PIL Jurisdiction Cannot Be Invoked To Challenge Government’s Economic Or Fiscal Policy: Supreme Court
The Apex Court held that judicial review in economic matters must remain limited to examining constitutionality and statutory compliance, and public interest litigation cannot be used to question tax policy or fiscal decisions of autonomous municipal bodies.
Justice Vikram Nath, Justice Sandeep Mehta, Supreme Court
The Supreme Court has held that the writ jurisdiction of High Courts cannot be exercised in public interest to question economic or fiscal policy decisions undertaken by the Government or its functionaries.
The Court observed that revision of property tax by municipal authorities falls within the domain of policy determination and is not ordinarily open to interference in a public interest writ petition.
The Court was hearing appeals filed by Akola Municipal Corporation challenging the judgment of the Bombay High Court, which had quashed the Corporation’s resolution revising property tax rates for the period 2017–18 to 2021–22 pursuant to a public interest litigation.
A Bench comprising Justice Vikram Nath and Justice Sandeep Mehta, while stating that “judicial interference by way of public interest litigation is available only if there is injury to public because of dereliction of constitutional obligations on the part of the Government”, further held that “the writ jurisdiction of the High Court cannot be exercised in public interest for questioning the economic/fiscal policy or reforms sought to be undertaken by the Government or its functionaries”.
Senior Advocate Vinay Navare represented the appellants, while Senior Advocate A.I.S. Cheema represented the respondents.
Background
The respondent had filed a public interest writ petition challenging the Corporation’s decision to revise property tax rates and the procedure adopted for assessment. He further alleged arbitrary action and procedural impropriety in the engagement of a private consultant for a geographic property survey and valuation.
The Municipal Corporation defended the revision, submitting that property taxes had remained unchanged since 2001 and the increased burden was necessary to sustain essential civic services, including sanitation, infrastructure and public health. It stressed that the exercise did not alter tax rates but reassessed taxable values based on updated parameters.
The Bombay High Court had allowed the petition and quashed the resolutions revising taxes. The Corporation appealed before the Supreme Court, which had stayed the High Court’s judgment during the pendency of the proceedings.
Court’s Observation
The Supreme Court, upon examining the relevant records, held that municipal corporations are autonomous statutory bodies that perform vital public functions, including urban planning, sanitation, waste management and civic infrastructure, and their financial autonomy is essential to fulfil constitutional obligations owed to citizens.
The Apex Court emphasised that “without the generation of revenue, the municipal bodies cannot be expected to sustain all these functions and perform their statutory obligations”, while stressing that “the cost of all these activities/functions rises with passage of time and hence, revision in the tax structure on a regular basis to match the rising costs is unexceptionable”.
On judicial review of economic policy, the Court relied on the Constitution Bench ruling in Shri Sitaram Sugar Co. Ltd. v. Union of India, holding that courts do not substitute their views in matters involving expert economic evaluation and must only test decisions for rationality and statutory compliance. The Bench reaffirmed that trivial procedural errors cannot invalidate a tax revision exercise undertaken after sixteen years of stagnancy.
The Court further referred to BALCO Employees’ Union v. Union of India to reiterate that courts must exercise restraint in fiscal policymaking, noting: “Wisdom and advisability of economic policies are ordinarily not amenable to judicial review unless it can be demonstrated that the policy is contrary to any statutory provision or the Constitution.” It emphasised that the proper forum to test policy correctness is the legislature and not the court.
Further reliance was placed on Kirloskar Ferrous Industries Ltd. v. Union of India, where this Court held that judicial review of policy decisions is confined to examining legality, procedural propriety and absence of constitutional contravention, while substantive merits are the exclusive domain of policymakers. The Bench stressed that courts lack technical expertise in economic regulation and should presume good faith in such policy unless illegality is demonstrated.
The Court also questioned the bona fides and locus standi of the writ petitioner, who himself was a corporator and had not established that he represented the interests of the public at large. The petition, the Court observed, appeared to be a disguised individual grievance or possibly linked to business rivalry concerning the tendered valuation work. Availability of statutory remedies under Section 406 of the Maharashtra Municipal Corporations Act, 1949, reinforced that PIL was not appropriate.
The Bench found that the High Court failed to identify any lack of authority or demonstrable illegality in the Corporation’s decision and had engaged in a re-appreciation of policy wisdom, thereby exceeding the permissible bounds of judicial review under Article 226. Interference without proof of arbitrariness, perversity or violation of statutory duties was held to be legally impermissible.
“Ex facie, we are of the opinion that the aforesaid exercise was not permissible to be undertaken in the extraordinary writ jurisdiction of the Court, and the decision of the appellant-Corporation regarding economic policies was beyond the scope of the power of judicial review. There is no finding by the High Court that the decision to increase the tax rates was perverse or unconstitutional”, the Apex Court concluded.
Conclusion
The Supreme Court set aside the Bombay High Court’s order and restored the Corporation’s property tax revision. The appeals were accordingly allowed with no order as to costs.
Cause Title: Akola Municipal Corporation & Another v. Zishan Hussain Azhar Hussain & Another (Neutral Citation: 2025 INSC 1398)
Appearances
Appellants: Vinay Navare, Senior Advocate, Suhaskumar Kadam, Advocate, M/S. Black & White Solicitors, AOR
Respondents: Senior Advocate A.I.S. Cheema, with Advocates Kunal Cheema, AOR, Kritika Gakhar, Rushabh Tripathi, Shubham Chandankhede, Aarti Gupta, and Others
