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The Municipal Corporation, Faridabad v. Modern School, Faridabad & Ors.

Civil Appeal · 2019 INSC 168Decided 8 Feb 2019
Civil Appeal No. 1555 of 2019
Dr. Justice D.Y. Chandrachud · Justice Hemant Gupta

Background

Modern School, Faridabad, installed private tubewells to supplement the Municipal Corporation's inadequate piped water supply and discharged the extracted water into the Corporation's municipal drains. The Municipal Corporation issued notices demanding "user charges" for this discharge, based on the diameter of the tubewells, but the School challenged the charge, arguing it was really a "fee" under the Haryana Municipal Corporation Act that could not be levied without the State Government's prior approval. The Punjab & Haryana High Court agreed with the School and struck down the charges, prompting the Corporation's appeal to the Supreme Court.

Decision Breakdown

The Supreme Court held that the High Court had misdirected itself in treating the demand as a "fee" under Section 88 of the Act requiring State Government approval. It held that the charge was neither a tax under Section 87 nor a fee under Section 88, but a legitimate "user charge" for the Corporation's municipal drainage service used to carry away the waste water extracted by the Schools' tubewells, which was permissible under the Corporation's statutory drainage and water-supply functions (Sections 43, 193-196 and 205 of the Act). Since the Schools had in fact been discharging this water into the municipal drains without separate permission, and the charge was tied to the service used (drain capacity) rather than a tax or regulatory fee, the Court found no illegality and set aside the High Court's judgment, allowing the appeals and dismissing the Schools' writ petitions.

Lesson Learnt

Not every charge imposed by a local body is automatically a "tax" or "fee" requiring special statutory approval: a charge genuinely linked to the cost or capacity of a specific municipal service actually used (like drainage) can be validly levied under the body's general service-providing powers.

Official source (sci.gov.in)View Judgment (PDF)

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