UNION OF INDIA Vs. R C JAIN

JUDGEMENT

(1.) The question for consideration in this appeal is whether the Delhi Development Authority is a 'local authority' whose employees are taken out of the purview of the Payment of Bonus Act, 1965, by Section 32 (iv) of that Act, which provides that nothing in the Act shall apply to employees employed by an establishment engaged in any industry carried on by or under the authority of any Department of the Central Government or State Government or a Local Authority. It appears that for about ten years prior to 1973-74 bonus was paid to the employees of the Delhi Development Authority but it was stopped thereafter on the advice of the Ministry of Law. The employees questioned the stoppage of the payment of bonus by filing Civil Writ Petn. No. 1139/78 in the Delhi High Court. The High Court allowed the writ petition and the Union of India and the Delhi Development Authority have preferred this appeal, after obtaining special leave of this Court under Art. 136 of the Constitution. The expression 'Local Authority' is not defined in the Payment of Bonus Act. One must, therefore, turn to the General Clauses Act to ascertain the meaning of the expression. Section 3 (31) defines Local Authority as follows:

(2.) Let us, therefore, concentrate and confine our attention and enquiry to the definition of 'Local Authority' in Section 3 (31) of the General Clauses Act. A proper and careful scrutiny of the language of Section 3 (31) suggests that an authority, in order to be a local Authority, must be of like nature and character as a Municipal Committee, District Board or Body of Port Commissioners, possessing, therefore, many, if not all, of the distinctive attributes and characteristics of a Municipal Committee, District Board, or Body of Port Commissioners, but, possessing one essential feature, namely, that it is legally entitled to or entrusted by the Government with, the control and management of a municipal or local fund. What then are the distinctive attributes and characteristics, all or many of which a Municipal Committee, District Board or Body of Port Commissioners shares with any other local authority First, the authorities must have separate legal existence as Corporate bodies. They must not be mere Governmental agencies but must be legally independent entities. Next, they must function in a defined area and must ordinarily, wholly or partly, directly or indirectly, be elected by the inhabitants of the area. Next, they must enjoy a certain degree of autonomy, with freedom to decide for themselves questions of policy affecting the area administered by them. The autonomy may not be complete and the degree of the dependence may vary considerably but, an appreciable measure of autonomy there must be. Next. they must be entrusted by Statute with such Governmental functions and duties as are usually entrusted to municipal bodies, such as those connected with providing amenities to the inhabitants of the locality, like health and education services, water and sewerage, town planning and development, roads, markets, transportation, social welfare services Broadly we may say that they may be entrusted with the performance of civic duties and functions which would otherwise be Governmental duties and functions. Finally, they must have the power to raise funds for the furtherance of their activities and the fulfilment of their projects by levying taxes, rates, charges, or fees. This may be in addition to moneys provided by Government or obtained by borrowing or otherwise. What is essential is that control or management of the fund must vest in the authority.

(3.) In Municipal Corporation of Delhi v. Birla Cotton Spinning and Weaving Mills Delhi, (1968) 3 SCR 251 at page No. 288, Hidayatullah, J., described some of the attributes of local bodies in this manner: