Introduction:

The matter came before the Gujarat High Court in a batch of writ petitions filed under Article 226 of the Constitution of India by Diya Ads Pvt. Ltd. and another, along with similarly placed petitioners, challenging the legality and validity of an order dated 21 January 2025 passed by the Joint Secretary, Urban Development and Urban Housing Department, State of Gujarat. The impugned order had been issued in exercise of powers under Section 451 of the Bombay Provincial Municipal Corporation Act, 1949, whereby three resolutions passed by the Ahmedabad Municipal Corporation relating to waiver of late payment charges under its advertisement policy were suspended. The petitioners, who are advertisers and advertising agencies operating under the policy framework of the Corporation, approached the High Court seeking quashing of the said order on grounds of lack of jurisdiction, violation of principles of natural justice, and non-application of mind. The case raised significant questions regarding the scope of supervisory powers of the State Government over municipal bodies, the authority of the Municipal Commissioner in referring matters to the State, and the procedural safeguards required while exercising statutory powers affecting civil and commercial rights. Justice Niral M. Mehta, while hearing the matter, examined the legality of both the reference made by the Municipal Commissioner and the subsequent action taken by the State Government, ultimately granting interim relief and making strong prima facie observations against the actions of both authorities.

Arguments on behalf of the Petitioners:

The petitioners, represented by their counsel, contended that the impugned order passed by the State Government was arbitrary, illegal, and unsustainable in law. It was argued that the resolutions passed by the Ahmedabad Municipal Corporation regarding waiver of late payment charges were within the competence of the Corporation and did not warrant interference by the State Government under Section 451 of the Bombay Provincial Municipal Corporation Act, 1949. The petitioners submitted that the Municipal Commissioner had improperly referred the resolutions to the State Government without any statutory basis, effectively treating the State as an approving authority, which is not contemplated under the Act. It was further argued that the State Government, in turn, acted mechanically and without independent application of mind in suspending the resolutions. The petitioners emphasized that the impugned order was passed without affording them an opportunity of being heard, thereby violating the principles of natural justice. It was submitted that the order lacked any reasoning or analysis and was based solely on the communication sent by the Municipal Commissioner, which itself was without jurisdiction. The petitioners also pointed out that no response or affidavit had been filed by the respondents before the Court to justify their actions, indicating the absence of any substantive defense. The counsel argued that the power under Section 451 is supervisory in nature and can be exercised only when the State Government forms an opinion that the resolution is contrary to law or likely to cause public harm. In the present case, it was contended, no such circumstances existed, and the invocation of Section 451 was wholly unjustified. The petitioners therefore sought interim relief by way of stay of the impugned order and a direction restraining the Corporation from taking coercive steps against them pending adjudication of the matter.

Arguments on behalf of the Respondents (State and Corporation):

The State Government, through its counsel, sought to justify the impugned order by relying on Section 451 of the Bombay Provincial Municipal Corporation Act, 1949, which empowers the State to suspend resolutions or actions of municipal authorities in certain circumstances. It was submitted that the Municipal Commissioner had addressed a communication to the State Government regarding the resolutions, and that the decision to suspend them was taken upon consideration of this communication. However, the State’s counsel candidly acknowledged before the Court that the official exercising the power under Section 451 is required to apply his own mind independently, and that such application of mind was not clearly reflected in the impugned order. The counsel requested the Court to permit the State to file a detailed reply to place on record the relevant considerations and justify the exercise of power. On behalf of the Ahmedabad Municipal Corporation, the counsel referred to the correspondence by which the matter was referred to the State Government. It was submitted that the resolutions in question pertained to waiver of late payment charges under the advertisement policy, subject to the condition that outstanding dues be cleared by a specified date. The Corporation’s counsel pointed out that the petitioners had failed to comply with this condition, which led to the matter being escalated to the State Government and the subsequent suspension of the resolutions. While the Corporation did not oppose the grant of interim relief in the form of stay of the State Government’s order, it opposed the petitioners’ request for a blanket restraint against coercive action, arguing that such relief would adversely affect the Corporation’s ability to enforce its policies and recover dues.

Court’s Judgment:

The Gujarat High Court, after hearing the submissions and examining the material on record, expressed strong prima facie disapproval of the actions of both the Municipal Commissioner and the State Government. Justice Niral M. Mehta observed that the Municipal Commissioner appeared to have referred the resolutions to the State Government as if seeking approval or sanction, which is not contemplated under the statutory framework of the Bombay Provincial Municipal Corporation Act, 1949. The Court questioned the authority under which such a reference was made and indicated that the Commissioner could not abdicate his statutory responsibilities by routinely forwarding resolutions to the State. The Court further observed that the State Government, in exercising its powers under Section 451, had acted in a mechanical manner without proper application of mind and without adhering to the principles of natural justice. The absence of reasons in the impugned order and the lack of any indication of independent consideration were noted as serious deficiencies. The Court emphasized that the power under Section 451 is supervisory and must be exercised with caution, only in circumstances where the resolution is illegal or likely to cause public harm. The Court also highlighted that the exercise of such power without giving affected parties an opportunity of hearing is contrary to established legal principles. In light of these observations, the Court granted ad-interim relief by staying the operation of the State Government’s order suspending the resolutions. The Court directed the Municipal Commissioner, Ahmedabad, to file a personal affidavit explaining the circumstances under which the resolutions were referred to the State Government, including details of similar instances, if any. The Court also permitted the State Government to file its response to clarify the basis of its decision and demonstrate application of mind. The matter was listed for further hearing on April 6, with the Court indicating that it would undertake a more detailed examination upon receipt of the affidavits. The judgment reflects a firm stance against arbitrary exercise of statutory powers and underscores the importance of accountability and adherence to due process in administrative decision-making.