in Saij Gram Panchayat vs. State of Gujarat and others, 1999 (2) SCC 366, where this Court had occasion to consider the proviso to Article 243-Q sub-clause (1) in the context of Gujarat Industrial Development Act, 1962. After insertion of Part IX-A in the Constitution, the Gujarat Municipalities Act, 1962 was also amended by adding Section 264-A. It was provided under Section 264-A that notified area means an urban area or part thereof specified to be an industrial township area under the proviso to Article 243-Q(1) of the Constitution of India. Paragraphs 10 and 11 of the judgment are extracted below: "10. The Gujarat Municipalities Act, 1962 was amended on 20-8-1993 in view of the insertion of Part IX-A in the Constitution. Section 264-A was substantially amended. It now provided: “264-A. For the purpose of this chapter, notified area means an urban area or part thereof specified to be an industrial township area under the proviso to clause (1) to Article 243-Q of the Constitution of India.” Thus, as a result of this amendment in the Gujarat Municipalities Act, as industrial area under the Gujarat Industiral Development Act, which is notified under Section 16 of the Gujarat Industrial Development Act, would become a notified area under the new Section 264-A of the Gujarat Municipalities Act and would mean an industrial township area under the proviso to clause(1) of Article 243-Q of the Constitution of India. 11. On 7-9-1993, the Government of Gujarat issued a notification under Section 16 of the Gujarat Industrial Development Act declaring Kalol Industrial Area as a notified area under Section 264-A of the Gujarat Municipalities Act. By another notification of the same date 7-9-1993, the Government of Gujarat excluded the notified area from Saij Gram Panchayat under Section 9(2) of the Gujarat Panchayats Act, 1961.” Thus, for treating industrial area as industrial township notification under proviso to Article 243-Q(1) was contemplated which is also the statutory scheme under the 1976 Act. 17. In view of the aforegoing discussion, we are of the view that it was rightly held by the High Court that exemption under Article 12-A of the 1976 Act was not available in the facts of the above case. The appellants were not entitled for the reliefs claimed in the writ petition. In the result, the appeal is dismissed.

                                                                  REPORTABLE
                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                       CIVIL APPEAL NO. 1362  OF 2017
                   (arising out of SLP(C)No.25529 of 2014)

MGR INDUSTRIES ASSOCIATION AND ANR.      … APPELLANTS

                                   VERSUS

STATE OF U.P. AND ORS.                  … RESPONDENTS




                               J U D G M E N T


ASHOK BHUSHAN, J.

      Leave granted.

2.    This appeal has been filed against the judgment and order  dated  17th
July, 2014 of High Court of Judicature at Allahabad by which judgment  Civil
Misc.Writ (Tax) No.447 of 2014 filed by the appellants has been dismissed.

3.    The brief facts of the case are:
      Appellant No.1 is  an  Industries  Association  registered  under  the
Societies  Registration  Act,  1860  whose   members   are   running   small
industries. Zila Panchayat, Hapur initiated proceedings for  realisation  of
tax for members of the appellant -Association which was objected  to  and  a
representation was submitted to  the  District  Magistrate.  Appellant  also
represented the  matter  to  the  Upper  Mukhya  Adhikari,  Zila  Panchayat,
Bulandshehar and filed a Civil Misc. Writ Petition (Tax) No.4 of 2013  which
was disposed of by the Allahabad High Court  by  order  dated  6th  January,
2014,  directing  the  State  Government   to   consider   the   appellant's
representation. The representation submitted by the appellant  was  rejected
by the Principal Secretary, Panchayat Raj vide its order dated  23rd   June,
2014. The State Government held that although the area has been declared  as
industrial area under U.P. Indusrial Area  Development  Act,  1976   but  no
notification having been issued as industrial township  within  the  meaning
of   Article 243-Q(1) proviso of the Constitution, the Zila  Panchayat/Nagar
Panchayat is entitled to realise tax and appellants cannot  claim  exemption
from taxation by local authority.  Aggrieved  by  the  order  of  the  State
Government, appellants filed  a  Civil  Misc.  Writ  (Tax)  No.447  of  2014
claiming the following reliefs:
"A.   Call for the records of the case; and issue writ, order  or  direction
in the nature of certiorari quashing the order  dated  23-6-2014  passed  by
respondent No.1 (Annexure 8 to this writ petition).

B.    Issue writ, order or direction in the  nature  of  mandamus  directing
the respondent Nos.2, 3 and 4 not to realise any taxes from the  members  of
petitioner No.1 (as mentioned in paragraph No.10 of the  writ  petition  and
other members of petitioner No.1).

C.    Issue any other writ, order or direction the Hon'ble Court deems  just
and proper on the facts and circumstances of the case.

D.    Award cost of this petition to the petitioner.”


4.    The writ petition was heard  by  the  High  Court  and  the  same  was
dismissed by its judgment dated 17th July, 2014. The Division Bench  of  the
High Court relying on an earlier Division Bench judgment in Rishipal &  Ors.
vs. State of U.P. & Ors., 2006 (1) AWC 426,  dismissed  the  writ  petition.
The Division Bench also held that the  area  having  not  been  declared  as
industrial township, exemption as sought to be  claimed  by  the  appellants
under Section 12-A of 1976 Act is misconceived. Aggrieved  by  the  judgment
of the High Court, the appellants have filed this appeal.
5.    We have heard Ms. Meenakshi Arora,  learned  senior  counsel  for  the
appellants, Mr. Aviral Saxena has appeared on behalf of respondent No.5.  We
have also heard learned  counsel appearing for the State of U.P.

6.    Learned counsel for the  appellant  contends  that  area  in  question
having been declared as industrial area by  issuing   a  notification  dated
5th September, 2001  in  exercise  of  power  under  Section  2(d)  of  U.P.
Indusrial Area Development Act,  1976  (hereinafter  referred  to  as  '1976
Act').  The  appellants  are  entitled  for  the  benefit  of  exemption  as
contemplated by Section 12-A of the 1976 Act and by virtue of  Section  12-A
no Panchayat is to be  constituted  for  the  said  area.  Hence,  the  Zila
Panchayat is not entitled  to  realise  any  tax  under  the  Uttar  Pradesh
Kshetra Panchayat and Zila Panchayat Adhiniyam, 1961.
7.    The Authority constituted under  the  1976  Act  fully  satisfied  the
condition  under  Section  12-A  of  the  1976  Act,  hence,  there  is   no
requirement of  issue  of  any  separate  notification  as  contemplated  by
Article 243-Q of the Constitution  of  India.  It  is  submitted  that  once
industries have been set up under the notified industrial  development  area
and taxes under Section 11 of the 1976 Act are levied,  the  industries  are
exempted from liability of any tax under 1976 Act  and  the  appellants  are
put on double jeopardy.
8.    Learned  counsel  appearing  for  the  State  of  U.P.  refuting   the
submission of learned counsel for the appellants contended  that  the  State
Government by its detailed order dated 23rd June, 2014  after  referring  to
all relevant provisions  of  1976  Act  has  found  that  unless  industrial
township is notified the provisions of Section 12-A are  not  attracted.  It
has been stated by the State that no  notification  notifying  the  area  as
industrial township has yet been issued. Learned counsel appearing  for  the
U.P. State Industrial Development  Corporation  submits  that  in  the  writ
petition  the  appellants  have  only  prayed   for   mandamus   restraining
respondent Nos.2 to 4 from realising any tax. No relief having been  claimed
against respondent No.5 the writ petition has rightly been dismissed by  the
High Court.

9.    We have considered the submission made by the learned counsel for  the
parties and perused the records.
10.   The U.P. Industrial Area Development Act, 1976  has  been  enacted  to
provide for the constitution of an authority for the development of  certain
area in the  State  into  industrial  township  and  for  matters  connected
therewith. Section 2 sub-section (d)  defines  industrial  development  area
which is to the following effect:
“Section 2(d)- “industrial development area” means an area declared as  such
by the State Government by notification.”

11.    Under  Section  3,  the  State  Government,  by   notification,   can
constitute an Authority to be called Industrial  Development  Authority  for
industrial development area.  By  notification  dated  5th  September,  2001
which is in exercise of power under Section 2(d) of the  1976  Act,  various
areas as mentioned in the Schedule were declared as  industrial  development
areas. There is no dispute that  area  in  question  has  been  declared  as
industrial development area. The claim which  has  been  laid  in  the  writ
petition before the High Court by the  appellants  was  for  exemption  from
taxation by Zila Panchayat, Hapur under Section 12-A. Section 12-A  of  1976
Act which has been added by U.P. Act 4 of 2001 is as under:
"Section  12-A.  NO  panchayat  for  industrial  township.-  Notwithstanding
anything contained to  the  contrary  inany  Uttar  Pradesh  Act,  where  an
industrial development area or any  part  thereof  is  specified  to  be  an
industrial township under the proviso to clause (1) of Article 243-Q of  the
Constitution, such industrial development area or part thereof, if  included
in a Panchayat area, shall, with effect from the date of  notification  made
under the said proviso, stand excluded  from  such  Panchayat  area  and  no
Panchayat shall be constituted for such industrial developmentarea  or  part
thereof under the United Provinces Panchayat Raj  Act,  1947  or  the  Uttar
Pradesh Kshettra Panchayats and Zila  Panchayats  Adhiniyam,  1961,  as  the
case may be, and may Panchayat constituted for such  industrial  development
area or part thereof before the date of such  notification  shall  cease  to
exist.”

1

12.   Zila Panchayat, Hapur against whom reliefs have been  claimed  by  the
appellants, is Zila Panchayat constituted under the  Uttar  Pradesh  Kshetra
Panchayats and Zila Panchayats Adhiniyam,  1961  as  amended  from  time  to
time.

13.   Part IX A was inserted by the Constitution (Seventy-fourth  Amendment)
Act, 1992. Article  243-Q is contained in Part  IX  A  of  the  Constitution
dealing with Municipalities which provides as follows:

“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.”


14.   Article 243-Q mandates constitution of a municipality in every  State,
constitution  of  Nagar   Panchayat,   Municipal   Council   and   Municipal
Corporation in every State respectively for a transitional area,  a  smaller
urban area and a larger urban area respectively.  The  provisio  to  Article
243-Q(1) contemplates a circumstance where a Municipality under Article 243-
Q(1) may not be constituted in an urban area  or  part  thereof,  when  such
area  is  specified  by  a  notification  having  regard  to  the  following
circumstances:
 "(i) Having regard to the size of the area,

(ii)  Municipal services being provided or proposed to be provided  in  that
area, and

(iii) such other factors as may deem fit.”

Thus, exemption from non-constitution  of  Municipality  is  dependent  upon
consideration of aforesaid factors and a public notification thereof.
15.   Section 12-A has been inserted in the 1976  Act   in  consonance  with
proviso to  Article  243-Q(1).   Section  12-A  specifically  provides  that
“....where  an industrial development area or any part thereof is  specified
to be an industrial township under the proviso to clause (1) of Article 243-
Q of the Constitution, such industrial development area or part thereof,  if
included  in  a  Panchayat  area,  shall,  with  effect  from  the  date  of
notification  made  under  the  said  proviso,  stand  excluded  from   such
Panchayat area and no Panchayat shall be  constituted  for  such  industrial
development area or part thereof.......”. Section  12-A  thus,  specifically
contemplates issuance  of  notification  under  proviso  to  clause  (1)  of
Article 243-Q and exclusion from Panchayat area is consequent and  dependent
upon such  notification.  Notification   under  proviso  to  clause  (1)  of
Article 243-Q has to be subsequent to declaration of an area as   industrial
development area, which itself indicates  that  declaration  of  development
area under 1976 Act is not sufficient to treat  an  area  as  an  industrial
township. As noted above, industrial township  as  contemplated  by  Article
243-Q(1)  proviso  has  to  be  specifically  a  public  notification  after
consideration  of  relevant  statutory  ingredients  referred  therein.  The
exclusion of industrial  development  area  from  Panchayat  has  a  serious
consequence since persons residing within the  industrial  development  area
are immediately deprived of facilities and benefits extended to them by  the
respective Panchayats. The deprivation of the said benefits has to  be  thus
a conscious decision in accordance with condition as  contained  in  Article
243-Q. In the case before us, it has not been pleaded that any  notification
referable to proviso to Article 243(Q)(1) has yet been issued. The  Division
Bench of the High Court has also referred to  and  relied  upon  an  earlier
judgment of the Allahabad High Court  in  Rishipal  (supra).  In  the  above
case, the appellants who  were  residents  of  industrial  development  area
prayed for direction that no election for constituting Panchayat in  various
villages including the said industrial development area  should  be  allowed
since, notification under Section 2(d) of the  1976  Act  has  already  been
issued on 11th July, 1989. The State Government  categorically  stated  that
no notification under proviso to  Article  243-Q(1)  has  been  issued.  The
Division Bench of the High Court referring to Section 12-A has rejected  the
contention and  dismissed  the  writ  petition.  In  paragraphs  6,7  and  8
following was stated:

“6. From a plain reading of Section 12A of the Act it is  clear  that  after
declaration of any industrial development area u/s. 2  (d)  of  the Act  two
things are required for excluding them from existing panchayat  area.  First
is, specification to be an industrial township and secondly  a  notification
under Proviso to Article 243Q of the Constitution of India.



7. From Section 12A it further reveals that if the said area is included  in
panchayat area, such area with effect from the  date  of  notification  made
under  proviso  (proviso  to  Article  243Q)  stands  excluded   from   such
panchayat. Thus, specification to be an industrial township  as  well  as  a
notification under proviso to  Article  243Q  are  condition  precedent  for
excluding from any panchayat area. There is nothing on the  record  to  come
to conclusion that the area in question has been specified as an  industrial
township. Further no notification, as stated by Chief Standing Counsel,  has
been issued under proviso to Article 243Q by the  State  Government,  hence,
question of exclusion of the area from panchayat area does not arise.

8. Merely because the villages in question are covered u/s. 2 (d)  does  not
ipso fActo exclude them from panchayat area. As noted above neither  it  has
been specified as Industrial Township nor a notification under Article  243Q
has been issued. The relief claimed by  the  writ  petitioner  in  the  writ
petition cannot be granted.”







16.   It shall also be relevant to refer the judgment of this Court in  Saij
Gram Panchayat vs. State of Gujarat and others,  1999  (2)  SCC  366,  where
this Court had occasion to consider the proviso to Article 243-Q  sub-clause
(1) in the context  of  Gujarat  Industrial  Development  Act,  1962.  After
insertion of Part IX-A in the Constitution, the Gujarat Municipalities  Act,
1962  was also amended by  adding  Section  264-A.  It  was  provided  under
Section 264-A that notified  area  means  an  urban  area  or  part  thereof
specified to be an industrial township area under  the  proviso  to  Article
243-Q(1) of the  Constitution  of  India.   Paragraphs  10  and  11  of  the
judgment are extracted below:
"10. The Gujarat Municipalities Act, 1962 was amended on 20-8-1993  in  view
of the insertion of  Part  IX-A  in  the  Constitution.  Section  264-A  was
substantially amended. It now provided:

      “264-A. For the purpose of this chapter, notified area means an  urban
area or part thereof specified to be an industrial township area  under  the
proviso to clause (1) to Article 243-Q of the Constitution of India.”

Thus, as a result of this amendment in the Gujarat  Municipalities  Act,  as
industrial area under the  Gujarat  Industiral  Development  Act,  which  is
notified under Section 16 of the Gujarat Industrial Development  Act,  would
become  a  notified  area  under  the  new  Section  264-A  of  the  Gujarat
Municipalities Act and would mean an  industrial  township  area  under  the
proviso to clause(1) of Article 243-Q of the Constitution of India.

11. On 7-9-1993, the Government  of  Gujarat  issued  a  notification  under
Section 16  of  the  Gujarat  Industrial  Development  Act  declaring  Kalol
Industrial Area as a notified  area  under  Section  264-A  of  the  Gujarat
Municipalities Act. By another notification of the same date  7-9-1993,  the
Government of Gujarat excluded the notified area from  Saij  Gram  Panchayat
under Section 9(2) of the Gujarat Panchayats Act, 1961.”

Thus, for treating  industrial  area  as  industrial  township  notification
under proviso to  Article  243-Q(1)  was  contemplated  which  is  also  the
statutory scheme under the 1976 Act.

17.   In view of the aforegoing discussion, we are of the view that  it  was
rightly held by the High Court that exemption  under  Article  12-A  of  the
1976 Act was not available in the facts of the above  case.  The  appellants
were not entitled for the reliefs claimed  in  the  writ  petition.  In  the
result, the appeal is dismissed.



                                                          ……………………………………………J
                                    [Ranjan Gogoi]



                                                          ……………………………………………J
                                             [Ashok Bhushan]
New Delhi
February 03, 2017.