Supreme Court Clarifies Requirements for Municipal Upgradation under Article 243Q: Champa Lal vs. State of Rajasthan (26 April 2018)

Case Background

The case revolves around the State of Rajasthan’s notification dated 6 October 2008, which upgraded the Gram Panchayat of Napasar village to a Nagar Palika (Municipality) Class IV. This action was purportedly taken under Section 3(1)(A) of the Rajasthan Municipalities Ordinance 2008. The legality of this notification was challenged in the Rajasthan High Court. Initially, a single judge dismissed the challenge, but a subsequent writ appeal was filed. During the appeal, the State withdrew the 2008 notification on 18 September 2009, rendering the appeal infructuous. However, this withdrawal led to another writ petition challenging the new notification. The Division Bench of the High Court quashed the withdrawal notification on 13 May 2015 and directed the State to issue a fresh notification. Consequently, a new notification was issued on 2 June 2016, again establishing a Nagarpalika for Napasar village. This was also challenged, but the High Court upheld it on 12 September 2016. These conflicting decisions led to the present appeals before the Supreme Court.

Timeline

Course of Proceedings

The initial challenge to the 6 October 2008 notification was dismissed by a single judge of the Rajasthan High Court. An appeal was filed, but the State withdrew the notification, leading to a new writ petition. The Division Bench quashed the withdrawal notification, directing a fresh notification. The subsequent notification was again challenged, but the Division Bench upheld it. These conflicting decisions led to the appeals before the Supreme Court.

Legal Framework

The Supreme Court examined the constitutional provisions governing the establishment of municipalities, specifically Part IXA of the Constitution of India, which was inserted by the Constitution 74th (Amendment) Act, 1992. Article 243P(e) defines “Municipality” as an institution of self-government under Article 243Q. The core of the judgment revolves around Article 243Q, which states:

“243Q. Constitution of Municipalities:-(1) There shall be 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 a smaller urban area; and (c) a Municipal Corporation for a larger urban area, in accordance with the provisions of this Part: Provided that a Municipality under this clause may not be constituted in such urban area or part thereof as the Governor may, having regard to the size of the area and the municipal 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” 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, specify by public notification for the purposes of this Part.”

Article 243Q mandates that the Governor must specify what constitutes a “transitional area,” “smaller urban area,” or “larger urban area” based on factors like population, density, revenue, employment in non-agricultural activities, and economic importance. The Court emphasized that these parameters must be uniformly applied across the State.

Arguments

The State of Rajasthan argued that the notifications issued were in accordance with the Rajasthan Municipalities Act, 1959 (since repealed) and the Rajasthan Municipalities Act, 2009. They contended that the upgrade of the Gram Panchayat to a Nagarpalika was valid. The State relied on two notifications dated 4 July 1995 and 30 April 2012, which classified municipalities based on population.

The non-State respondents argued that significant development had occurred in the area, including the establishment of industries, educational institutions, and hospitals. They contended that reversing the upgrade would be detrimental and could lead to the relocation of industries.

The Supreme Court noted that the notifications relied upon by the State classified municipalities solely based on population, disregarding other factors mandated by Article 243Q(2) of the Constitution. The Court also rejected the non-State respondents’ argument, finding no basis for the apprehension that industries would relocate if the area reverted to a Gram Panchayat.

Submissions of the Parties

Issues Framed by the Supreme Court

The Supreme Court addressed the following issue:

1. Whether the State of Rajasthan followed the procedure as contemplated under Article 243Q of the Constitution of India while upgrading the Gram Panchayat of Napasar village to a Nagar Palika?

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities:

• Article 243Q of the Constitution of India: The Court emphasized that Article 243Q mandates the Governor to specify parameters for classifying areas as transitional, smaller urban, or larger urban, based on factors like population, density, revenue, and employment.
• S.C. Prashar & Another v. Vasantsen Dwarkadas & Others, AIR 1963 SC 1356: The Court cited this case to reinforce the principle that courts are bound to take note of the Constitution and the laws, even if not explicitly brought to their attention by the parties.

Judgment

The Supreme Court held that the initial notification dated 6 October 2008, upgrading the Napasar village Gram Panchayat to a Nagarpalika, was unconstitutional. The Court found that the State of Rajasthan had not issued any notification under Article 243Q(2) of the Constitution, which specifies the parameters for classifying areas as transitional, smaller urban, or larger urban. The notifications relied upon by the State only considered population and ignored other factors such as density, revenue generated for local administration, and the percentage of employment in non-agricultural activities.

The Court stated that the entire exercise undertaken by the State of Rajasthan was inconsistent with the requirements of the Constitution. The Court emphasized that the parameters for classifying areas must be uniform throughout the State. The Court also noted that the High Court had failed to notice this constitutional infirmity, as it was not brought to their attention.

The Court observed, “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 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.”

The Court also noted, “It is a settled principle of law that courts are bound to take note of the constitution and the laws.”

Further, the Court stated, “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.”

What weighed in the mind of the Court?

The Court’s decision was primarily influenced by the constitutional mandate outlined in Article 243Q. The Court emphasized that the State’s actions must align with the Constitution, and any deviation renders the actions unsustainable. The Court found that the State’s failure to establish parameters as required by Article 243Q(2) was a fundamental flaw. The Court also highlighted its duty to uphold the Constitution, even if the parties do not explicitly raise the relevant provisions.

Logical Reasoning

Key Takeaways

• The State must adhere to the parameters specified in Article 243Q(2) of the Constitution when upgrading a rural area to an urban one.
• The parameters for classifying areas as transitional, smaller urban, or larger urban must be uniform throughout the State.
• Notifications classifying municipalities based solely on population are not sufficient under Article 243Q(2).
• Courts are bound to take note of the Constitution and the laws, even if not explicitly brought to their attention by the parties.
• The absence of a notification under Article 243Q(2) renders the entire exercise of upgrading a Gram Panchayat to a Nagarpalika unconstitutional.

Directions

The Supreme Court did not issue any specific directions but declared the initial notification dated 6 October 2008, as well as the subsequent actions of the State, to be unconstitutional.

Development of Law

The ratio decidendi of this case is that any upgrade of a Gram Panchayat to a municipality must strictly adhere to the parameters specified in Article 243Q(2) of the Constitution. This judgment clarifies that the State cannot arbitrarily upgrade areas without considering all the factors mentioned in Article 243Q(2). This judgment emphasizes the importance of constitutional compliance in the establishment of municipalities and provides a clear interpretation of Article 243Q.

Conclusion

The Supreme Court’s judgment in Champa Lal vs. State of Rajasthan underscores the importance of adhering to constitutional mandates when upgrading rural areas to urban ones. The Court held that the State of Rajasthan failed to follow the procedure as contemplated under Article 243Q of the Constitution of India while upgrading the Gram Panchayat of Napasar village to a Nagar Palika. The judgment clarifies that the State must establish uniform parameters for classifying areas based on population, density, revenue, and employment, among other factors. This decision ensures that such upgrades are based on objective criteria and not arbitrary discretion, thereby upholding the principles of self-governance enshrined in the Constitution.

Category

✓ Constitutional Law
✓ Article 243Q of the Constitution of India
✓ Local Self-Government
✓ Municipalities
✓ Rajasthan Municipalities Act
✓ Article 243Q of the Constitution of India

FAQ

Q: What is Article 243Q of the Constitution of India?
A: Article 243Q of the Constitution of India deals with the constitution of municipalities. It specifies that there shall be Nagar Panchayats for transitional areas, Municipal Councils for smaller urban areas, and Municipal Corporations for larger urban areas. It also mandates that the Governor must specify what constitutes these areas based on factors like population, density, revenue, and employment.

Q: What did the Supreme Court rule in this case?
A: The Supreme Court ruled that the State of Rajasthan’s upgrade of the Napasar village Gram Panchayat to a Nagarpalika was unconstitutional because the State did not follow the procedure as contemplated under Article 243Q of the Constitution of India. The State did not issue a notification specifying the parameters for classifying areas as transitional, smaller urban, or larger urban.

Q: What factors should a State consider when upgrading a rural area to a municipality?
A: According to Article 243Q(2) of the Constitution, a State must consider factors such as the population of the area, the density of the population, the revenue generated for local administration, the percentage of employment in non-agricultural activities, and the economic importance of the area.

Q: What happens if a State does not follow Article 243Q when upgrading a rural area?
A: If a State does not follow the procedure as contemplated under Article 243Q, the upgrade is considered unconstitutional, and any actions taken based on that upgrade are also invalid. This means that the area may revert to its previous status.

Q: What is the significance of this judgment?
A: This judgment clarifies the constitutional requirements for establishing municipalities and ensures that such decisions are based on objective criteria, not arbitrary discretion. It emphasizes the importance of constitutional compliance in the establishment of municipalities and provides a clear interpretation of Article 243Q.