Limits of Article 226 Jurisdiction in Economic Policy

Source: Supreme Court

Why in News? 

The bench of Justices Vikram Nath and Sandeep Mehta in Akola Municipal Corporation and Anr. v. Zishan Hussain Azhar Hussain and Anr. (2025) clarified the limits of Article 226 jurisdiction in reviewing municipal tax policy decisions, holding that writ courts cannot substitute their judgment for that of municipal bodies on economic matters unless there is clear illegality or constitutional violation. 

What was the Background of Akola Municipal Corporation and Anr. v. Zishan Hussain Azhar Hussain and Anr. (2025) Case? 

Initial Writ Petition: 

• Dr. Zishan Hussain, a corporator of Akola Municipal Corporation, filed a Public Interest Litigation under Article 226 of the Constitution in 2018 challenging the revision of property tax for years 2017-18 to 2021-22. 
• The petitioner invoked the writ jurisdiction claiming the tax revision was illegal, contrary to law, and done without following due process. 
• The petitioner sought writs of mandamus to declare the tax revision illegal and quash the Corporation's resolution. 

Corporation's Position: 

• Akola Municipal Corporation had not revised property tax rates since 2001, when it was upgraded from Municipal Council to Municipal Corporation. 
• Property tax being the main revenue source, the Corporation found it necessary to re-assess taxable values for 2015-16 to 2020-21 to strengthen tax recovery systems. 
• In 2015-16, the Corporation initiated a comprehensive door-to-door survey of approximately 1,50,000 properties within its jurisdiction through technical consultants. 
• The Corporation passed a resolution on April 3, 2017 (modified on August 19, 2017) determining the mode and manner of property tax imposition for five years (2017-18 to 2021-22). 

High Court's Exercise of Article 226 Powers: 

• The Bombay High Court exercised its writ jurisdiction under Article 226 to quash the Corporation's resolution through its judgment dated October 9, 2019. 
• The High Court found procedural irregularities in the tax revision process and interfered with the Corporation's economic policy decision. 
• A review petition filed by the Corporation was dismissed on January 24, 2020. 
• The Supreme Court stayed the High Court's order on October 13, 2020, allowing the Corporation to implement the revised tax structure.

What were the Court's Observations? 

Questionable Locus Standi and Misuse of PIL: 

• The Supreme Court noted the petitioner's locus was questionable as he did not claim to represent Akola's populace. Being a corporator himself, the petition appeared to raise individual grievances under the garb of PIL.  

Improper Exercise of Article 226 Jurisdiction: 

• The Court held that the High Court was not justified in invoking Article 226 powers to interfere in the Corporation's economic policy decision. 
•  The extraordinary writ jurisdiction should not be used to conduct roving inquiries into policy merits or wisdom.  
• The High Court exceeded well-settled tenets by substituting its opinion for the Corporation's when tax revision fell squarely within the Corporation's domain. 

Precedents on Article 226 Limitations: 

• The Court cited Shri Sitaram Sugar Co. Ltd. v. Union of India (1990), emphasizing that Article 226 judicial review is not concerned with economic policy matters.  
• BALCO Employees' Union v. Union of India (2002) held that Article 226 writ jurisdiction through PIL is available only for dereliction of constitutional obligations, not questioning economic policies.  
• Kirloskar Ferrous Industries Ltd. v. Union of India (2025) reinforced that Article 226 powers should assess legality of process, not re-evaluate policy wisdom. 

Limited Scope of Review: 

• The respondent's counter affidavit admitted the PIL did not challenge the Corporation's authority to revise taxes but only the procedure adopted.  
• Since substantive authority was unchallenged, Article 226 scrutiny should have been limited to examining statutory compliance.  
• Article 226 powers cannot be invoked for roving inquiries unless the procedure was demonstrably arbitrary or violated statutory provisions—no such material was demonstrated. 

Supreme Court's Directions: 

• The Supreme Court set aside the High Court's judgment dated October 9, 2019, and review order dated January 24, 2020, as unsustainable in law. 
• The appeals were allowed with no order as to costs. 

What is Article 226 of the COI?  

• Article 226 is enshrined under Part V of the Constitution which puts power in the hand of the High Court to issue the writs. 
• Article 226(1) of the COI states that every High Court shall have powers to issue orders or writs including habeas corpus, mandamus, prohibition, quo warranto, and certiorari, to any person or any government for the enforcement of fundamental rights and for other purpose. 
• Article 226(2) states that the High Court has the power to issue writs or orders to any person, or government, or authority -  
  • Located within its jurisdiction or 
  • Outside its local jurisdiction if the circumstances of the cause of action arise either wholly or partly within its territorial jurisdiction. 
• Article 226(3) states that when an interim order is passed by a High Court by way of injunction, stay, or by other means against a party then that party may apply to the court for the vacation of such an order and such an application should be disposed of by the court within the period of two weeks.  
• Article 226(4) says that the power granted by this article to a high court should not diminish the authority granted to the Supreme Court by Clause (2) of Article 32. 
• This Article can be issued against any person or authority, including the government. 
• This is merely a constitutional right and not a fundamental right and cannot be suspended even during an emergency. 
• Article 226 is of mandatory nature in case of fundamental rights and discretionary nature when it is issued for “any other purpose”. 
•  It enforces not only fundamental rights, but also other legal rights