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Respondents 1 to 36 are residents of two villages called Ramakrishnapuram and Sriharipuram. Prior to the year 1966, the area comprised in these villages was not included within the municipal limits of the Visakhapatnam Municipality. Most of these respondents own properties situated within the limits of the two villages but they were not assessed to property tax under the Andhra Pradesh (Andhra Area) District Municipalities Act 1920 which was in force until the introduction of the Act. They used to pay taxes to the village Panchayat. .

In exercise of the powers conferred by the corresponding provision of the District Municipalities Act, 1920, namely section 4(1)(c), the Government of Andhra Pradesh declared its intention to include within the limits of Visakhapatnam Municipality the local area comprised in the villages of Ramakrishnapuram and Sriharipuram. The district Municipalities Act, 1920 was repealed by section 391(1) of the Act which, as stated earlier, came into force on April 2, 1965. On March 24, 1966 the Government of Andhra Pradesh acting in the exercise or powers conferred by section 3(3) of the Act issued a notification including within the limits of the Visakhapatnam Municipality the area comprised in the villages of Ramakrishnapuram and Sriharipuram with effect from April 1, 1966.

On January 24, 1971 respondents 1 to 36 filed writ petition 442 of 1971 in the High Court of Andhra Pradesh against the State of Andhra Pradesh and the Visakhapatnam Municipality asking for a declaration that the levy of property tax on their properties for the period prior to October 1, 1970 was illegal. The writ petition was dismissed by a learned Single Judge on the view that it was competent to the municipality, under the District Municipalities Act 1920, to levy property tax on properties situated in the newly included areas from April 1, 1966 to October 1, 1970.

Respondents 1 to 36 filed writ appeal 411 of 1972 against the decision on the Single Judge, which was allowed by a Division Bench of the High Court by its judgment dated June 13, 1972. lt held that the provisions contained in clause 12 of Schedule IX had no application and that it was incompetent to the municipality to impose the property tax on the newly included areas without following the procedure prescribed by sections 81 and 83 of the Act. The correctness of that view is challenged by the Visakhapatnam Municipality in this appeal by special leave. The State of Andhra Pradesh is respondent No. 37 to the appeal.