State Legislature Competent To Legislate For Municipalities - SC Upholds Section 5 Of Rajasthan Municipalities Act

The Bench further held that High Court has misread the scope of Part IXA of the Constitution and Article 243Q of the Constitution contemplating that the transitional area has to be notified. In this context, the Bench observed -

"The scheme of the 74th Constitutional Amendment is not to take away legislative competence of the State Legislatures to legislate on the subject of local Government but it is more to ensure that the three tiers of governance are strengthened as part of a democratic setup."

Senior Counsel Dr. Manish Singhvi appeared for the State while Counsel Ms. Pooja appeared for the Respondents before the Apex Court.

An appeal was preferred before the Supreme Court assailing the order of the Rajasthan High Court whereby a notification dated 12.8.2014 declaring Gram Panchayat Roopbas, District Bharatpur as Municipal Board was set aside. The High Court found that no public notification as contemplated under Article 243Q(2) of the Constitution of India has been produced specifying Gram Panchayat Roopbas as a "transitional area" and thus, it cannot be declared as a Municipal Board.

Article 243ZF of the Constitution mandated that any provision of any law relating to Municipalities in force in a State immediately before the commencement of the Constitution (Seventy-fourth Amendment) Act, 1992, which is inconsistent with the provisions of Part IXA shall continue to be in force until amended or repealed by a competent Legislature or any other competent authority or until the expiration of one year from such commencement whichever is earlier.

Hence, in consonance with Part IXA of the Constitution, the State of Rajasthan enacted the Rajasthan Municipalities Act 

Section 5 of the Act provides for the establishment and incorporation of a municipality, Section 2 clause lxv reads:

"a transitional area", "a smaller urban area" or "a larger urban area" means an area specified under Article 243Q of the Constitution of India"

The State while relying on several precedents argued before the Apex Court that the power to declare Municipal Board or a Municipality is a legislative function which is discharged by the State by issuing a notification on behalf of the Hon'ble Governor. The notification issued by the Hon'ble Governor is in fact a notification issued by the State Government. 

Further, it was contended that the provisions of Section 5 of the Municipalities Act are not inconsistent with Article 243Q of the Constitution and thus, Section 5 of the Municipalities Act is a legal and valid provision and the notification has been issued in exercise of the powers conferred by the statute. The High Court has thus erred in law to quash the notification issued.

While the Respondents contended that the notification issued under Section 5 of the Municipalities Act is a legislative function but she contended that firstly there has to be a notification under Article 243Q of the Constitution and only thereafter the Government can issue a notification constituting a Municipal Board under Section 5 of the Municipalities Act.

The Apex Court noted, "Since the local Government falls in entry 5 of List II of the Seventh Schedule, therefore, it is the State Legislature alone which is competent to legislate in respect of the municipalities with only one limitation that the provisions of the State Act cannot be inconsistent with the mandate of the Scheme of Part IXA of the Constitution. The scheme of Part IXA of the Municipalities Act does not contemplate a separate notification under Article 243Q of the Constitution and thereafter under Section 5 of the Municipalities Act. As Section 5 of the Municipalities Act is not inconsistent with any provisions of Article 243Q of the Constitution, therefore, two notifications are not contemplated or warranted under the Scheme of Part IXA or the Municipalities Act."

The Bench while referring to the two notifications issued held that the State Government had the power to establish Municipality in terms of Section 5 of the Municipalities Act and such notifications could not be said to be illegal or arbitrary in any manner and were rightly issued in exercise of the statutory powers conferred on the State by the Legislature.

The Court also held, "In fact, the High Court has struck down the notification only for the reason that the notification under Article 243Q(2) was not published. Such reasoning is not tenable."

Accordingly, the Court set aside the impugned order of the High Court and allowed the appeal.