State competent to divide municipalities into classes based on income, population: Supreme Court

The Supreme Court on Thursday reiterated that State governments are competent to legislate in respect of municipalities as long as the same is not inconsistent with Part IX-A of the Constitution [State of Rajasthan v. Ashok Khetoliya and Anr]..A Bench of Justices Hemant Gupta and V Ramasubramanian held that States are competent to divide municipalities into classes according to their income or other factors like population or importance of the local area and other circumstances.In the context of the 73rd amendment that provides for powers and recognition to local bodies, the Bench stated that,"The scheme of the 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 democratic set up."In the present case, the Court held that the State of Rajasthan had legally and rightly exercised its powers conferred under Section 5 (establishment and incorporation of Municipality) of the Rajasthan Municipalities Act to establish a municipal board in the Gram Panchayat of Roopbas in Bharatpur district.The Court was heaing an appeal against a decision of the Rajasthan High Court which had said that Roopbas cannot be declared a municipal board as no public notification was issued under Article 243Q(2) of the Constitution specifying the region as a “transitional area”.Counsel for the State submitted that the High Court had erred in law by quashing the notification for Roopbas as a municipality board, as the same was issued on the basis of statutory powers. Counsel for the respondents argued that while the State is competent to classify local bodies, it must issue a notification under Article 243Q as well, which was not the case here. .The Supreme Court observed that 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 [of the State Governments] are not contemplated or warranted under the Scheme of Part IXA or the Municipalities Act," the Court said..The Bench further said that the Rajasthan High Court had “misread the scope of Part IXA of the Constitution and Article 243Q of the Constitution contemplating that the transitional area has to be notified under such provision.”The State's notifications were not illegal or arbitrary in any manner and were in exercise of statutory powers, for it is the State governments alone that are competent to legislate in respect of municipalities as the local government falls in entry 5 of List II of the Seventh Schedule, the Bench noted while setting aside the High Court order..Senior Counsel Dr Manish Singhvi appeared for the State of Rajasthan. Advocate Yadav appeared for the respondents..[Read Judgment]