Revision of property tax by municipal body - Courts can not interfere

Supreme Court Overturns High Court Ruling, Upholds Akola Municipal Corporation's Property Tax Revision Judicial Review Must Not Interfere with Municipal Economic Policies, Says Supreme Court

In a significant ruling, the Supreme Court of India has overturned a previous decision by the Nagpur Bench of the Bombay High Court, which had quashed the Akola Municipal Corporation's revised property tax policy. The Supreme Court, in a judgment delivered on December 8, 2025, emphasized the limitations of judicial review concerning economic policy decisions made by municipal bodies, asserting that such decisions should not be interfered with unless they are arbitrary, perverse, or in violation of statutory provisions.

The case arose when Dr. Zishan Hussain, a corporator and resident of Akola, filed a writ petition in 2018 challenging the municipal corporation's decision to revise property taxes, a move that had not been undertaken for nearly 16 years. The High Court had previously quashed the revision on procedural grounds, but the Supreme Court found this intervention to be an overreach of judicial authority.

In their judgment, Justices Vikram Nath and Sandeep Mehta clarified that economic policy decisions, including tax revisions, fall within the purview of municipal bodies. The court underscored the necessity for financial autonomy of municipal corporations to fulfill their statutory obligations effectively. The stagnation of tax rates, they noted, adversely impacts the ability of municipal bodies to deliver essential public services.

The Supreme Court criticized the High Court for entertaining a Public Interest Litigation (PIL) without proper locus standi, highlighting that such PILs should not be used as substitutes for statutory remedies or to bypass procedural requirements. The court also stressed that judicial interference in economic policies is warranted only when there is a violation of constitutional provisions or statutory limits.

The ruling emphasized that the Akola Municipal Corporation's decision to revise property taxes was justified, given the significant lapse since the last revision and the rising costs of maintaining public infrastructure and services. The court also pointed out that the High Court had erred in substituting its judgment for that of the municipal corporation, which is an autonomous body with the authority to make such decisions.

The Supreme Court's decision reaffirms the principle that courts should exercise restraint in matters of economic policy unless there is a clear legal or constitutional breach. This ruling is expected to have broader implications for similar cases involving municipal governance and economic policy decisions across India.

Bottom Line:

Judicial review should not interfere with the economic policy decisions of municipal bodies unless they are shown to be arbitrary, perverse, or in violation of statutory provisions.

Statutory provision(s):  

• - Maharashtra Municipal Corporations Act, 1949  
• - Article 226 of the Constitution of India  
• - Judicial review principles

Akola Municipal Corporation v. Zishan Hussain Azhar Hussain, (SC) : Law Finder Doc Id # 2819375