The Supreme Court on Monday made it clear that the writ jurisdiction of high courts cannot be invoked to challenge economic or fiscal policy decisions of the government or its authorities in the guise of public interest litigation.
A bench of Justices Vikram Nath and Sandeep Mehta set aside two orders passed by the Nagpur bench of the Bombay High Court that had quashed the Akola Municipal Corporation’s decision to revise property tax rates after a gap of 16 years. The corporation had passed resolutions in April and August 2017 determining the manner of imposing property taxes for the five-year period from 2017–18 to 2021–22, resulting in an increase of around 40 percent.
The bench observed that judicial interference through PIL is permissible only where the public suffers injury due to dereliction of constitutional duties by the government. It held that the high court overstepped the limits of judicial review by interfering with an economic policy decision without establishing that the tax revision was unconstitutional, perverse, or arbitrary.
The judges said the public interest litigation did not challenge the corporation’s authority to revise taxes but only questioned the procedure. They added that the high court ought not to have embarked on a “roving inquiry” into the wisdom or merits of revising tax rates in the absence of evidence showing perversity or violation of statutory provisions.
The Supreme Court also noted that keeping property tax stagnant for nearly 16 years placed the municipal body under a statutory obligation to revise the rates, remarking that regular revisions might have prevented a sudden cumulative hike. It emphasized that property tax remains a primary source of revenue for municipal corporations to carry out welfare and development responsibilities.
Setting aside both orders of the high court, the bench concluded that the economic policy decision of the Akola Municipal Corporation fell outside the scope of interference under writ jurisdiction.
