconstitutional, and therefore, the Apex Court didn’t feel it necessary for them to take a decision on this issue. In the views of the Apex Court, the ends of justice were secured by asking the state government to take appropriate action on this matter.
Ultimately, as the end result, the appeals were allowed and the impugned order of the High Court was set aside through the analysis of the legal issues involved, the principles laid down and the precedent set in the previous cases.

Legal aspects involved

This case deals with the following legal principles and doctrines:

Doctrine of Excessive Delegation under Administrative Law

In the sphere of administrative function, excessive delegation refers to the phenomenon of a legislative authority conferring broad decision-making powers to any administrative agency or state instrumentalities without providing any clear guidelines as to the use of such power. The lack of necessary checks and balances on the use of such delegated power is also termed excessive delegation. Vague legislative mandates that fail to provide detailed guidance or objective policy of the law to an administrative agency while delegating power is an important form of excessive delegation. In the absence of clear directives, the agencies often interpret and apply the law in ways that seem counterproductive to the original intent of the legislation. This leads to various ambiguities and uncertainty in the exercise of the power so conferred. Most times this also leads to the administrative authority making unreasonable and arbitrary decisions that fall outside the intended scope of their authority. At times, the legislature may fail to provide clear policy directions to administrative agencies while delegating power and that leads to deviation from the original legislative intent. The administrative agencies in such situations form their own interpretations of the legislative policy, which contradicts the original intended policy and leads to many ambiguities. While such situations exist, the legislature can prevent them by providing a clear policy directive, statements and objects, purpose and intent behind creating the legislation to provide a sufficient guideline to the administrative authorities.

Test for excessive delegation

If any form of delegation of power to an administrative authority is challenged to be excessive, the court must look into the following factors:

If the legislature provides adequate policy directive, guidance, and statement of object and purpose of the legislation to the administrative authority.
Even if the legislation is skeletal and lacks a lot of detail, can the purpose and policy of the legislation be derived from its provisions, preamble, and guidelines?
The court must always presume the validity of the legislation unless proven otherwise. The court must take into consideration the time and circumstances in which the law was created and which problems it sought to address while deciding on the nature of delegation.

Critical analysis of the judgement

The judgement is landmark in its own right as it is one of the primary pieces of analysis provided by the Apex Court on the validity of delegated legislation and the concept of delegation of power. Excessive delegation is a defence which has been taken multiple times through writ petitions to avoid executive action but there wasn’t a standardised test to ascertain whether a piece of legislation delegated excessive authority to an administrative agency or not.

Through a series of cases, including the instant matter, the Apex Court laid down important measures to guide the courts to deal with cases of such nature. The acknowledgement of the fact that the legislature is not an all knowing body and that delegation of power is necessary to fulfil the true intent of the policy behind the legislation is what makes the judgement of the case significant towards the discourse of delegation of power. The test of excessive delegation is truly an efficient check and balance system to prevent arbitrariness in executive and administrative action.

Conclusion

The instant case is a reflection of the separation of power based on skills and expertise and how such power must be controlled through efficient checks and balances to prevent arbitrariness in governance. Arbitrariness is the death of democracy and governance, and therefore essential rulings and precedents on the doctrine of excessive delegation are important to ensure that the functioning of governance mechanisms is smooth, free from arbitrariness, and reasonable.

Frequently asked questions

What is the presumption regarding the validity of the legislation?

Legislation is always presumed to be valid unless proven otherwise. This doctrine stems from the assumption that the legislature that created the legislation is wise enough to understand the specific problems of a class and create laws to counter such problems.

Can an individual be treated as a class for the application of a law?

Yes. If such a special situation arises and a law is created that treats an individual as a separate class due to special circumstances attached to him, he can be treated as a separate class, and the differentiation would be reasonable.

What is delegated legislation?

Since the legislature cannot be expected to legislate on all subject matters due to a lack of expertise in each and every matter, the legislature at times provides law-making power to agencies under it. The legislation created by the agencies using such law-making power is termed delegated legislation. They are often in the nature of regulations and by-laws.

What happens when rule-making power is delegated in excess?

This situation is referred to as excessive delegation and it is held to be unconstitutional. Any form of delegation that provides inauthentic and uncontrolled power to an agency is unconstitutional in nature and therefore ultra vires to the Constitution.

Which powers cannot be delegated?

The legislature cannot delegate its essential legislative functions to an agency under it. These core functions of the legislature must be performed by its own wisdom. These functions are the enactment of laws, establishing legislative policies, drafting important and significant laws, declaring policies, and setting standards.

Bangalore Development Authority vs. Air Craft Employees Coop. Society (2012)

Introduction

Details of the case