Gujarat High Court
Govindbhai V Makwana - Accountant & 107 ... vs State Of Gujarat & 3 Others on 5 September, 2014
Author: Bhaskar Bhattacharya
Bench: Bhaskar Bhattacharya, J.B.Pardiwala
C/SCA/12112/2013 CAV JUDGMENT
SCA121122013Cj5.doc gb
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 12112 of 2013
WITH
CIVIL APPLICATION NO. 7498 of 2014
FOR APPROVAL AND SIGNATURE:
HONOURABLE THE CHIEF JUSTICE
MR. BHASKAR BHATTACHARYA
HONOURABLE MR.JUSTICE
J.B.PARDIWALA
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1 Whether Reporters of Local Papers may be allowed
to see the judgment?
2 To be referred to the Reporter or not? `
3 Whether their Lordships wish to see the fair copy
of the judgment?
4 Whether this case involves a substantial question
of law as to the interpretation of the constitution of
India, 1950 or any order made there under?
5 Whether it is to be circulated to the civil judge?
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GOVINDBHAI V MAKWANA - ACCOUNTANT & 107 OTHERS
Versus
STATE OF GUJARAT & 3 OTHERS
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Appearance:
MR YATIN OZA, SR. ADVOCATE with MR. ASHISH B DESAI, ADVOCATE for the
Petitioners.
MR KAMAL TRIVEDI, ADVOCATE GENERAL with MS. S.K. VISHEN ASST.
GOVERNMENT PLEADER for the Respondents No. 1 - 2
MR P P MAJMUDAR with MR SP MAJMUDAR, ADVOCATE for the Respondent
Page 1 of 96
C/SCA/12112/2013 CAV JUDGMENT
No. 4
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CORAM: HONOURABLE THE CHIEF JUSTICE MR.
BHASKAR BHATTACHARYA
and
HONOURABLE MR.JUSTICE J.B.PARDIWALA
Date : 05/09/2014
CAV JUDGMENT
(PER : HONOURABLE THE CHIEF JUSTICE MR. BHASKAR BHATTACHARYA)
1. By filing this Special Civil Application, the employees of Limbdi Nagarpalika, Limbdi, Dist. Surendranagar has prayed for the following reliefs.
"7(B) Your Lordships may be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction quashing and setting aside the impugned order dated 21.6.2013 which is at Annexure-A to this petition and all consequential orders and further be pleased to restore to the employees of the Limbdi Nagar Palika the salary in the pay scale recommended by the Fifth Pay Commission.
1.1 Subsequently, by filing a draft amendment, the petitioners have made the following further prayers.
"7(BB) Your Lordships may be pleased to declare circular No. PGR/122009/1127/R dated 16.09.2010 and No. PGR/1098/83/R dated 2.6.1998 which are at Annexure:-W collectively, ultra vires the mandate of part 9 and Part 9A of the Constitution of Page 2 of 96 C/SCA/12112/2013 CAV JUDGMENT India, so also ultra vires the mandate of Article 14 and 16 of the Constitution of India."
7(BC):- Pending the hearing and final disposal of the present petition, Your Lordships may be pleased to stay the implementation, execution and operation of the Circular No. PGR/122009/1127/R dated 16.09.2010 and No. PGR/1098/83/R dated 2.6.1998 which are at Annexure:-W collectively Amendment carried out as per court's order dated 15.12.2013.
"7(BD) Your Lordships may be pleased to declare and 260 of Gujarat Municipalities Act 1963 are ultra vires the mandate of article 243 Y and 243 ZF of the Constitution of India, so also ultra vires the mandate of articles 14 and 16 of the Constitution of India.
"7 (BE) Pending the hearing and final disposal of the present petition, Your Lordships may be pleased to stay the implementation, execution and operation and enforcement of sections 257, 258 and 260 of the Gujarat Municipalities Act, 1963.
1.2 During the course of hearing, the petitioners have filed a Civil Application, being C.A. No. 7498 of 2014, and prayed for the following additional prayers:-
"7(BF):- "Your Lordships may be pleased to declare sections 37 and 47 of the Gujarat Municipalities Act, 1963, are ultra vires the mandate of article 243Y and 243ZF of the constitution of India, so also ultra vires the mandate of articles 14 and 16 of the Constitution of India."Page 3 of 96 C/SCA/12112/2013 CAV JUDGMENT
2. The case made out by the petitioners may be summed up thus:
[a]. The respondent No.1, the State of Gujarat, passed a resolution dated 2nd June 1998 applying the pay-scale recommended by the 5th Pay Commission to the employees of the Nagarpalika in the State in accordance with the terms mentioned therein.
[b]. Subsequently, the respondent No.4, Limbdi Nagarpalika, by its resolution No. 10/85 dated 31st October 1998 passed by General Board resolved to accept the recommendation of the pay-scale by the 5th Pay Commission.
[c]. The respondent No.4 passed another resolution on 31st October 1998 itself, bearing No. 10/86, whereby a committee has been constituted for the implementation of the pay-scale of the 5 th Pay Commission.
[d]. The respondent No.4 passed another resolution bearing No. 7/155 on 30th October 1999 whereby it was decided to provide the pay scale of the 5th Pay Commission to the employees of the respondent No.4 - Nagar Palika.
[e]. In accordance with the resolution No. 7/155 dated 30th October 1999, the respondent No.4 issued an Office Order bearing No. Esta-Page 4 of 96 C/SCA/12112/2013 CAV JUDGMENT
Vashi-415/99 dated 2nd December 1999, implementing the said resolution, and the President of the Nagarpalika also passed an order dated 20th September 2000 in this regard.
[f]. Subsequently, the respondent No.3, the Regional Director of Municipalities, initiated proceedings under section 258 of the Gujarat Municipalities Act, 1963 [hereafter, "the Act"], and by passing an order dated 15th October 2001, the respondent No.3, without giving an opportunity of hearing to the employees of the respondent Nagarpalika, quashed and set aside the earlier decisions of the Municipality, i.e. resolutions No. 10/85 dated 31st October 1998, No. 10/86 dated 31st October 1998 and Office Order bearing No. Esta-
Vashi-415/99 dated 2nd December 1999.
[g]. The petitioners preferred a Revision Application being No. 18 of 2001 under section 264 of the Act before the respondent No.1 against the order dated 15th October 2001 passed by the respondent No.3.
[h]. The respondent No.1 dismissed the Revision Application by passing an order dated 20th November 2007 holding therein that the establishment-expenditure of Nagarpalika exceeded the limit of 45% of the total revenue and before the recommendations of the 5th Pay Commissioner was made applicable by the respondent Nagarpalika, the establishment-expenditure was below the limit of 45%, i.e. 39.13%.Page 5 of 96 C/SCA/12112/2013 CAV JUDGMENT
[i]. In the past, conciliation was arrived at by passing an Award on 24th October 1997 between the employees of the Nagarpalika and the Administrator of the Nagarpalika in Conciliation Case No. 17 of 1977, wherein it was agreed that the pay-scale made applicable to the employees of the State Government would also be made applicable to the employees of the Nagarpalika automatically and the said conciliation award is still in operation and not terminated. [j]. In the past, being dissatisfied with the order dated 15 th October 2001 passed by the respondent No.3 quashing the earlier decision of the Nagarpalika by which the 5th Pay Commission pay-scale was made applicable to the petitioners, the petitioners filed Special Civil Application No. 11863 of 2008 before this Court, and a Division Bench of this Court disposed of the said petition by passing an order dated 2nd July 2009 inter alia observing as under:-
"In this petition, the petitioner has prayed for a writ of certiorari to quash and set side the impugned orders passed by the Collector and the impugned orders of the Director of Municipalities and also for direction to the respondent No.4 to forthwith pay salary to the employees of Limbdi Municipality as per the recommendations of Fifth Pay Commission. Collector has taken the view that the issue is to be finally decided by the Government.
Under the circumstances, we deem it appropriate that Page 6 of 96 C/SCA/12112/2013 CAV JUDGMENT the writ petition be disposed of with direction to the Government to take final decision on the grievances raised by the employees of the Limbdi Municipality regarding their salary as per the recommendations of Fifth Pay Commission. Government will take appropriate decision in accordance with law in consultation with the Municipality, Director of Municipalities, District Collector and also employees Association and the petitioners.
With above direction, without expressing any opinion on merits of the case, this petition is disposed of. It would be appropriate for the Government to take final decision within three months from the date of receipt of this order."
[k]. Although this Court specifically issued a direction to the Government to take final decision on the grievances raised by the employees of the Nagarpalika regarding their salary as per the recommendations of the 5th Pay Commission, no decision was taken by the respondent-authority. As a result, the petitioners filed a Misc. Civil Application being No. 821 of 2013 seeking further directions in the matter.
[l]. The said MCA No. 821 of 2013 came up for hearing before a Division Bench of this Court, and pending decision on the said MCA, the State Government took final decision in reference to the order dated 2nd July 2009 passed by this Court. By the said order dated 21 st June 2013, the respondent No.1 passed an order withdrawing the 5 th Pay Commissioner pay scale granted to the petitioners. Page 7 of 96 C/SCA/12112/2013 CAV JUDGMENT 2.1 Being dissatisfied, the petitioners have come up with the present Special Civil Application with the prayers indicated above.
3. Mr. Oza, the learned Senior Advocate appearing on behalf of the petitioners strenuously contended before us that part IX-A of the Constitution of India has provided an independent status to Municipality as a unit of the Local Self Government, which is totally autonomous, and, therefore, the State cannot control its powers flowing from part IX-A of the Constitution, and any law enacted by the State with an object to do the same would be ultra vires the Constitution of India. Thus, according to Mr. Oza, sections 37, 47, 257, 258 and 260 of the Act are inconsistent with the provisions of Part IX- A of the Constitution, and deserve to be struck down. Mr. Oza, therefore, prays for quashing of those provisions as ultra vires part IX- A of the Constitution.
3.1 Mr. Oza has also made an alternative argument that by virtue of Sections 47 and 47.A of the Act, the State Government is obliged to constitute a 'Municipal Service' which is nothing but a part of the State Services where absolute control as regards payment of salary and service conditions vest in the State Government. According to Mr. Oza, this has been introduced pursuant to the provisions of Part IX-A of the Constitution of India. Page 8 of 96 C/SCA/12112/2013 CAV JUDGMENT 3.2 Mr. Oza lastly contended that the Government Resolution dated 2nd June 1988 and 16th September 2010 are violative of Articles 14 and 16 of the Constitution of India as also ultra vires the mandate of Part IX-A of the Constitution of India.
4. Mr. Kamal Trivedi, the learned Advocate General appearing on behalf of the State-Respondent, has, on the other hand, opposed the aforesaid contentions of Mr. Oza and has contended that as per Article 243 ZF of the Constitution of India, any existing law of the State which is inconsistent with the provisions of Part IX-A of the Constitution would not continue beyond a period of one year from the date of commencement of Part IX-A of the Constitution. According to Mr. Trivedi, this does not mean that the provisions of the existing State laws, which are not inconsistent with the provisions of Part IX-A of the Constitution would automatically come to an end or be rendered void.
4.1 Mr. Trivedi has given the following instances wherein the State legislation may be considered to be void:-
(i). Article 243T (3) provides that at least 1/3rd of the total number of seats in every Municipality will be reserved for woman. If existing State legislation provides that such reservation should be less than 1/3rd of the total number of seats, then in that case, the same will be a matter of inconsistency.Page 9 of 96 C/SCA/12112/2013 CAV JUDGMENT
(ii). Similarly, Article 243(U) (1) provides for duration of Municipalities for the period of 5 years. Therefore, there will be a case of inconsistency, if the State legislation provides for the said duration of only two years.
(iii). Similarly, Article 253(Y) states that Finance Commission shall review the financial position of the Municipality. As against this, the State legislation cannot provide that the financial position of the Municipality will be reviewed by the office of the Accountant General of the State.
4.2 According to Mr. Trivedi, the provisions contained in Sections 37, 47, 257, 258 and 260 of the Act are not, in any manner, inconsistent with any of the provisions of Part IX-A of the Constitution. Mr. Trivedi further submits that the petitioners failed to show as to how and in which manner the above provisions are inconsistent with any of the provisions of Part IX-A of the Constitution. 4.3 Mr. Trivedi further submitted that the State legislature has independent powers under Article 246 of the Constitution to enact law with reference to any of the entries falling under List II or List III on 7th Schedule of the Constitution, and one cannot interpret the provisions of Part IX-A of the Constitution so as to frustrate the independent power of the State legislature flowing from Article 246 of the Constitution to enact any law.
Page 10 of 96 C/SCA/12112/2013 CAV JUDGMENT 4.4 Mr. Trivedi further submits that since no legislative and judicial powers are conferred on municipalities under provisions of part IX-A of the Constitution, the State is an important player in furthering the objective behind the insertion of Part IX-A of the Constitution, and the said institutions of Local Self Government cannot be construed as constituting a third tier in the federal structure of the Constitution. Mr. Trivedi further submits that in the functions of the said institutions, the State is not an intruder, nor its presence an alien to part IX-A of the Constitution, but the State is an important player in furthering the objective behind the insertion of part IX-A of the Constitution as per the guidelines flowing there from. 4.5 As regards the alternative argument of Mr. Oza regarding Section 47 and Section 47.A of the Act, Mr. Trivedi submitted that the State has, in fact, constituted a Municipal Service by declaring only seven different cadres, which are as under:-
[i]. Chief Officer [ii]. Municipal Engineer [iii]. Municipal Accountant [iv]. Municipal Health Officer [v]. Fireman-cum-Driver [vi]. Sanitary Inspector
[vii]. Junior Town Planner-cum-Planning Assistant Page 11 of 96 C/SCA/12112/2013 CAV JUDGMENT 4.6 According to Mr. Trivedi, so far as the aspect relating to appointment, payment of salary, etc. with regard to the personnel appointed in any of the aforesaid cadres under the said services are concerned, the same are being taken care of by the State Government and barring persons engaged in the aforesaid cadres, all the petitioners including the employees shown at pages 120 to 123 are not the part of the State service but they are employees directly employed by the Municipality.
4.7 Mr. Trivedi further submits that so far as the persons working in the above referred seven cadres of the State service are concerned, they are being paid as per the recommendations of the 6th Pay Commission and they are not at all affected, even while taking recourse to provisions of section 260 of the Act for reducing extravagance.
4.8 As regards the contention of Mr. Oza that the Government Resolutions dated 2nd June 1988 and 16th September 2010 are violative of Articles 14 and 16 of the Constitution and the mandate of Part IX-A of the Constitution, Mr. Trivedi submitted that the aforesaid Resolutions are issued in furtherance of the exercise of powers conferred under the provisions of section 260 of the Act. Mr. Trivedi further contends that G.R. Dated 2nd June 1988 provides to the effect that if the expense of the Municipality is more than 45% of its income, the authority concerned can take actions against Municipality under Page 12 of 96 C/SCA/12112/2013 CAV JUDGMENT section 260 of the Act. The said figure of 45% came to be increased to 48% vide G.R dated 16th September 2010.
4.9 Therefore, according to Mr. Trivedi, even as per the judgment of this Court dated 10th March 2011, the expenditure towards actual pay and allowance of the employees on the approved set-up of the Municipality for the financial year 2012-13 is about 53.17% of the total income of the Nagarpalika, which is beyond the permissible limit, and hence, the decision taken in the instant case by the Nagarpalika in the years 1998, 1999 and 2000 of introducing new pay scale as per 5th Pay Commission's recommendation were rightly set aside by the Director, Municipalities by its order dated 21 st June 2013. Mr. Trivedi further submitted that if the provisions of section 260 of the Act are not ultra vires, the aforesaid resolutions issued in aid of the exercise of the powers under the said section 260 of the Act are also valid, legal and constitutional in nature. 4.10 In support of his contentions, Mr. Trivedi relies upon the following decisions:
1. ANILKUMAR GULATI v. STATE OF MP [FB] reported in AIR 2004 MP 182 [paragraphs 17 to 21 and 54]
2. BHARUMATI & ORS. v. STATE OF UTTAR PRADESH reported in (2010) 12 SCC 1 - (paragraphs 38 to 67)
3. SHANTI G PATEL v. STATE OF MAHARASHTRA reported in (2006) Page 13 of 96 C/SCA/12112/2013 CAV JUDGMENT 2 SCC 505 (paragraphs 6 to 15)
4. BONDU RAMASWAMY v. BANGALORE DEVELOPMENT AUTHORITY reported in (2010) 7 SCC 129 (paragraphs 7, 9, 11, 39, 42, 43, 49, 52, 59)
5. Judgment of Patna High Court dated 13th January 2010 [paragraphs 8 to 11]
6. Full Bench judgment of Andhra Pradesh High Court dated 29th January 2014.
7. MEMAN ASLAM v. DIRECTOR OF MUNICIPALITIES reported 1994 (1) GLR 446
8. ANJAR MUNICIPALITY v. J.M. VYAS reported in 1999 (3) GLR 1892
9. N.M. BRAHMBHATT v. STATE reported in 2006 (3) GLR 2615 [paragraphs 10 to 61]
5. In order to appreciate the aforesaid contentions advanced by the learned counsel for the parties, it will be profitable to refer to the Articles starting from 243P and ending with 243ZJ in Part IX-A of the Constitution of India, which are quoted below:-
"243P. Definitions In this Part, unless the context otherwise requires,-
(a) "Committee" means a Committee constituted under article 243S;
(b) "district" means a district in a State;
(c) "Metropolitan area" means an area having a population of ten lakhs or more, comprised in one or more districts and consisting of two or more Municipalities or Panchayats or Page 14 of 96 C/SCA/12112/2013 CAV JUDGMENT other contiguous areas, specified by the Governor by public notification to be a Metropolitan area for the purposes of this Part;
(d) "Municipal areas" means the territorial area of a Municipality as is notified by the Governor;
(e) "Municipality" means an institution of self-government constituted under article 243Q;
(f) "Panchayat" means a Panchayat constituted under article 243B;
(g) "population" means the population as ascertained at the last preceding census of which the relevant figures have been published.
243Q. Constitution of Municipalities (1) There shall be constituted in every State.-(a) a Nagar Panchayat (by whatever name called) for a transitional area, that is to say, an area in transition from a rural area to an urban area;
(b) a Municipal Council for a smaller urban area; and
(c) a Municipal Corporation for a larger urban area, in accordance with the provisions of this Part :
Provided that a Municipality under this clause may not be constituted in such urban area or part thereof as the Governor may, having regard to the size of the area and the municipal services being provided or proposed to be provided by an industrial establishment in that area and such other factors as he may deem fit, by public notification, specify to be an industrial township.
(2) In this article, "a transitional area", "a smaller urban area"
or "a larger urban area" means such area as the Governor may, having regard to the population of the area, the density of the population therein, the revenue generated for local Page 15 of 96 C/SCA/12112/2013 CAV JUDGMENT administration, the percentage of employment in non- agricultural activities, the economic importance or such other factors as he may deem fit, specify by public notification for the purposes of this Part.
243R. Composition of Municipalities (1) Save as provided in clause (2), all the seats in a Municipality shall be filled by persons chosen by direct election from the territorial constituencies in the Municipal area and for this purpose each Municipal area shall be divided into territorial constituencies to be known as wards. (2) The Legislature of a State may, by law, provide-
(a) for the representation in a Municipality of-
(i) persons having special knowledge or experience in Municipal administration;
(ii) the members of the House of the People and the members of the Legislative Assembly of the State representing constituencies which comprise wholly or partly the Municipal area;
(iii) the members of the Council of States and the members of the Legislative Council of the State registered as electors within the Municipal area;
(iv) the Chairpersons of the Committees constituted under clause (5) of article 243S :
Provided that the persons referred to in paragraph (i) shall not have the right to vote in the meetings of the Municipality;
(b) the manner of election of the Chairperson of a Municipality.
243S. Constitution and composition of Wards Page 16 of 96 C/SCA/12112/2013 CAV JUDGMENT Committees, etc
(1) There shall be constituted Wards Committees, consisting of one or more wards, within the territorial area of a Municipality having a population of three lakhs or more.
(2) The Legislature of a State may, by law, make provision with respect to-
(a) the composition and the territorial area of a Wards Committee;
(b) the manner in which the seats in a Wards Committee shall be filled.
(3) A member of a Municipality representing a ward within the territorial area of the Wards Committee shall be a member of that Committee.
(4) Where a Wards Committee consists of-
(a) one ward, the member representing that ward in the Municipality; or
(b) two or more wards, one of the members representing such wards in the Municipality elected by the members of the Wards Committee, shall be the Chairperson of that Committee.
(5) Nothing in this article shall be deemed to prevent the Legislature of a State from making any provision for the constitution of Committees in addition to the Wards Committees.
243T. Reservation of seats (1) Seats shall be reserved for the Scheduled Castes and the Scheduled Tribes in every Municipality and the number of seats so reserved shall bear, as nearly as may be, the same proportion to the total number of seats to be filled by direct Page 17 of 96 C/SCA/12112/2013 CAV JUDGMENT election in that Municipality as the population of the Scheduled Castes in the Municipal area or of the Scheduled Tribes in the Municipal area bears to the total population of that area and such seats may be allotted by rotation to different constituencies in a Municipality.
(2) Not less than one-third of the total number of seats reserved under clause (1) shall be reserved for women belonging to the Scheduled Castes or, as the case may be, the Scheduled Tribes.
(3) Not less than one-third (including the number of seats reserved for women belonging to the Scheduled Castes and the Scheduled Tribes) of the total number of seats to be filled by direct election in every Municipality shall be reserved for women and such seats may be allotted by rotation to different constituencies in a Municipality.
(4) The officers of Chairpersons in the Municipalities shall be reserved for the Scheduled Castes, the Scheduled Tribes and women in such manner as the Legislature of a State may, by law, provide.
(5) The reservation of seats under clauses (1) and (2) and the reservation of offices of Chairpersons (other than the reservation for women) under clause (4) shall cease to have effect on the expiration of the period specified in article 334. (6) Nothing in this Part shall prevent the Legislature of a State from making any provision for reservation of seats in any Municipality or offices of Chairpersons in the Municipalities in favour of backward class of citizens.
Page 18 of 96 C/SCA/12112/2013 CAV JUDGMENT 243U. Duration of Municipalities etc. (1) Every Municipality, unless sooner dissolved under any law for the time being in force, shall continue for five years from the date appointed for its first meeting and no longer :
Provided that a Municipality shall be given a reasonable opportunity of being heard before its dissolution.
(2) No amendment of any law for the time being in force shall have the effect of causing dissolution of a Municipality at any level, which is functioning immediately before such amendment, till the expiration of its duration specified in clause (1).
(3) An election to constitute a Municipality shall be completed,-
(a) before the expiry of its duration specified in clause (1);
(b) before the expiration of a period of six months from the date of its dissolution :
Provided that where the remainder of the period for which the dissolved Municipality would have continued is less than six months, it shall not be necessary to hold any election under this clause for constituting the Municipality for such period.
(4) A Municipality constituted upon the dissolution of a municipality before the expiration of its duration shall continue only for the remainder of the period for which the dissolved Municipality would have continued under clause (1) had it not been so dissolved.Page 19 of 96 C/SCA/12112/2013 CAV JUDGMENT
243V. Disqualifications for membership (1) A person shall be disqualified for being chosen as, and for being, a member of a Municipality-
(a) if he is so disqualified by or under any law for the time being in force for the purposes of elections to the Legislature of the State concerned :
Provided that no person shall be disqualified on the ground that he is less than twenty-five years of age, if he has attained the age of twenty-one years;
(b) if he is so disqualified by or under any law made by the Legislature of the State.
(2) If any question arises as to whether a member of a Municipality has become subject to any of the disqualifications mentioned in clause (1), the question shall be referred for the decision of such authority and in such manner as the Legislature of a State may, by law, provide.
243W. Powers, authority and responsibilities of Municipalities, etc Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow-
(a) the Municipalities with such powers and authority as may be necessary to enable them to function as institutions of self- government and such law may contain provisions for the devolution of powers and responsibilities upon Municipalities, subject to such conditions as may be specified therein, with respect to-
Page 20 of 96 C/SCA/12112/2013 CAV JUDGMENT
(i) the preparation of plans for economic development and social justice;
(ii) the performance of functions and the implementation of schemes as may be entrusted to them including those in relation to the matters listed in the Twelfth Schedule;
(b) the Committees with such powers and authority as may be necessary to enable them to carry out the responsibilities conferred upon them including those in relation to the matters listed in the Twelfth Schedule.
243X. Power to impose taxes by, and Funds of, the Municipalities The Legislature of a State may, by law,-
(a) authorise a Municipality to levy, collect and appropriate such taxes, duties, tolls and fees in accordance with such procedure and subject to such limits;
(b) assign to a Municipality such taxes, duties, tolls and fees levied and collected by the State Government for such purposes and subject to such conditions and limits;
(c) provide for making such grants-in-aid to the Municipalities from the Consolidated Fund of the State; and
(d) provide for constitution of such Funds for crediting all moneys received, respectively, by or on behalf of the Municipalities and also for the withdrawal of such moneys therefrom, Page 21 of 96 C/SCA/12112/2013 CAV JUDGMENT as may be specified in the law.
243Y. Finance Commission (1) The Finance Commission constituted under article 243-I shall also review the financial position of the Municipalities and make recommendations to the Governor as to-
(a) the principles which should govern-
(i) the distribution between the State and the Municipalities of the net proceeds of the taxes, duties, tolls and fees leviable by the State, which may be divided between them under this Part and the allocation between the Municipalities at all levels of their respective shares of such proceeds;
(ii) the determination of the taxes, duties, tolls and fees which may be assigned to, or appropriated by, the Municipalities;
(iii) the grants-in-aid to the Municipalities from the Consolidated Fund of the State;
(b) the measures needed to improve the financial position of the Municipalities;
(c) any other matter referred to the Finance Commission by the Governor in the interests of sound finance of the Municipalities.
(2) The Governor shall cause every recommendation made by the Commission under this article together with an explanatory memorandum as to the action taken thereon to be laid before the Legislature of the State.
Page 22 of 96 C/SCA/12112/2013 CAV JUDGMENT 243Z. Audit of accounts of Municipalities The Legislature of a State may, by law, make provisions with respect to the maintenance of accounts by the Municipalities and the auditing of such accounts.
243ZA. Elections to the Municipalities (1) The superintendence, direction and control of the preparation of electoral rolls for, and the conduct of, all elections to the Municipalities shall be vested in the State Election Commission referred to in article 243K. (2) Subject to the provisions of this Constitution, the Legislature of a State may, by law, make provision with respect to all matters relating to, or in connection with, elections to the Municipalities.
243ZB. Application to Union territories The provisions of this Part shall apply to the Union territories and shall, in their application to a Union territory, have effect as if the references to the Governor of a State were references to the Administrator of the Union territory appointed under article 239 and references to the Legislature or the Legislative Assembly of a State were references in relation to a Union territory having a Legislative Assembly, to that Legislative Assembly :
Provided that the President may, by public notification, direct that the provisions of this Part shall apply to any Union territory or part thereof subject to such exceptions and modifications as he may specify in the notification.Page 23 of 96 C/SCA/12112/2013 CAV JUDGMENT
243ZC. Part not to apply to certain areas (1) Nothing in this Part shall apply to the Scheduled Areas referred to in clause (1), and the tribal areas referred to in clause (2), of article 244.
(2) Nothing in this Part shall be construed to affect the functions and powers of the Darjeeling Gorkha Hill Council constituted under any law for the time being in force for the hill areas of the district of Darjeeling in the State of West Bengal.
(3) Notwithstanding anything in this Constitution, Parliament may, by law, extend the provisions of this Part to the Scheduled Areas and the Tribal Areas referred to in clause (1) subject to such exceptions and modifications as may be specified in such law, and no such law shall be deemed to be an amendment of this Constitution for the purposes of article
368.
243ZD. Committee for district planning (1) There shall be constituted in every State at the district level a District Planning Committee to consolidate the plans prepared by the Panchayats and the Municipalities in the district and to prepare a draft development plan for the district as a whole.
(2) The Legislature of a State may, by law, make provision with respect to-
(a) the composition of the District Planning Committees; Page 24 of 96 C/SCA/12112/2013 CAV JUDGMENT
(b) the manner in which the seats in such Committees shall be filled :
Provided that not less than four-fifths of the total number of members of such Committee shall be elected by, and from amongst, the elected members of the Panchayat at the district level and of the Municipalities in the district in proportion to the ratio between the population of the rural areas and of the urban areas in the district;
(c) the functions relating to district planning which may be assigned to such Committees;
(d) the manner in which the Chairpersons of such Committees be chosen.
(3) Every District Planning Committee shall, in preparing the draft development plan,-
(a) have regard to-
(i) matters of common interest between the Panchayats and the Municipalities including spatial planning, sharing of water and other physical and natural resources, the integrated development of infrastructure and environmental conservation;
(ii) the extent and type of available resources whether financial or otherwise;
(b) consult such institutions and organisations as the Governor may, by order, specify.Page 25 of 96 C/SCA/12112/2013 CAV JUDGMENT
(4) The Chairperson of every District Planning Committee shall forward the development plan, as recommended by such Committee, to the Government of the State.
243ZE. Committee for Metropolitan planning (1) There shall be constituted in every Metropolitan area a Metropolitan Planning Committee to prepare a draft development plan for the Metropolitan area as a whole. (2) The Legislature of a State may, by law, make provision with respect to-
(a) the composition of the Metropolitan Planning Committees;
(b) the manner in which the seats in such Committees shall be filled :
Provided that not less than two-thirds of the members of such Committee shall be elected by, and from amongst, the elected members of the Municipalities and Chairpersons of the Panchayats in the Metropolitan area in proportion to the ratio between the population of the Municipalities and of the Panchayats in this area;
(c) the representation in such Committees of the Government of India and the Government of the State and of such organisations and institutions as may be deemed necessary for carrying out the functions assigned to such Committees;
(d) the functions relating to planning and coordination for the Metropolitan area which may be assigned to such Committees;Page 26 of 96 C/SCA/12112/2013 CAV JUDGMENT
(e) the manner in which the Chairpersons of such Committees shall be chosen.
(3) Every Metropolitan Planning Committee shall, in preparing the draft development plan,-
(a) have regard to-
(i) the plans prepared by the Municipalities and the Panchayats in the Metropolitan area;
(ii) matters of common interest between the Municipalities and the Panchayats, including co-ordinated spatial planning of the area, sharing of water and other physical and natural resources, the integrated development of infrastructure and environmental conservation;
(iii) the overall objectives and priorities set by the Government of India and the Government of the State;
(iv) the extent and nature of investments likely to be made in the Metropolitan area by agencies of the Government of India and of the Government of the State and other available resources whether financial or otherwise;
(b) consult such institutions and organisations as the Governor may, by order, specify.
(4) The Chairperson of every Metropolitan Planning Committee shall forward the development plan, as recommended by such Committee, to the Government of the State.
243ZF. Continuance of existing laws and Municipalities Page 27 of 96 C/SCA/12112/2013 CAV JUDGMENT Notwithstanding anything in this Part, any provision of any law relating to Municipalities in force in a State immediately before the commencement of the Constitution (Seventy-fourth Amendment) Act, 1992, which is inconsistent with the provisions of this Part, shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until the expiration of one year from such commencement, whichever is earlier:
Provided that all the Municipalities existing immediately before such commencement shall continue till the expiration of their duration, unless sooner dissolved by a resolution passed to that effect by the Legislative Assembly of that State or, in the case of a State having a Legislative Council, by each House of the Legislature of that State.
243ZG. Bar to interference by courts in electoral matters Notwithstanding anything in this Constitution,-
(a) the validity of any law relating to the delimitation of constituencies or the allotment of seats to such constituencies, made or purporting to be made under article 243ZF shall not be called in question in any court;
(b) no election to any Municipality shall be called in question except by an election petition presented to such authority and in such manner as is provided for by or under any law made by the Legislature of a State.
243ZH. Definitions.--
Page 28 of 96 C/SCA/12112/2013 CAV JUDGMENT In this Part, unless the context otherwise requires,-- [a] "authorised person" means a person referred to as such in article 243ZQ ;
[b] "board" means the board of directors or the governing body of a co-operative society, by whatever name called, to which the direction and control of the management of the affairs of a society is entrusted to;
[c] "co-operative society" means a society registered or deemed to be registered under any law relating to co- operative societies for the time being in force in any State; [d] "multi-State co-operative society" means a society with objects not confined to one State and registered or deemed to be registered under any law for the time being in force relating to such co-operatives;
[e] "office bearer" means a President, Vice-President, Chairperson, Vice-Chairperson, Secretary or Treasurer of a co- operative society and includes any other person to be elected by the board of any co-operative society;
[f] "Registrar" means the Central Registrar appointed by the Central Government in relation to the multi-State co-operative societies and the Registrar for co-operative societies appointed by the State Government under the law made by the Legislature of a State in relation to co-operative societies; [g] "State Act" means any law made by the Legislature of a State;
[h] "State level co-operative society" means a co-operative society having its area of operation extending to the whole of a State and defined as such in any law made by the Legislature of a State.
243ZI. Incorporation of co-operative societies.-- Subject to the provisions of this Part, the Legislature of a State may, by law, make provisions with respect to the incorporation, regulation and winding-up of co-operative Page 29 of 96 C/SCA/12112/2013 CAV JUDGMENT societies based on the principles of voluntary formation, democratic member-control, member-economic participation and autonomous functioning.
243ZJ. Number and term of members of Board and its office bearers.--
[1] The board shall consist of such number of directors as may be provided by the Legislature of a State, by law:
Provided that the maximum number of directors of a co- operative society shall not exceed twenty-one:
Provided further that the Legislature of a State shall, by law, provide for the reservation of one seat for the Scheduled Castes or the Scheduled Tribes and two seats for women on board of every co-operative society consisting of individuals as members and having members from such class or category of persons.
[2] The term of office of elected members of the board and its office bearers shall be five years from the date of election and the term of office bearers shall be coterminous with the term of the board:
Provided that the board may fill a casual vacancy on the board by nomination out of the same class of members in respect of which the casual vacancy has arisen, if the term of office of the board is less than half of its original term.
[3] The Legislature of a State shall, by law, make provisions for co-option of persons to be members of the board having experience in the field of banking, management, finance or specialisation in any other field relating to the objects and activities undertaken by the co-operative society, as members of the board of such society:
Provided that the number of such co-opted members shall not exceed two in addition to twenty-one directors specified in the first proviso to clause [1]:Page 30 of 96 C/SCA/12112/2013 CAV JUDGMENT
Provided further that such co-opted members shall not have the right to vote in any election of the co-operative society in their capacity as such member or to be eligible to be elected as office bearers of the board:
Provided also that the functional directors of a co- operative society shall also be the members of the board and such members shall be excluded for the purpose of counting the total number of directors specified in the first proviso to clause [1]."
xxx xxx xxx 5.1 It will also be profitable to refer to sections 37, 47, 47A,
257, 258 and 260 of the Act, which are quoted below:-
"37. Removal from office:-
(1) The State Government may remove from office-
(a) any councilor of a municipality, on its own motion or on receipt of a recommendation of the municipality in that behalf supported by a majority of the total number of the then councilors of the Municipality, or
(b) any president or vice-president of a municipality.
If, after giving the councilor, president or as the case may be vice-president an opportunity of being heard and giving due notice in that behalf to the municipality and after making such inquiry as it deems necessary, the State Government is of the opinion that the councilor, president or as the case may be, vice-president has been guilty of misconduct in the discharge of his duties or of any disgraceful conduct or has Page 31 of 96 C/SCA/12112/2013 CAV JUDGMENT become incapable of performing his duties under this Act. (2) A president or vice-president removed under sub-section (1) shall not be eligible for re-election as a president or vice- president during the reminder of the term of the municipality.
47. Appointment of Chief Officers and other Officers- (1) (a) For every municipality there shall be a Chief Officer appointed by the State Government.
(a) The Chief Officer of a municipality shall forthwith be transferred from that municipality by the State Government if a resolution to that effect is passed by the municipality with not less than two thirds of the total number of councillors of the municipality voting in favour of such resolution. (2) A municipality may, with the previous sanction of the Director, and shall, if so required by the State Government, create all or any of the following posts, namely:-
(i) a municipal engineer, (ii) a water works engineer, (iii) a municipal health officer, (iv) a municipal auditor, (v) a municipal education officer and
(vi) any other officer as may be designated by the State Government in this behalf.
(3) Subject to the provisions of section 47A, the recruitment and conditions of service of the officers referred to in sub- sections (1) and (2) shall be such as may be prescribed. (4) Subject to the provisions of section 47A, the power to make appointment to the posts referred to in sub-section (2) Page 32 of 96 C/SCA/12112/2013 CAV JUDGMENT shall vest in the municipality.
47A. Constitution of Municipal Services:-
[1] If, the State Government, is of the opinion that it is necessary and expedient so to do for bringing about a uniform and a more efficient service of officers in municipalities for the purpose of carrying out the functions and duties under this Act, it may notwithstanding anything contained in this Act, by notifications in the official Gazette-
(a) Constitute in respect of all municipalities in municipal boroughs having population of such number as may be specified in the notification a municipal service or services to be called by such designation as may be specified in the notification of-
(i). Chief Officers of such municipalities, and
(ii). all or any other officers referred to in sub-section (2) of section 47,
(b) direct from time to time that each such municipal service shall consist of such classes, cadres and posts (including grades of posts), and
(c)specify the initial strength of officers in each such class or cadre.
[2] The State Government may make rules for,-
(a) regulating the mode of recruitment by holding examinations or otherwise, including provision for the absorption in municipal service constituted under this section, or otherwise, of persons already working under any Page 33 of 96 C/SCA/12112/2013 CAV JUDGMENT municipality,
(b) providing for terminal benefits such as compensation, pension or gratuity or the like, to persons who elect not to be absorbed in any such service or who elect to retire, and (c ) the conditions of service of persons appointed to, or absorbed to such municipal services.
Provided that the conditions of service of any person absorbed in any such service shall not be less advantageous than those applicable to him immediately before such absorption. (3) The provisions of section 48 shall cease to apply to persons appointed to or absorbed in such municipal services constituted under this section:
Provided that, such cessor shall not, in relation to persons absorbed, in any such service, affect the previous operation of section 48 in respect of anything done or omitted be done before such absorption.
(4) Notwithstanding anything contained in sub-section (4) of section 47, the power to appoint officers of any municipal service constituted under this section including promotions, transfers, and powers in relation to all matters regarding their conditions of service shall vest in the State Government.
(5) The officers included in any municipal service constituted under this section shall be the servants of the State Government; but they shall draw their salaries and allowances directly from the municipal fund.
(6) There shall be paid every year out of the municipal fund to the State Government such cost as the State Government may determine on account of pension, leave and Page 34 of 96 C/SCA/12112/2013 CAV JUDGMENT allowances other than those drawn from the municipal fund under sub-section (5) of the officers belonging to any of municipal services constituted under this section and all the expenses incurred by the State government for administering the municipal service or services constituted under this section. If any municipality fails to pay such cost and expenses or the salaries and allowances of such officers within the period prescribed in this behalf, then the provision of sub-
section (3) of section 262 shall apply to the payment of such cost and expenses or the salaries and allowances of such officers as they apply in relation to the payment of the expense and remuneration not paid under that section.
257. Power of inspection and supervision:-
(1) The Director, Collector or any officer of Government authorized by the State Government by a general or special order shall have powers-
(a) to call for or inspect, or cause to be entered on and inspected, any immovable property occupied by any municipality or any institution under its control or management or any work in progress under it or under its direction.
(b) to call for or inspect, any extract from any municipality's or any committee's proceedings and any book or documents in the possession of or under the control of a municipality.
(2) The Collector shall have power-
(a) to call for any return, statement, account, report or record which he may think fit to require such municipality to furnish.
(b) to require a municipality to take into its consideration may Page 35 of 96 C/SCA/12112/2013 CAV JUDGMENT objection which appears to him to exist to the doing of anything which is about to be done or is being done by or on behalf of such municipality or any information which he is able to furnish and which appears to him to necessitate the doing of a certain thing by the municipality, and to make a written reply to him within a reasonable time stating its reasons for not desisting from doing, or for not doing, such thing.
(3) The Collector may delegate any power exercisable by him under this section to any Deputy or Assistant Collector subordinate to him.
258. Powers of Collector to suspend execution of orders, etc, of municipalities:-
(1) If, in the opinion of the Collector, the execution of any order or resolution of a municipality, or the doing of anything which is about to be done or is being done by or on behalf of a municipality, is causing or is likely to cause injury or annoyance to the public or to lead to a breach of the peace or is unlawful, he may by order in writing under his signature suspend the execution or prohibit the doing thereof and where the execution of any work in pursuance of the order or resolution of the municipality is already commenced or completed direct the municipality to restore the position in which it was before the commencement of the work.
(2) When the Collector makes any order under this section he shall forthwith forward to the municipality affected thereby a copy of the order with a statement of the reasons for making it and also submit a report to the State Government along with copies of such order and statement.Page 36 of 96 C/SCA/12112/2013 CAV JUDGMENT
(3) Against the order made by the Collector under sub-
section (1) the municipality may prefer an appeal to the State Government within thirty days from the date on which it receives a copy of the order. The State Government may on such appeal being preferred rescind the order or may revise or modify or confirm the order or direct that the order shall continue to be in force, with or without modification, permanently or for such period as it may specify.
Provided that the order shall not be revised, modified or confirmed by the State Government without giving the municipality reasonable opportunity of showing cause against the order.
260. Power of Director to prevent extravagance in the employment of establishment.
If in the opinion of the Director the number of persons who are employed by a municipality as officers or servants, or whom a municipality proposes to employ or the remuneration assigned by the municipality to those persons or to any particular person is excessive the municipality shall, on the requirement of the Director reduce the number of the said persons or the remuneration of the said person or persons;
provided that the municipality may appeal against any such requirement to the State Government whose decision shall be conclusive.
6. Therefore, the only question that falls for determination in this Special Civil Application is, whether Sections 37, 47, 257, 258 and 260 of the Act are inconsistent with the provisions of Part IX-A of the Constitution and should be consequently declared to be ultra vires the Constitution of India.
Page 37 of 96 C/SCA/12112/2013 CAV JUDGMENT
7. After hearing the learned counsel for the parties and after going through the provisions contained in the Act as well as Part IX-A of the Constitution, we find that by virtue of the amendment introducing Part IX-A in the Constitution, the Parliament has recognized the status of a Municipality as a unit of local self-government in terms of Article 40 of the Constitution of India. In Part IX-A various provisions have been enacted prescribing the mode of functioning of the Municipalities as provided in Article 243P to 243ZG. At the same time, the provisions contained in Article 246 of the Constitution defining the jurisdiction of the Parliament and Legislatures of the States in the matter of enactment of laws mentioned in Seventh Schedule have not been touched. Therefore, notwithstanding introduction of Part IX-A in the Constitution, item no.5 of List II of the Seventh Schedule has not been curtailed in any way. The combined effect of these two provisions, namely, Part IX-A and Article 246 read with the Seventh Schedule is that the State Legislature will continue to enact laws relating to constitution and power of Municipal Authority but such power must be subject to the provisions contained in Articles 243P to 243ZG of the Constitution. As clearly provided in Article 243ZF notwithstanding anything in Part IX-A, any provision of any law relating to Municipalities in force in a State immediately before the commencement of the Constitution (Seventy-fourth Amendment) Act, 1992, which is inconsistent with the provisions of Part IX-A, shall continue to be in force until amended or repealed by a competent Page 38 of 96 C/SCA/12112/2013 CAV JUDGMENT Legislature or other competent authority or until the expiration of one year from such commencement, whichever is earlier. It is further provided that all the Municipalities existing immediately before such commencement shall continue till the expiration of their duration, unless sooner dissolved by a resolution passed to that effect by the Legislative Assembly of that State or, in the case of a State having a Legislative Council, by each House of the Legislature of that State.
8. In view of the above clear provisions contained in Article 243ZF, there is no shadow of doubt that the effect of Part IX-A is that the State Legislature will have full power and authority to enact any law relating to Municipalities, provided, however, that such law should not be inconsistent with the provisions of Part IX-A.
9. The submission of Mr Oza, the learned Senior Counsel appearing on behalf of the petitioner is, however, that such law enacted by State Legislature should not only be in conflict with the provisions contained in Part IX-A but also should not be in conflict with the object and aim of introducing Part IX-A and thus, even if any law made by the State Legislature may not be in direct conflict with any of the provisions of Part IX-A, if in reality it is against the principle and object of Part IX-A, the same should nevertheless be declared to be invalid.
10. We are afraid we are not at all convinced by such submission. Page 39 of 96 C/SCA/12112/2013 CAV JUDGMENT Any law made by either the Parliament or the State Legislature can be struck down only if it appears that either the Parliament or the State Legislature, as the case may be, has no legislative competence to enact such law or that it is in conflict with any of the constitutional provision or with any existing valid law of a State. There is no scope of declaring any law as ultra vires other than those three categories of cases. In the case before us, Mr Oza could not point out whether any of the provisions contained in Sections 37, 47, 257, 258 or 260 of the Act are in any way in conflict with Part IX-A of the Constitution.
11. We now propose to consider the above provisions of Sections 37, 47, 257, 258 and 260 of the Act separately.
12. Section 37 of the Act prescribes the procedure for removal from office any councilor of a municipality or any president or vice- president of a municipality. In Part IX-A, we find that Article 243V provides for disqualifications for membership and according to sub- article (1), a person shall be disqualified for being chosen as, and for being, a member of a Municipality if he is so disqualified by or under any law for the time being in force for the purposes of elections to the Legislature of the State concerned with further proviso that no person should be disqualified on the ground that he is less than twenty-five years of age, if he has attained the age of twenty-one years. Similarly Article 243V (1) (b) provides that a person may be disqualified by or under any law made by the Legislature of the State. Page 40 of 96 C/SCA/12112/2013 CAV JUDGMENT It appears that Section 37 of the Act is in tune with the power conferred under State Legislature under Article 243V (1) (b). Thus, we do not find that Section 37 is in any way in conflict with any of the provisions of Part IX-A.
13. Section 47 provides for appointment of Chief Officer and other Officers. In Part IX-A, we do not find any provision which put any restriction upon the power of the State Legislature to enact a law providing for appointment of Chief Officers and other Officers of a Municipality. Therefore, there is nothing inconsistent in Section 47 with any of the provisions contained in Part IX-A and Section 47 is consistent with Article 246 read with the Seventh Schedule of the Constitution.
14. Similarly, section 47A has been enacted giving the authority to the State Government by notifications in the Official Gazette to constitute in respect of all municipalities in municipal boroughs, a municipal service or services as indicated therein. The said provision is also in no way conflict with any of the provisions contained in Part IX-A of the Constitution.
15. Section 257 gives power of inspection and supervision to the Director, Collector or any officer of Government authorized by the State Government by a general or special order to call for inspect, or cause to be entered on and inspected, any immovable property Page 41 of 96 C/SCA/12112/2013 CAV JUDGMENT occupied by any municipality or any institution under its control or management or any work in progress under it or under its direction. The said provision also vests the Collector with the power to call for any return, statement, account, report or record which he may think fit to require such municipality with further power to delegate any of the power exercisable by him under the said section to any Deputy or Assistant Collector subordinate to him.
16. Mr Oza could not point out any provision in Part IX-A which does not authorize the State Legislature to enact such a law.
17. Similarly, Section 258 gives power to the Collector to suspend execution of orders etc. of municipalities if, in his opinion, the execution of such order or resolution is causing or is likely to cause injury or annoyance to the public or to lead to a breach of peace or is unlawful. We do not find any provision in Part IX-A prohibiting the State Government from interfering in respect of the above matters.
18. Section 260 of the Act gives power to the Director to prevent extravagance in the employment of establishment, if, in his opinion, the number of persons who are employed by a municipality as officers or servant or whom a municipality proposes to employ or the remuneration assigned by the municipality to those persons or to any particular person is excessive. We are of the opinion that in Part IX-A, no power has been given upon the Municipality to engage any Page 42 of 96 C/SCA/12112/2013 CAV JUDGMENT number of employees inconsistent with either the income or the requirement of the Municipality if the State Government is of the view that the same is not in tune with the requirement of the Municipality. In other words, unless inconsistent with Part IX-A of the Constitution, a State Legislature is free to enact any law in exercise of its power under Article 246 read with Seventh Schedule of the Constitution with further condition that the same should not affect any of the other legal or fundamental rights of a citizen.
19. We, thus, find that none of the aforesaid provisions of the Act is in conflict with any of the Article of Part IX-A of the Constitution.
20. In this connection, we may profitably refer to the Full Bench decision of the Madhya Pradesh High Court in the case of ANIL KUMAR GULATI v. STATE OF M.P. reported in AIR 2004 MP 182 FB where the question was whether in view of introduction of Part IX- A of the Constitution of India, the right to collect tax should be left to the total discretion of the Municipality or the Municipal Corporation. The Full Bench, in paragraph 54 of the judgment, answered the aforesaid question by holding that the concept of self-governance as provided in Part IX-A of the Constitution is not absolute and is subject to the law made by the legislature and neither the Municipal Corporation nor the Municipality can impose tax independently without the authority of the State legislature as that would tantamount to create a sovereign within a sovereign which is Page 43 of 96 C/SCA/12112/2013 CAV JUDGMENT impermissible in our constitutional frame work and philosophy. The Full Bench further held that the contention that the legislature could not have made law in respect of the role of the Municipal Corporation and Municipality is absolutely unfounded and baseless.
21. In the case of BHANUMATI AND OTHERS v. STATE OF UTTAR PRADESH reported in (2010) 12 SCC 1, the Supreme Court was considering the question whether the provisions of "no confidence motion" against the Chairperson of a Panchayat and Jilla Parishad was unconstitutional in view of Chapter IX of the Constitution of India. In that context, the Supreme Court held that the State legislature was competent to enact the impugned amendment by introduction of no confidence against the Chairperson of the Panchayat as such power is very much within the power of the State legislature within Schedule VII List II Entry 5. According to the Supreme Court, the entry must be read liberally in accordance with the well-settled principles of reading. The Supreme Court pointed out that the legislative entry is generic in nature and virtually constitutes the legislative field and has to be very broadly and liberally construed. These entries demarcate "areas", "fields" of legislation within which the respective laws are to be operate and do not merely confer legislative power as such. According to the Supreme Court, the words in the entry should be held to extend to all ancillary and subsidiary matters which can be reasonably said to be encompassed by it. The Supreme Court further held that when the Constitution Page 44 of 96 C/SCA/12112/2013 CAV JUDGMENT specifically enables the State legislature to provide the details of election of the Chairperson, and the provision of no-confidence motion against the Chairman cannot be challenged on the ground of its not being in the Constitution. According to the Supreme Court, Constitution is not to give all details of the provisions contemplated under the scheme of amendment. The Supreme Court further held that under various articles of the Constitution of India like Articles 243-A, 243-C(1), (5), 243-D(4), (6), 243-F(1), (6), 243-G, 243-H, 243- I(2), 243-J, 243-K(2), (4), the State legislatures have been empowered to make law to implement the constitutional provisions.
22. If we apply the above principles to the facts of the present case, we find no substance in the contention of Mr. Oza that even if the proposed law enacted by the State legislature is not in conflict with the provisions of Part IX-A, the same should be held to be ultra vires if it is beyond the concept of so-called self-governance.
23. In the case of SHANTI G. PATEL v. STATE OF MAHARASHTRA reported in (2006) 2 SCC 505, the question before the Supreme Court was whether section 37(1-AA) of the Maharashtra Regional and Town Planning Act, 1966 was violative of Article 243-W of the Constitution by alleging that in view of Article 243-W and items 1 and 2 of the Twelfth Schedule of the Constitution, the Municipal Corporation alone has competence to make subordinate legislation as regards town planning. The Supreme Court turned down such Page 45 of 96 C/SCA/12112/2013 CAV JUDGMENT contention holding that the existing provisions of the statutes governing the field relation to urban planning and/or regulation of land use and construction of building etc., would continue to operate in that field unless a statute is enacted by the State legislature in terms of Article 243-W. The Supreme Court further held that Article 243-W is merely an enabling provision and the State is not obliged to provide for such a statute. In such circumstances, according to the Supreme Court, the High Courts or the Supreme Court could only issue a direction to the State to pass an appropriate legislation in terms of Article 243-W and 12th schedule, and existing laws cannot be struck down only on that premises.
24. In the case of BONDU RAMASWAMY AND OTHERS v.
BANGALORE DEVELOPMENT AUTHORITY AND ORS, reported in (2010) 7 SCC 129, the Supreme Court, while considering the scope of Constitution (Seventy-fourth amendment) inserting Part IX-A of the Constitution, made observations regarding the object of enactment of the said provisions, which are quoted below:-
"43. The Constitution (Seventy-Fourth Amendment) Act, 1992 inserting Part IX-A in the Constitution, seeks to strengthen the system of municipalities in urban areas, by placing these local self-governments on sound and effective footing and provide measures for regular and fair conduct of elections. Even before the insertion of the said Part IX-A, Municipalities existed all over the country but there were no uniform or strong foundations for these local self-governments to function Page 46 of 96 C/SCA/12112/2013 CAV JUDGMENT effectively.
44. Provisions relating to composition of Municipalities, constitution and composition of Ward Committees, reservation of seats for weaker sections, duration of Municipalities, powers, authority, responsibilities of Municipalities, power to impose taxes, proper superintendence and centralised control of elections to Municipalities, constitution of Committees for District Planning and Metropolitan Planning, were either not in existence or were found to be inadequate or defective in the State laws relating to municipalities.
45. Part IX-A seeks to strengthen the democratic political governance at grass root level in urban areas by providing constitutional status to Municipalities, and by laying down minimum uniform norms and by ensuring regular and fair conduct of elections. When Part IX-A came into force, the provisions of the existing laws relating to municipalities which were inconsistent with or contrary to the provisions of Part IX-A would have ceased to apply. To provide continuity for some time and an opportunity to the State Governments concerned to bring the respective enactments relating to municipalities in consonance with the provisions of Part IX-A in the meanwhile, Article 243ZF was inserted. The object was not to invalidate any law relating to city improvement trusts or development authorities which operate with reference to specific and specialised field of planned development of cities by forming layouts and making available plots/houses/apartments to the members of the public.
46. To enable the municipalities (that is municipal corporations, municipal councils and Nagar Panchayats) to function as institutions of self-government, Article 243W Page 47 of 96 C/SCA/12112/2013 CAV JUDGMENT authorises the legislature of a State to endow to the municipalities, such powers and authority as may be necessary, by law. Such law made by the State legislature may contain provision for the devolution of powers and responsibilities upon municipalities, with respect to the following:
(i). The preparation of plans for economic development and social justice; and
(ii). The performance of functions and implementation of schemes as may be entrusted to them including those in relation to the following matters (earmarked in the twelfth schedule):
1. Urban planning including town planning.
2. Regulation of land-use and construction of buildings.
3. Planning for economic and social development.
4. Roads and bridges.
5. Water supply for domestic, industrial and commercial purposes.
6. Public health, sanitation conservancy and solid waste management.
7. Fire services.
8. Urban forestry, protection of the environment and promotion of ecological aspects.
9. Safeguarding the interests of weaker sections of society, including the handicapped and mentally retarded.
10. Slum improvement and up gradation.
11. Urban poverty alleviation.
12. Provision of urban amenities and facilities such as parks, gardens, playgrounds.
13. Promotion of cultural, educational and aesthetic aspects.Page 48 of 96 C/SCA/12112/2013 CAV JUDGMENT
14. Burials and burial grounds; cremations, cremation grounds; and electric crematoriums.
15. Cattle pounds; prevention of cruelty to animals.
16. Vital statistics including registration of births and deaths.
17. Public amenities including street lighting, parking lots, bus-stops and public conveniences.
18. Regulation of slaughter houses and tanneries.
The aforesaid powers and authority (enumerated in the twelfth Schedule) may also be endowed to the Ward Committees which are required to be constituted by Article 243S.
47. On the other hand, the purpose and object of the BDA is to act as a development authority for the development of the city of Bangalore and areas adjacent thereto. The Preamble of BDA Act describes it as "an Act to provide for the establishment of a Development Authority for the development of the city of Bangalore and areas adjacent thereto and for matters connected therewith". The development contemplated by the BDA Act is "carrying out of building, engineering or other operations in or over or under land or the making of any material change in any building or land and includes redevelopment" (vide Section 2(j) of BDA Act). Therefore, the purpose is to make lay outs, construct buildings or carry out other operations in regard to land.
48. Municipalities are not concerned with nor entrusted with functions similar to those entrusted to BDA under the BDA Act, that is building, engineering or other operations by forming layout of plots with all amenities, construction of houses and apartments, as a part of any scheme to develop a city. Municipalities are concerned with the overall economic Page 49 of 96 C/SCA/12112/2013 CAV JUDGMENT development providing social justice (urban poverty alleviation and slum improvement) regulating land use and constructions, providing amenities (roads, bridges, water supply, fire services, street lighting, parking, bus stops, public conveniences), promoting education and culture etc. Neither urban town planning nor regulation of land use and construction, is similar to the "development" as contemplated in BDA Act, that is carrying out building, engineering operations in or over or under land. It would thus be seen that the object and functions of a Municipal Corporation are completely different from the object and purpose of a development authority like BDA. BDA is not a municipality. Therefore, it cannot be said that mere existence of Municipal Corporations Act, duly amended to bring it in conformity with Part IX-A of the Constitution, will nullify or render redundant, the BDA Act."
24.1 In the said case, it was contended that the Bangalore Development Authority Act was a Legislation which related to some of the responsibilities and functions of Municipalities, enumerated in the 12th Schedule to the Constitution read with Article 243-W and that its provisions, in particular, sections 15 to 19 were inconsistent with the provisions of Part IXA of the Constitution, and no law can entrust powers and responsibilities referred to in Article 243W including those relating to matters listed in 12th Schedule to an authority other than an authority having popular mandate; and that therefore the BDA Act entrusting such powers and responsibilities to a non-elected authority ceases to be in force. However, the Supreme Court has turned down the aforesaid contentions.
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25. In the case of RANGA REDDY DISTRICT SARPACHES' ASSOCIATION AND ORS. v. GOVERNMENT OF A.P. 7 ORS. reported in 2004 (2) ALD 1, a Full Bench of the Andhra Pradesh High Court considered the question whether local bodies should be deemed as part of federating unit in view of 73rd and 74th amendments. The said question was answered by holding that the federal structure includes the Union and the Provincial Governments and the local bodies should be treated to be out of purview of the federal structure. It was further held that power of provincial legislatures and parliament to legislate on VIIth Schedule is not restricted by Article 243-G of Constitution.
26. In the case of ANJAR MUNICIPALITY & ORS. v. J.M. VYAS reported in 1999 (3) GLR 1892, a Division Bench of this Court was considering Section 263 of the Gujarat Municipalities Act, 1963 as amended by amendment Act of 1993 by which it enabled the State Government to dissolve a Municipality inter alia on the ground that it is not competent to perform its duties or deliberately makes default in performance of duties, or exceeds or abuses its power. It was contended that the said provision is not in consonance with Article 243-U of the Constitution. However, the Division Bench overruled such contentions and held [in paragraph 20] that the said Article does not in any way put embargo on or prohibit a competent legislature to make provision for dissolution of a Municipality provided that before Page 51 of 96 C/SCA/12112/2013 CAV JUDGMENT such action is taken, a Municipality is given reasonable opportunity of being heard. The Division Bench further pointed that there is no absence of power on the part of the State legislature in enacting such a provision if a provision regarding dissolution of Municipality is found in the Constitution on the ground that under that provision, a Municipality shall continue for five years from the date appointed for its first meeting. According to the said Division Bench, the only interpretation in consonance with the provisions of Part IX-A would be that a Municipality constituted under any law shall continue for five years from the date appointed for its meeting unless it is dissolved under the provisions of the Gujarat Municipalities Act and before such action is taken, reasonable opportunity of being heard is afforded to the Municipality.
27. Thus, all the aforesaid decisions discussed above clearly indicate that by introduction of Part IX-A of the Constitution, the power of the State legislature as provided in the 7th Schedule of the Constitution of India, to enact law relating to Municipality is in no way taken away unless such law is in direct conflict with the provisions contained in Part IX-A of the Constitution.
28. We now propose to deal with the various decisions cited by Mr Oza.
29. In the cases of STATE OF GUJARAT AND ANOTHER, Page 52 of 96 C/SCA/12112/2013 CAV JUDGMENT APPELLANTS V. RAMAN LAL KESHAV LAL SONI AND OTHERS, RESPONDENTS AND MATHURADAS MOHAN LAL KEDIA AND OTHERS V. S. D. MUNSHAW AND OTHERS reported in AIR 1984 SC 161, an appeal preferred by the State of Gujarat against the judgment of the Gujarat High Court was heard along with an application under Article 32 of the Constitution challenging the amendment of the Gujarat Panchayat Act amended in the year 1978 to circumvent the judgment of the Gujarat High Court which was the subject-matter of the appeal were heard together. 29.1 In the above matters, the appeal and the Writ Petitions were heard earlier by a Constitution Bench consisting of Chandrachud, C. J., Sarkaria, Untwalia, Kailasam and Venkataramiah, JJ. The opinion of the Constitution Bench was pronounced by Venkataramiah, J., on July 13, 1980. But on the application of the appellants, the opinion was set aside and the appeal and the writ petitions were directed to be set down for hearing once more by the Constitution Bench. That is how the matters again came before the Constitution Bench.
29.2 Pursuant to the constitutional mandate in Article 40 that "the State shall take steps to organise village panchayats and endow them with such powers and authority as may be necessary to function as units of self-Government", the State of Gujarat enacted the Gujarat Panchayats Act 1961 (Act No. VI of 1962) 'to consolidate Page 53 of 96 C/SCA/12112/2013 CAV JUDGMENT and amend the law relating to village Panchayats, and district local boards with a view to reorganize the administration pertaining to local Government in furtherance of the object of the democratic decentralization of powers in favour of different classes of panchayats'.
29.3 The Gujarat Panchayats Act 1961 was substantially amended in 1978 in an attempt, to circumvent the judgment of the Gujarat High Court which was under appeal before the said Bench. The Constitutional validity of the Amending Act was in question in the Writ Petitions which was also before the said Constitution Bench. 29.4 By Section 11 (1) of the Act, as it originally stood, a Panchayat Organisation was constituted for the State of Gujarat, consisting of Gram Panchayats, Taluqa Panchayats, District Panchayats, Gram Sabhas, Nyaya Panchayats and Conciliation Panchas. It is provided by, Section 11 (2) that the State Government shall exercise control over Panchayats either directly or through such officer or officers at it may appoint for that purpose. Local areas comprising of revenue villages or groups of revenue villages or hamlets forming-parts of revenue villages or other administrative units or parts thereof are to be declared Grams under the Act, if the population of the local areas does not exceed 10,000 and Nagars if the population of the local areas exceeds 10,000 but does not exceed 20,000. There is to be a Gram Panchayat for each Gram and a Nagar Page 54 of 96 C/SCA/12112/2013 CAV JUDGMENT Panchayat for each Nagar. There is also to be a Taluqa Panchayat for each taluqa and a District Panchayat for each district, as constituted from time to time under the Land Revenue Code. The Gram Panchayat, the Nagar Panchayat, the Taluqa Panchayat and the District Panchayat are to be bodies corporate with perpetual succession and common seal. Section 8 prescribes the hierarchy and provides that, subject to the control of the Government, a Gram Panchayat is to be subordinate to the Taluqa Panchayat and the District Panchayat, while a Nagar Panchayat and Taluqa Panchayat are to be subordinate to the District Panchayat. While the Gram Panchayats, Nagar Panchayats, Taluqa Panchayats and District Panchayats are to be bodies corporate, S. 287 makes it explicit that notwithstanding that they are separate bodies corporate having distinct territorial jurisdiction and territorial functions to perform, the Gram Panchayats, Nagar Panchayats, Taluqa Panchayats, and District Panchayats shall form part of the Panchayat organisation, set up for the purpose of securing a greater measure of participation by the people of the State in local governmental functions and shall perform the functions and duties assigned to them by or under the Act so as to conform to the State plans, National plans and the State policy in general, and also so as to give effect to general or special directions as may be issued by the State Government. Section 292 (A) and Section 305 authorize the State Government to cause inspection to be made and to call for and examine the record of the proceedings of any panchayat.
Page 55 of 96 C/SCA/12112/2013 CAV JUDGMENT 29.5 Prior to the enactment of the Gujarat Panchayat Act, there were in source in the State of Gujarat the Bombay Village Panchayats Act, 1958, the Bombay Local Boards Act, 1923, the Bombay District Municipal Act, 1901 and the Bombay Municipal Boroughs Act, 1925.
29.6 The Bombay Village Panchayats Act, 1958 and the Bombay Local Boards Act, 1923 were repealed by Sections 325 and 326 of the Gujarat Village Panchayats Act, 1961. A local area declared to be a village under the Bombay Village. Panchayats Act, 1958 and a Panchayat constituted under that Act, are deemed to be gram and panchayat under the Gujarat Gram Panchayats Act, 1961. The Secretaries and all officers and servants under the employment of the old village Panchayats are to be Secretaries, Officers and servants of the new gram panchayats. A District Local Board constituted under the Bombay Local Boards Act for a local area is to stand dissolved. All property which stood vested in the district local board immediately before the appointed day is to be deemed transferred to the district panchayat constituted for the local area, called the successor panchayat. All officers and servants in the employment of the District Local Board were similarly to be deemed transferred to the service of the successor panchayat. Where local areas were declared to be grams or nagars under Sec. 9 of the Gujarat Gram Panchayats Act, 1961 and such areas correspond to the limits of a municipal district or Page 56 of 96 C/SCA/12112/2013 CAV JUDGMENT municipal borough under the Bombay District Municipal Act or Bombay Municipal Boroughs Act, it is provided by Section 307 of the Gujarat Panchayats Act that the municipality previously functioning in such local area shall cease to exist and that the councillors of such municipality shall constitute an interim gram panchayat or interim nagar panchayat as the case may be for the gram or nagar. It is also provided that all officers and servants in the employment of the municipality immediately before the date of declaration of the local areas as gram or nagar, shall be officers and servants of the interim panchayat.
29.7 Thus, broadly, District Local Boards under the Bombay Local Boards Act stand transformed as District Panchayats, village panchayats under the Bombay Village Panchayats Act as gram panchayats and municipalities under the Bombay District Municipal Act and Bombay Municipal Boroughs Act as gram or nagar panchayats, depending on the population. Officers and servants in the employment of the District Local Boards are deemed to be transferred to the service of the district panchayats; Secretaries, officers and servants in the employment of the old village panchayats become Secretaries, officers and servants of new gram panchayats and officers and servants in the employment of municipalities become officers and servants of interim panchayats. 29.8 Section 88 of the Act empowers each gram panchayat to Page 57 of 96 C/SCA/12112/2013 CAV JUDGMENT make, in the area within its jurisdiction, and so far as the fund at its disposal will allow, reasonable provision in regard to all or any of the matters specified in Sch. I. Sch. I enumerates a host of matters under the heads 'Sanitation and Health', 'Public Works" Education and Culture, 'Self Defence and Village Defence', 'Planning and Administration', 'Community Development, Agriculture Preservation of forests and Pasture Lands, 'Animal Husbandry', 'Village Industries, and 'Collection of Land Revenue'. Under each of these heads innumerable subjects are specified. In regard to the collection of land revenue express provision is further made by Section 149 that the Government shall, notwithstanding anything contained in land Revenue Code or any other law, entrust to every Gram Panchayat and every Nagar Panchayat, any or all of the functions and duties of Village Accountant or Patel or other similar functions of any other person by whatever name called, in relation to the collection of land revenue and dues recoverable as arrears of land revenue and all other functions and duties of village Accountant under the Land Revenue Code. Section 150 provides that the panchayat so entrusted under Section 149 shall be responsible for the collection of land revenue and other dues of the gram or nagar as the case may be. 29.9 In addition to the functions enumerated in Schedule I, Section 89 imposed certain other duties and functions on the panchayat. A panchayat may, for example, carry out in the area within the limits of jurisdiction, any other work or measure which is Page 58 of 96 C/SCA/12112/2013 CAV JUDGMENT likely to promote health, safety, education, comfort, convenience or social or economic or cultural well-being of the inhabitants of the area including secondary education. A panchayat is also required to carry out the directions or orders given or issued from time to time by the State Government for the amelioration of the condition of scheduled castes and scheduled tribes, and other backward classes. 29.10 Taluqa and District Panchayats are required by Sections 117 and 137 respectively to make reasonable provision in respect of matters specified in Schedules II and III. In Schedule II, a number of subjects are enumerated under the heads 'Sanitation and Health', 'Communication', 'Education and Culture, 'Social Education', 'Community Development', 'Agriculture and Irrigation', 'Animal Husbandry, 'Village and Small Scale Industries', 'Corporation', 'Women's Welfare', 'Social Welfare', 'Relief', 'Collection of Statistics', 'Trusts', 'Forests', 'Rural Housing' and 'Information'. In Schedule III, similarly, a number of subjects are enumerated under the heads 'Sanitation and Health', 'Public Works', 'Education and other Cultural Activities', 'Administration, 'Community Development', 'Agriculture', 'Animal Husbandry', 'Village and Small Scale Industries', 'Social Welfare, 'Relief' and. 'Minor Irrigation Projects'. 29.11 Section 155 provides for the transfer of the functions previously performed by District School Boards under the Bombay and Saurashtra Primary Education Act to taluqa and district Page 59 of 96 C/SCA/12112/2013 CAV JUDGMENT panchayats.
29.12 Section 156 provides for the delegation to district and taluqa panchayats such powers and functions and duties of the registrar or any other authority under the Bombay Co-operative Societies Act, as may be specified.
29.13 Section 157 provides for the transfer to District Panchayats of such powers, functions and duties relating to any matter as are exercised or performed by the State Government or any officer of the Government under any enactment which the State Legislature is competent to enact, or otherwise in the executive power of the State. On the transfer of such functions, the Government is also required to allot to the District Panchayats such funds and personnel as may be necessary to enable the District Panchayats to exercise the powers and discharge functions and duties so transferred. Section 157 (2) mentions the subjects which in particular may be transferred to the District Panchayats. Section 157 (3) further provides that on the transfer of powers, functions and duties under sub-sections (1) and (2), the District Panchayat shall, if the State Government so directs, and may with the previous approval of the Government, delegate to any Panchayat subordinate to it any of the functions, powers and duties so transferred and allot to such Panchayats such funds and staff as may be necessary to enable the Panchayat to discharge the functions and duties so delegated. Page 60 of 96 C/SCA/12112/2013 CAV JUDGMENT 29.14 Section 158 provides that any functions and duties relating to any of the matters specified in the Panchayat functions list, which were previously being performed by the State Government, shall be transferred to the District Panchayats together with the funds provided and the staff employed therefor. On such transfer, the District Panchayat may delegate, subject to the approval of the Government, to any Panchayat subordinate to it any of the functions and duties so transferred.
29.15 Section 96 of the Act authorizes the State Government to vest in a Panchayat open sites, waste, vacant or grazing lands or public roads, streets, bridges, ditches, dikes and fences, wells, river banks, streams, lakes, nallas, canals, water courses, trees or any other property in the gram or nagar.
29.16 Section 99 provides for the creation of gram and nagar funds. Each gram and nagar is to have a fund called the Gram Fund or the Nagar Fund into which are to be paid, inter alia, the proceeds of any tax or fee imposed by or assigned to the panchayat under the Act, the sums contributed to the fund by the State Government or the Taluqa Panchayat or the District Panchayat and all sums received by way of loans from the State Government or the Taluqa Panchayat or the District Panchayat or out of the District Development Fund or otherwise.
Page 61 of 96 C/SCA/12112/2013 CAV JUDGMENT 29.17 Section 119 vests in the Taluqa Panchayat every road building and other work constructed by the Taluqa Panchayat, any land or property transferred to the Taluqa Panchayat by the State Government and any land or property transferred by any other Panchayat. Section 139 vests in the District Panchayat every road building or other work constructed by the Panchayat, any land or property transferred to a District Panchayat by the State Government and any land or other property transferred to the District Panchayat by any other Panchayat.
29.18 We may at this stage appropriately refer to the provisions relating to services. Section 102 provides that there shall be a Secretary for every gram panchayat and nagar panchayat, who shall be appointed in accordance with the rules. Rules, of course, have to be made by the Government under Section 323. Section 102 also provides that a gram panchayat and nagar panchayat may have such other servants as may be determined under Section 203, who shall be appointed by such authority and with such conditions of service, as may be prescribed. The word 'prescribed' again means 'prescribed by rules' and rules have to be made by the Government. It is further provided that having regard to the population of a gram and its income, the State Government may direct that a group of gram panchayats shall have one Secretary only. The Secretary is required to keep in his custody all records and registers of the panchayats, Page 62 of 96 C/SCA/12112/2013 CAV JUDGMENT issue receipts on behalf of the panchayat, prepare all statements and reports required under the Act and perform such other functions and duties, as may be prescribed under the Act. Other servants of the panchayat are required to perform such functions and duties and exercise such powers as may be imposed or conferred on them by the Panchayat, subject to any rules which may be made. 29.19 Section 122 provides that there shall be a Secretary for every Taluqa Panchayat and that the Taluqa Development Officer, who shall be an officer belonging to the State service and posted under the panchayat, shall be the ex-officio Secretary of the panchayat. Section 122 further provides that the taluqa panchayat shall have such other officers and servants as may be determined under Section 203, who may be appointed by such authority, with such conditions of service, as may be prescribed. 29.20 Similarly, Section 142 provides that the District Development Officer posted under the District Panchayat shall be the ex-officio Secretary of the District Panchayat in addition, the District Panchayat shall have such officers and servants, as may be determined under Section 203, performing such functions as may be prescribed and appointed by such authority with such conditions of service, as may be prescribed. We have earlier referred to Sections 157 and 158 which provide for the allotment and transfer of staff to the District Panchayat when functions are transferred by the Page 63 of 96 C/SCA/12112/2013 CAV JUDGMENT Government to the District Panchayats under those provisions. We have already referred to S. 326 which provides that all officers and servants in the employment of an existing District Local Board shall be deemed to be transferred to the service of the successor District Panchayat. We have also referred to Section 325 which stipulates that the Secretaries and all officers and servants in the employ of old village panchayats under the Bombay Village Panchayats Act shall be Secretaries, officers and servants of the new Gram Panchayats. We have further referred to Section 307 which provides that all officers and servants in the employment of municipalities whose local areas have been declared as grams or nagars, as the case may be, shall be officers and servants of the interim panchayats of such grams or nagars.
29.21 Section 203, as it stood before it was amended in 1978, provided for the constitution of a Panchayat Service for the purpose of bringing about uniform scales of pay and. uniform conditions of service for persons employed in the discharge of functions and duties of panchayats. Such service, it was declared, shall be distinct from the State Service. The panchayat service was to consist of such classes, cadres and posts and the initial strength of officers and strength of such classes, cadres and posts was to be such as the State Government might determine from time to time. District Panchayats were empowered to alter, with the previous approval of the State Government, any class, cadre or number of posts Page 64 of 96 C/SCA/12112/2013 CAV JUDGMENT determined by the Government. The cadres were to consist of district cadres, taluqa cadres and local cadres. A servant belonging to a district cadre was liable to be posted, whether by promotion or transfer, to any post in any taluqa or of the district. A servant belonging to the taluqa cadre was liable to be posted whether by promotion or transfer to any post in any gram or nagar in the same taluqa. A servant belonging to a local cadre was liable to be posted whether by promotion or transfer to any post in the same gram or nagar. In addition to the posts in the district taluqa and local cadres, a panchayat might have such other posts of such classes as the State Government may, by general or special order, determine such posts being called 'deputation posts'. They were to be filled in accordance with the provisions of Sec. 207. The State Government was empowered to make rules regulating the mode of recruitment either by holding examinations or otherwise and conditions of service of persons appointed to the panchayat service and powers of appointment, transfer and promotion of officers and servants in the panchayat service and disciplinary action against such officers and servants. The rules were required to make provision entitling servants of such cadres in the Panchayat Service to promotion to such cadres in the State service as may be prescribed. The rules were also required to provide for inter-district transfer of servants belonging to the panchayat service.
29.22 Subject to the rules made under Section 203, the Page 65 of 96 C/SCA/12112/2013 CAV JUDGMENT appointment to posts in the panchayat service, Section 205 provides, shall be made by direct recruitment, by promotion or by transfer of a member of the State service to the panchayat service. Sec. 206 obliges the State Government by general or special order to allocate to the panchayat service- "(i) such number of officers and servants out of the staff allotted or transferred to a panchayat under sections (157, 158 and 325) as it may deem fit, (i) all officers and servants of the municipalities dissolved under Section 307, (ii) all officers and servants in the service of district local boards and district school boards immediately before their dissolution under this Act and transferred to the panchayats under Sections 155 and 326. It is further provided that officers and servants so allocated shall be taken over by such panchayats in such cadre and on such tenure, remuneration and other conditions of service, as the State Government may determine. Section 204 provides that, subject to the rules which the State Government may make, the expenditure towards the pay, allowances of and other benefits allowed to an officer or servant of the panchayat service serving for the time being under any panchayat shall be met by that panchayat from its own fund. Section 207 enables the State Government to direct the posting of officers of the Indian administrative service and of Class II services of the State under panchayat institutions. Sec. 208 enables a panchayat to obtain the services of any officer of Government on loan. Section 210 provides for the constitution of a Panchayat Services Selection Board and Section 211 provides for the Page 66 of 96 C/SCA/12112/2013 CAV JUDGMENT constitution of District Panchayat Service Selection Committees and District Primary Education Staff Selection Committees. 29.23 The broad and general picture that comes out on a perusal of the relevant provisions of the Act, as it stood before it was amended in 1978, is that the Gujarat Legislature aimed at the democratic decentralization of important governmental functions by vesting such functions in gram, nagar, taluqa and district panchayats (See Section 88 read with Sch. I, Section 117 read with Sch. II and Section 137 read with Sch. III) and, besides, by enabling the State Government to transfer other powers, functions and duties to the Panchayat institutions (See Sections 89, 149, 150, 155, 156, 157 and
158). A perusal of the lists of subjects entrusted to the Panchayat Institutions shows that they are not merely the ordinary run of subjects entrusted to municipal bodies, such as public health, sanitation, etc., but they include, a great variety of subjects intimately connected with all aspects of community life and vital to it, except functions, such as, law and order, administration of justice and the like. Even part of the revenue administration is entrusted to panchayat institutions, as evident from the fact that collection of land revenue is one of the duties of the gram panchayats under the Act. Since decentralisation was not to mean mere chaotic fission and confusion, a three tier organisation was set up, subject to the overall control of the Government and it was as if a parallel but subsidiary or subordinate Government was set up by the Government itself to Page 67 of 96 C/SCA/12112/2013 CAV JUDGMENT discharge some of its functions. Not merely were the panchayat institutions required to discharge governmental functions, the organisation and its three-tier units were to have very close links with the Government at every twist and turn, as it were. The property of the panchayat was that which previously belonged to the Government but came to be vested in them or transferred to them and the funds of the panchayats were those to be provided substantially by way of contribution or loan by the Government. The Government was not only empowered to make the rules to carry out the objects of the Act, but also to issue directions from time to time to all or any of the panchayats. The Government was also empowered. to cause inspection to be made and, further, to call for the proceedings of the panchayat, to satisfy itself as to the legality or propriety of any order made by the Panchayat. For the purpose of efficiently discharging the functions and duties of the various panchayat institutions and having regard to the three-tier system which had been established, it was apparently thought necessary to constitute a panchayat service, the members of which would have uniform scales of pay and uniform conditions of service. So a single centralised Panchayat Service was constituted which was to be 'distinct from the State Service'. The distinction lay in that it was a service parallel to the State Service and not in that the members of the service were not Government servants. The question whether the members of the panchayat service are Government servants or not is the principal question to be answered in the appeal and we will come Page 68 of 96 C/SCA/12112/2013 CAV JUDGMENT back to it again later.
29.24 After the coming into force of the 1961 Act, several sets of rules were promulgated and orders were made which concerned the Gujarat Panchayat Service. One such order was that made on Jan. 2, 1967 under Section 203(2) directing that the panchayat service shall consist of district cadre, taluqa cadre and local cadre and further specifying the posts which belonged to each of the cadres. Amongst the rules made were the Gujarat Panchayat Service (Absorption, Seniority, Pay and Allowances) Rules, 1965, which provided for the equation of posts, fixation of seniority, scales of pay, and allowances of "allocated employees". "Allocated employees" were defined in the rules to mean persons allocated to the panchayat service under the provisions of S. 206 (i). The rules provide that every allocated employee holding a corresponding post, immediately before the appointed day, shall be appointed to the equivalent post. Equivalent post is defined to mean a post in the panchayat service, which the State Government may, by order, determine to be generally corresponding to a post held by an allocated employee immediately before the appointed day (called corresponding post) having regard to the pay scales, the minimum educational and other qualifications prescribed for the equivalent post and the corresponding post and the nature and magnitude of responsibilities attached to such posts. Therefore, unless equivalence of posts is first determined, by order, by the Government the Gujarat Panchayat Service (Absorption Page 69 of 96 C/SCA/12112/2013 CAV JUDGMENT Seniority Pay and Allowances) Rules, 1965 cannot be effectively applied. Even so, the State Government did not make any order regarding, equation of posts of the staff in the local cadre and the fixation of their scale of pay, although such orders were made in respect of posts of other cadres. The State Government did not also extend to the staff borne on the local cadre of the panchayat service the benefit of revision of scales of pay, etc. which were made on the basis of the recommendations of the two Pay Commissions though such benefit was extended to the District and Taluqa cadres; nor did the Government make any order providing for promotional avenues to employees of the local cadre. Aggrieved by the deaf ear turned to their representations, certain ex-municipal employee subsequently included in the local cadre of the Panchayat Service, for themselves and on behalf of other ex-municipal employees, subsequently in the local cadre of the Panchayat Service, filed a Writ Petition in the High Court of Gujarat seeking various reliefs. The Writ Petition was resisted by the State of Gujarat and the Development Commissioner on the principal ground that the members of the Panchayat Service were not Government servants and, therefore, they were not entitled to claim the reliefs asked by them. The High Court of Gujarat allowed the Writ Petition holding that the members of the Panchayat Service belonging to the local cadre were Government servants and directed the State Government:
"(1) To make suitable orders under the Gujarat Panchayats Page 70 of 96 C/SCA/12112/2013 CAV JUDGMENT Service (Absorption, Seniority, Pay and Allowances) Rules, 1965 as regards the equivalence of posts, fixation of pay scales for such posts, fixation of the petitioners and the person to whom they represent at an appropriate stage in such pay scales and other incidental matters covered by the said rules and to give effect to such orders from the date of allocation of the petitioners and the persons whom they represent to the Panchayat Service, that is to say, from February 11, 1969.
"(2) To initially fix the pay scales and allowances and other conditions of service, including the grant of house rent allowance, compensatory local allowance, leave benefits, medical benefits, retirement benefits, etc. of the petitioners and the persons whom they represent in the equivalent posts in the Panchayat Service in accordance with the provisions of the Gujarat Panchayats Service (Absorption, Seniority, Pay and Allowances) Rules, 1965 and simultaneously give to them the benefit of such of the accepted recommendations of the First Pay Commission (Sarela Commission) in the said matters, as were extended to the other officers and servants of the Panchayat Service; alternatively, having initially fixed the pay scales, allowances and other conditions of service in the equivalent. post in accordance with the said rules, to revise subsequently such pay scales and other conditions of service as per the accepted recommendations of the First Pay Commission (Sarela Commission) in the said matters with effect from February 11, 1969.
"(3) To further revise the pay scales, and allowances and other conditions of service, including the grant of house rent allowance, compensatory local allowance, leave benefits, medical benefits, retirement benefits, etc, of the Second Pay Commission (Desai Commission) in the said matters and to give Page 71 of 96 C/SCA/12112/2013 CAV JUDGMENT effect to such revision on and with effect from January 1, 1975.
"(4) To extend to the petitioners and the persons whom they represent the benefit of interim relief in the same manner in which such benefit was extended to the other officers and servants of the Panchayat Service.
"(5) To pay to the petitioners and the persons whom they represent the amount payable to them as a consequence of the rationalisation or revision of pay scale and allowances and other conditions of service in pursuance of the directions contained in Clauses (1) to (4) hereinabove.
"(6) To consider the question of making suitable provisions in the Gujarat Panchayats Service (Promotion to Cadres in State Service) Rules, 1974 or by framing appropriate Rules for promotion of the ex-municipal staff of the Panchayat Service to consider the question of providing to such staff, by framing appropriate rules, promotional avenues to the other two cadres in the Panchayat Service, namely, the taluka cadre and the district cadre".
29.25 Being dissatisfied, the State Government and the Development Commissioner preferred appeal before the Supreme Court.
29.26 The Supreme Court first considered the question whether the members of the Gujarat Panchayat Service are Government Servants. The Supreme Court, in paragraph 31 of the judgment, answered the question thus:
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"We are, therefore, of the view that the Panchayat Service constituted under Section 203 of the Gujarat Panchayats Act is a civil service of the State and that the members of the service are Government servants. This very question had been decided by the High Court of Gujarat more than 15 years back in G. L. Shukla v. State of Gujarat, (1967) 8 Guj LR 833, and there appears no good reason to depart from the view then taken by the High Court. Bhagwati, J., who spoke for the Court had said, "The Panchayat Service contemplated under the Act is as much a civil service of the State as the State Service. The legislature by enacting the Act provided for the establishment of the Panchayat Organisation of the State and for the efficient administration of the Panchayat Organisation, particularly in view of the fact that a large part of the service personnel would be drawn from different sources and would, therefore, be heterogeneous in composition with widely differing scales of pay and conditions of service, the Legislature felt that it would be desirable to have a separate civil service of persons employed in the discharge of functions and duties of Panchayats with uniform scales of pay and uniform conditions of service and, therefore, with that end in view the Legislature provided for constitution of the Panchayat Service. All the provisions of the Act relating to the Panchayat Service point unmistakably and inevitably to one and only one conclusion, namely, that the Panchayat Service is one single service with the State as the master. The Panchayat Service is to be constituted by the State Government and its strength is also to be determined by the State Government. Section 203, sub-section (2) says that the Panchayat Service shall consist of such classes, cadres and posts and the initial strength of officers and servants in each such class and cadre shall be such as the State Government may by order from time to time Page 73 of 96 C/SCA/12112/2013 CAV JUDGMENT determine .................. ............... ................... ........................ ............... .................... "The provision of different cadres in Panchayat Service and the transferability of persons employed in the Panchayat Service from a post in the district cadre to a post in any taluka in the district and from a post in the taluka cadre to a post in any Gram or Nagar in the same taluka emphasize that the Panchayat Service is one single service with one master, namely, the State and each Panchayat is not the master of the servant employed in the discharge of its functions and duties. It is difficult to imagine that the Legislature should have provided for transfer of servants from one master to another...............................''The mode of recruitment, the conditions of service and matters relating to appointments, transfers and promotions of persons employed in the Panchayat Service as also disciplinary action against them are all determined by the State Government and that is consistent only with the State being the master in the entire Panchayat Service. The mandatory provision for promotion from Panchayat Service to State Service which is required to be made in the rules also shows that both the services are services of the State. There could be no question of promotion from one service to another if the masters in the two services were different. Then it would be a case of termination of one service and appointment to another ..............................................................."Then comes Sec. 206 which provides for making of an order of allocation to the Panchayat Service .......... ................. .................. .................... "This provision relating to allocation of officers and servants under clauses (i) and (iii) does not contemplate any termination of service of such officers and servants or any fresh appointment to a new service. There is no concept of termination of the existing service and reappointment to a new service involved Page 74 of 96 C/SCA/12112/2013 CAV JUDGMENT in the process of allocation; the concept is only of transfer from one service of the State to another without any break in the continuity of service and that clearly postulates that both services are under the same master, namely, the State. Sec. 206-A also reinforces this conclusion. It makes the initial allocation provisional and permits the State to review the allocation within a period of four years from 1st April, 1963 ....................................................................... "It is not possible to believe that the officer or servant could have been intended by the Legislature to be treated like a chattel which can be tossed about from one master to another. The only reasonable way of looking at the matter seems to be and that conclusion is inevitable on the language of these provisions, that the Panchayat Service is a civil service of State like the State Service and since both the services are civil services of the State with the State as the master, an officer or servant can be allocated from the State Service to the Panchayat Service and re-allocated from the Panchayat Service to the State Service ........................................................................................ ..........."The conclusion which emerges from this discussion is that the Panchayat Service is a distinct and separate service set up for serving the Panchayat Organization of the State and it is as much a civil service of the State as the State Service. The State can have many services such as State Service, Police Service, Engineering Service etc. and Panchayat Service is one of them. In the Panchayat Service, as in the State Service, the State is the master and every officer or servant employed in the Panchayat Service is the servant of the State and not of the Panchayat under which he may be serving for the time being. The Panchayat Service is one single service with the State as the master""
29.27 On the question whether the amendment was ultra vires Page 75 of 96 C/SCA/12112/2013 CAV JUDGMENT or not, the Supreme Court, in paragraphs 51 and 52, made the following observations:
"51. Now, in 1978 before the Amending Act was passed, thanks to the provisions of the Principal Act of 1961, the ex- municipal employees who had been allocated to the Panchayat Service as Secretaries, Officers and servants of Gram and Nagar Panchayats, had achieved the status of Government servants. Their status as Government servants could not be extinguished, so long as the posts were not abolished and their services were not terminated in accordance with the provisions of Art. 311 of the Constitution. Nor was it permissible to single them out for differential treatment. That would offend Art. 14 of the Constitution. An attempt was made to justify the purported differentiation on the basis of history and ancestry, as it were. It was said that Talatis and Kotwals who became Secretaries, Officers and servants of Gram and Nagar Panchayats were Government servants even to start with, while municipal employees who became such Secretaries, Officers and servants of Gram and Nagar Panchayats were not. Each carried the mark of the 'brand' of his origin and a classification on the basis of the source from which they came into the service, it was claimed, was permissible. We are clear that it is not. Once they had joined the common stream of service to perform the same duties, it is clearly not permissible to make any classification on the basis of their origin. Such a classification would be unreasonable and entirely irrelevant to the object sought to be achieved. It is to navigate around these two obstacles of Art. 311 and Art 14, that the Amending Act is sought to be made retrospective, to bring about an artificial situation as if the erstwhile municipal, employees never became members of a service under the State. Can a law be Page 76 of 96 C/SCA/12112/2013 CAV JUDGMENT made to destroy today's accrued constitutional rights by artificially reverting to a situation which existed seventeen years ago? No.
52. The legislation is pure and simple, self-deceptive, if we may use such an expression with reference to a legislature- made law. The legislature is undoubtedly competent to legislate with retrospective effect to take away or impair any vested right acquired under existing laws but since the laws are made under a written' Constitution, and have to conform to the dos and don'ts of the Constitution neither prospective nor retrospective laws can be made so as to contravene Fundamental Rights. The law must satisfy the requirements of the Constitution today taking into account the accrued or acquired rights of the parties today. The law cannot say twenty years ago the parties had no rights therefore, the requirements of the Constitution will be satisfied if the law is dated back by twenty years. We are concerned with today's rights and not yesterday's. A Legislature cannot legislate today with reference to a situation that obtained twenty years ago and ignore the march of events and the constitutional rights accrued in the course of the twenty years. That would be most arbitrary, unreasonable and a negation of history. It was pointed out by a Constitution Bench of this Court in B. S. Yadav v. State of Haryana, (1981) 1 SCR 1024 : (AIR 1981 SC 561) Chandrachud, C. J. speaking for the Court. "Since the Governor exercises the legislative power under the proviso to Article 309 of the Constitution, it is open to him to give retrospective operation to the rules made under that provision. But that date from which the rules are made to operate must be shown to bear either from the face of the rules or by extrinsic evidence, reasonable nexus with the provisions contained in the rules, especially when the retrospective effect extends over a long period as in Page 77 of 96 C/SCA/12112/2013 CAV JUDGMENT this case". Today's equals cannot be made unequal by saying that they were unequal twenty years ago and we will restore that position by making a law today and making it retrospective. Constitutional rights, constitutional obligations and constitutional consequences cannot be tampered with that way. A law which if made today would be plainly invalid as offending constitutional provisions in the context of the existing situation cannot become valid by being made retrospective. Past virtue, (constitutional) cannot be made to wipe out present vice (constitutional) by making retrospective laws. We are, therefore, firmly of the view, that the Gujarat Panchayats (Third Amendment) Act, 1978 is unconstitutional, as it offends Articles 311 and 14 and is arbitrary and unreasonable. We have considered the question whether any provision of the Gujarat Panchayat (Third Amendment) Act, 1978 might be salvaged. We are afraid that the provisions are so intertwined with one another that it is well nigh impossible to consider any life saving surgery. The whole of the Third Amendment Act must go. In the result the Writ Petitions Nos. 4266-70 are allowed, with costs quantified at Rs. 15,000/-. The directions given by the High Court, which we have confirmed, should be complied, with before June 30, 1983. In the meanwhile, the employees of the Panchayats covered by the appeal and the Writ Petitions will receive a sum of Rs. 200/- per month over and above the emoluments they were receiving before February 1, 1978. This order will be effective from February 1, 1983. The interim order made, on February 20, 1978 will be effective up to January 31, 1983. The amounts paid are to be adjusted later."
29.28 After going through the above decision, we do not find anything from the said judgment which helps the petitioners in contending that any of the above provisions of the Gujarat Page 78 of 96 C/SCA/12112/2013 CAV JUDGMENT Municipalities Act is ultra vires any of the provisions of the Constitution of India. In the case of Raman Lal Keshav Lal Soni [supra], by the first part of the judgment all that was held by the Supreme Court was that the Panchayat Service is a distinct and separate service set up for serving the Panchayat Organization of the State and it is as much a civil service of the State as the State Service. The State can have many services such as State Service, Police Service, Engineering Service etc. and Panchayat Service is one of them. In the Panchayat Service, as in the State Service, the State is the master and every officer or servant employed in the Panchayat Service is the servant of the State and not of the Panchayat ..... 29.29 We do not, for a moment, dispute that on the similar reasoning, the municipal service created by the State which consists of 7 classes of officers who are in the municipal service and those persons are entitled to all the benefit under the State service, but it is not possible to accept the contention of Mr. Oza that all the employees of the Municipality are entitled to the same benefit as are available to the employees of the State Government. 29.30 We, thus, find that the above decision is of no help to the client of Mr. Oza.
30. In the judgment of 10th March 2011 of a Division Bench of this Court in SPECIAL CIVIL APPLICATIONS No. 2274 to 2283 of 2008 and No. 8059 of 2009, it appears that a number of persons Page 79 of 96 C/SCA/12112/2013 CAV JUDGMENT were appointed against no post with or without the approval of the Director of Municipalities and a large number of daily rated workmen were also engaged without following any procedure, contrary to the decisions of the High Court and the Supreme Court. Therefore, the expenditure towards the establishment exceeded more than 45% of the revenue generated by the Municipality. The Regional Director of Municipalities, Rajkot, therefore, by order dated 25th July 2002 withdrew the revised scale of pay as was granted as per the recommendations of the 5th Pay Commission with prospective effect. At that stage, on behalf of the employees of the Bagasara Municipality, the Gujarat Pradesh Municipality Karmachari Maha Sangh filed a writ petition being SCA No. 8434 of 2002, challenging the instructions issued by the Director of Municipalities, Gujarat State dated 23rd July 2002. By order dated 3rd October 2002, a learned Single Judge of this Court held that the Director of Municipalities is vested with the powers to instruct the Municipalities to reduce the remuneration to the persons who are employed by the Municipalities as officers and servants. Learned Single Judge further held that whether the expenditure can be controlled by reduction of staff or by reduction of the salary or by both is a matter which has to be looked into by the Director of Municipalities. As regards the contention that there are other employees like daily wager employees whose salary bill takes the establishment cost beyond 45% and, therefore, the permanent employees should not suffer, the learned Single Judge observed as under:-
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"It is to be noted that the instructions are issued by the Director of Municipalities with the wholesome purpose that the substantial income of the Municipality should not be spent on salary of the employees, otherwise very little amount will be left for providing services to the residents in the town for whose benefit the Municipality is constituted. If the Director of Municipalities, who has been vested with the statutory powers under Section 260 of the Act, has taken the policy decision that 45% is the reasonable percentage beyond which the Municipality should not spend for the salaries and wages of its employees, no fault can be found with such decision and the said percentage would, therefore, include the salaries and wages payable to all the employees irrespective of their status whether they are permanent or temporary or daily wagers."
30.1 The learned Single further held as under:-
"if the Municipality wants to make appointment of employees in excess of the sanctioned set-up or even on the sanctioned set up, the Municipality will have to obtain the permission of the Director under Section 260 of the Act regarding their appointment/remuneration and while considering such proposal, the Director of Municipalities will have to consider whether the proposal of the Municipality is reasonable or not and to what extent it is required to be accepted."
30.2 So far as the illegal recruitment of daily wagers and other employees is concerned, the learned Single Judge by the aforesaid order dated 3rd October 2012 passed in SCA No. 8434 of 2002 as under:-
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"9. ... In case the Municipality itself does not make such a proposal, but the permanent employees are of the view that on account of excessive and illegal recruitment of the daily wagers, the Municipality has to spend more than the required amounts of salaries and wages to the daily wagers and other illegally recruited persons, it would be open to such permanent employees to submit a joint representation to the Director of Municipalities and in such a case also, the Director of Municipalities shall consider such representation after giving an opportunity of hearing to the Municipality as expeditiously as possible and preferably within six months, but the Municipality is not required to continue to pay salary as per the fifth Pay Commission pay scales until such exercise is undertaken and final decision is taken by the Director of Municipalities."
30.3 Ultimately, the case was disposed of with the following observations and directions:
"10. While considering the question whether the expenditure incurred by the Municipality on its staff is excessive (for which the Director has presently fixed the limit at 45% of the income of the Municipality), the Director shall consider, inter alia, the following aspects:-
(i). While computing the income of the Municipality, its revenue income, octroi grant and salary grant being received by the Municipality from the Government/Municipal Finance Board shall be taken into consideration.Page 82 of 96 C/SCA/12112/2013 CAV JUDGMENT
(ii). While computing the salary bill of the Municipality, the salary and allowances paid/payable to the employees on the sanctioned set up as well as other set up and to daily wager employees shall also be taken into consideration, with the break-up of regularly appointed employees on the sanctioned set up, those not on the sanctioned set up but appointed with the sanction of the Director of Municipalities and thirdly daily wagers appointed or regularized without the sanction of the Director of Municipalities.
(iii). The Director of Municipalities shall also consider the suggestion being made on behalf of the petitioners that when the Municipality is required to pay the salary to the Chief Officer in the Fifth Pay Commission pay-scales, it would be discriminatory to direct the Municipality not to pay such pay-scales to other employees. It will be open to the Director to consider the above and suggest to the Government to reimburse to the Municipality difference between the salary payable to the Chief Officer as per the 5th Pay Commission pay-scales and the salary payable to the Chief Officer as per the 4th Pay Commission pay-
scales.
(iv). The directions dated 23.7.2002 of the Director for withdrawing the 5th Pay Commission pay-scales are with prospective effect and not with retrospective effect. Hence, the directions are issued only for the limited purpose of stopping the payment of salaries in the Fifth Pay Commission with future effect. Hence, dismissal of the petition by this Court shall not be construed as requiring the Municipality to recover the amounts already paid to the employees in the past on the basis of Fifth Pay Page 83 of 96 C/SCA/12112/2013 CAV JUDGMENT Commission pay-scales.
(v). Even where the present income of the Municipality may not be sufficient to pay its employees salaries in the fifth Pay Commission pay scales, the Director shall not merely stop at giving such findings, but shall take steps; at an appropriate time and stage, and after consultation with the appropriate authorities and bodies, for suggesting ways and means of increasing the income of the Municipality/ies including recommendations to the State Government for introducing and/or amending the relevant statutory rules for fixing the minimum rates of taxation under Section 104 of the Gujarat Municipalities Act, 1963.
(vi). The Director shall reserve liberty to the Municipality that after an adequate increase in the revenue income of the Municipality, it will be open to the Municipality to reconsider the matter and to submit a fresh proposal to the Director of Municipalities with full justification for enhancing the pay scales for its employees."
30.4 The Regional Director of Municipalities, Rajkot, had, thereafter, issued order dated 9th October 2003 setting aside the order granting scale of pay in terms with the recommendations of the 5th Pay Commission as was allowed to the employees of the Municipality, at par with the permanent employees of the State, and the same was affirmed by the State.
30.5 The Bagasara Municipality, at that stage, preferred a Writ Petition before this Court being Special Civil Application No. 23552 of Page 84 of 96 C/SCA/12112/2013 CAV JUDGMENT 2007 with a prayer to quash and set aside the decision of the Director of Municipalities and confirmation thereof by the State Government, whereby the benefits conferred of the 5th Pay Commission were withdrawn. The said case was heard by a learned Single Judge of this Court, who by order dated 29th November 2011 observed that the Government has taken a policy decision for enabling powers of the Municipality to confer the benefits in the cases where in comparison to the revenue of the Municipality, the expenses are not exceeding 45%, such benefits are to be discontinued. Such policy of the State Government is with the object to achieve and maintain expenses of a particular limit in comparison to the revenue of the Municipality. The learned Single Judge, by order dated 29th November 2007 refused to interfere with the order passed by the Director of Municipalities as affirmed by the State.
30.6 When the learned Single Judge took up SCA No. 2274 to 2283 of 2008 and 8059 of 2009, the learned Single Judge noticed the aforesaid order dated 29th November 2007 passed by another learned Single Judge in SCA No. 23552 of 2007 as also order dated 3rd October 2002 passed by another learned Single Judge in SCA No. 8434 of 2002, the learned Single Judge was of the opinion that the matter should be placed before a larger Bench. Consequently, SCA No. 2274 to 2283 of 2008 and 8059 of 2009 came up for consideration before the Division Bench. While deciding the aforesaid matters, the Division Bench came to the following conclusion, vide paragraph 25 of the Page 85 of 96 C/SCA/12112/2013 CAV JUDGMENT judgment dated 10th March 2011:-
"25. There is nothing on record to suggest that the income of the Municipality subsequently gone down and therefore, the administrative expenditure of salary of the establishment of the Municipality has gone beyond the limit of 45% of the total income of the Municipality. On the contrary, from the impugned order dated 9.10.2003, it will be evident that while computing the expenditure of the Municipality towards pay and allowance to the employees, not only the pay and allowances of the employees on the sanctioned set up has been taken, which has not been correctly taken, but the Director also took into consideration the pay and allowances and wages paid to the employees of the other groups for the financial year 2002-03 as shown hereunder.
(i) Pay and allowances of those who Rs. 58,107/-
are not working on approved set up, but appointed by approval of the Director
(ii) Pay and allowances of those who Rs..29,01,292/- are not working on approved set up and not appointed by the approval of the Director
(iii) Pay and remuneration of daily Rs.30,14,184/- wagers
-------------------------
Total Rs. 59,73,583/-
-------------------------
Therefore, it will be evident that the salary expenditure has been shown as 72.52% for the financial year 2002-03 as wrongly inflated by adding the salary and wages of employees Page 86 of 96 C/SCA/12112/2013 CAV JUDGMENT paid to the posts which are not in the establishment of the Municipality, and who have been appointed without any post, with approval of the Director or without approval of the Director. The wages of daily wage and contract employees who may have been engaged in terms with one or other scheme has also been reflected as expenditure of the establishment though such engagement under a scheme is not in the establishment having fixed number of posts."
30.7 Ultimately, the Division Bench directed to pay the employees of regular establishment, who have been appointed against sanctioned posts, the revised scale of pay as per the recommendations of the 5th Pay Commission granted by resolution dated 2nd June 1998 and given effect to, vide letter dated 9th November 1998 and the arrears of salary in the said scale within two months from the date of receipt/production of a copy of this judgment. The Division Bench further directed that the said order would not stand in the way of the Director of Municipalities to pass appropriate order under Section 260 of the Act with respect to those appointed against no post or unsanctioned posts and/or not appointed by the approval of the Director. The Division Bench further held that if there is any scheme specifically framed by the State Government for the Municipalities or by the Municipalities and for giving effect to the same, if daily wage or contract employees are required, they may be paid wages under the scheme, but their salary and wages cannot be clubbed together with the salary to which the Page 87 of 96 C/SCA/12112/2013 CAV JUDGMENT employees of regular establishment. Thus, the Division Bench approved the right of the Director of the Municipalities to pass effective order under Section 260 of the Act and the direction mentioned above were passed because of the wrong calculation of the expenditure. We, therefore, do not find any thing from the above decision which can be helpful to the petitioners in this case.
31. Mr. Oza, in this connection, strongly relied upon the following observations of the Supreme Court in the case of S. R. BOMMAI VS. UNION OF INDIA reported in AIR 1994 SC 1918 in paragraphs 68 and 106 which are quoted below in support of his stance:
"68. The Presidential power under Article 356(l) has also to be viewed from yet another and equally important angle. Decentralisation of power is not only valuable administrative device to ensure closer scrutiny, accountability and efficiency, but is also an essential part of democracy. It is for this purpose that Article 40 in Part IV of our constitution dealing with the Directive Principles of State Policy enjoins upon the State to take steps to organise village panchayats and endow them with such powers and authorities as may be necessary to enable them to function as units of self-governance. The participation of the people in the governance is a sine qua non of democracy. The democratic way of life began by direct participation of the people in the day to day affairs of the society. With the growth of population and the expansion of the territorial boundaries of the State, representative democracy replaced direct democracy and people gradually surrendered more and more of their rights of direct participation, to their Page 88 of 96 C/SCA/12112/2013 CAV JUDGMENT representatives. Notwithstanding the surrender of the requisite powers, in matters which are retained, the powers are jealously guarded and rightly so. If it is true to say that in democracy, people are sovereign and all power belongs primarily to the people, the retention of such power by the people and the anxiety to exercise them is legitimate. The normal rule being the self-governance, according to the wishes expressed by the people, the occasions to interfere with the self-governance should both be rare and demonstrably compelling."
xxx xxx xxx xxxx "106. The Constitution decentralises the governance of the States by a four tier administration i.e. Central Government, State Government, Union territories, Municipalities and Panchayats. See Constitution for Municipalities and Panchayats : Part IX (Panchayats) and Part IX-A (Municipalities) introduced through the Constitution 73rd Amendment Act, making the peoples participation in the democratic process from grass root level a reality. Participation of the people in governance of the State is sine qua non of functional democracy. Their surrender of rights to be governed is to have direct encounter in electoral process to choose their representatives for resolution of common problems and social welfare. Needless interference in self-governance is betrayal of their faith to fulfill self-governance and their democratic aspirations. The constitutional culture and political morality based on healthy conventions are the fruitful soil to nurture and for sustained growth of the federal institutions set down by the Constitution. In the context of the Indian Constitution federalism is not based on any agreement between federating units but one of integrated whole as pleaded with vision by Dr. B. R. Ambedkar on the floor of the constituent assembly at the very inception of the deliberations and the Constituent Page 89 of 96 C/SCA/12112/2013 CAV JUDGMENT Assembly unanimously approved the resolution of federal structure. He poignantly projected the pitfalls flowing from the word "federation.""
31.1 We are unable to appreciate how those observations can be of any help in his contention that we should hold that even if there is no inconsistency between Part IX A and the existing Municipal Laws, the latter should be declared to be invalid because those laws are opposed to the principles of self-governance. We have not found any of those provisions challenged in this application as opposed to the principles reflected in Part IX A of the Constitution quoted by us above.
32. In Special Reference No. 1 of 2002 under Article 143 of the Constitution reported in AIR 2003 SC 87 in paragraph 152, the Supreme Court made the following observations strongly relied upon by Mr. Oza:
"152. In determining the question whether a provision is mandatory or directory, the subject matter, the importance of the provision, the relation of the provision to the general object intended to be secured by the Act will decide whether the provision is directory or mandatory. It is the duty of the Courts to get the real intention of the legislature by carefully attending the whole scope of the provision to be construed. The key to the opening of every law is the reason and spirit of the law, it is the animus impotentia, the intention of the law maker expressed in the law itself; taken as a whole". (See Bratt v. Bratt (1826) 3 Addams 210 at p. 216)."Page 90 of 96 C/SCA/12112/2013 CAV JUDGMENT
32.1 By relying upon the above observations, Mr. Oza tried to convince us that we should also interpret the Part IX-A of the Constitution by bearing in mind the above principles. We, however, propose to hold that the provisions contained in Part IX-A are mandatory in nature but in the said part, there is no indication that even if there is no inconsistency between the provisions of that part and a given Municipal Enactment, we should proceed to declare a part of the latter as unconstitutional. We thus find that the above decision is of no avail to the petitioners.
33. Mr. Oza also relied upon the observations of the Supreme Court in the case SRIKINNA TRUST VS. CIT reported in (1976) 1 SCC 254 at paragraph 32 reproduced below:
"It is true that it is dangerous and may be misleading to gather the meaning of the words used in an enactment merely from what was said by any speaker in the course of a debate in Parliament on the subject. Such a speech cannot be used to defeat or detract from a meaning which clearly emerges from a consideration of the enacting words actually used. But, in the case before us, the real meaning and purpose of the words used cannot be understood at all satisfactorily without referring to the past history of legislation on the subject and the speech of the mover of the amendment who was, undoubtedly, in the best position to explain what defect in the law the amendment had sought to remove. It was not just the speech of any Page 91 of 96 C/SCA/12112/2013 CAV JUDGMENT member in Parliament. It was the considered statement of the Finance Minister who was proposing the amendment for a particular reason which he clearly indicated. If the reason given by him only elucidates what is also deducible from the words used in the amended provision, we do not see why we should refuse to take it into consideration as an aid to a correct interpretation. It harmonises with and clarifies the real intent of the words used. Must we, in such circumstances, ignore it?"
33.1 By relying upon the above observations, Mr. Oza tried to impress upon us that we should guided by the speech of the concerned Minister proposing the incorporation of Part IX-A in interpreting the said Part. We are afraid, in view of the clear provisions of Part IX-A, there is no scope of deviating from the unambiguous provisions of the Constitution. Thus, the said decision is of no help to the clients of Mr. Oza.
34. Mr. Oza also relied upon the following observations of the Supreme Court in the case of RAGHUNATH RAI BARJEA VS PUNJAB AND NATIONAL BANK reported in 2007(2) SCC 230 at paragraphs 51 and 52:
"The learned counsel for the respondent submitted that we have to see the legislative intent when we interpret Section 31. In our opinion, resort can be had to the legislative intent for the purpose of interpreting a provision of law when the language employed by the legislature is doubtful or ambiguous or leads to some absurdity. However, when the language is plain and explicit and does not admit of any doubt, the court cannot by Page 92 of 96 C/SCA/12112/2013 CAV JUDGMENT reference to an assumed legislative intent expand or alter the plain meaning of an expression employed by the legislature vide Ombalika Das v. Hulisa Shaw.
52. Where the language is clear, the intention of the legislature has to be gathered from the language used vide Grasim Industries Ltd. v. Collector of Customs and Union of India v. Hansoli Devi.
34.1 In our opinion, the above principles should be rather applied against the petitioners for the clear language used in Part IX-A of the Constitution and we do not find any of the aforesaid provisions of the Act as inconsistent with any of the provisions of the Part IX-A of the Constitution of India.
35. Lastly reliance has been placed upon the decision of this court in the case of MEMAN ASLAM v. DIRECTOR OF MUNI. reported in 1994(1) G. L. R 446. In the said case, a Division Bench of this Court was considering whether the provisions contained in Section 260 of the Gujarat Municipalities Act, 1963, is ultra vires Article 14 and 16 of the Constitution of India. While answering the aforesaid question in negative, the Division Bench pointed out that section 260 of the said Act indicates the guidelines that whenever Page 93 of 96 C/SCA/12112/2013 CAV JUDGMENT there is extravagant expenditure or excessive staff, the Director of Municipalities is enabled to issue directions to the Municipality to put the things right by directing the Municipality to reduce the number of employees. According to the Division Bench, this is merely an administrative or management decision which ordinarily should be taken by the Municipality itself, as to what should be the strength of the staff and what measures should be taken to reduce the excessive staff or prevent extravagant employment. When the Municipality has failed to act in a prudent manner, the Director is enabled to issue directions to the Municipality to achieve these purposes which are purely management functions and policy decisions. In taking such decisions, the Municipality is not required to give any hearing nor is the Director required to give hearing to any employee. The decision of the Director does not directly affect any particular employee. 35.1 The above decisions, thus, go against the contentions of the petitioners.
36. We, thus, find that the decisions relied upon by Mr. Oza are of no assistance to his clients.
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37. On consideration of the entire materials on record, we, thus, find no merits in the writ-application and in the facts of the present case, the decisions impugned in this writ-application cannot be said to be illegal in any way nor can any of the provisions of the Act challenged in this application be said to be ultra vires any of the Articles of the Constitution of India. The application, thus, fails and is dismissed accordingly. In the facts of the case, there shall be, however, no order as to costs.
37.1 In view of the aforesaid order passed in the main writ- petition, the connected Civil Application does not survive, and it stands disposed of accordingly.
38. We make it clear that while hearing this application, we have restricted our scrutiny only on the question of vires of the provisions indicated above, and we have not gone into the other questions, including the merit of the circular; however, we approve the power of the authority concerned to issue the resolution. We also make it clear that disposal of this application will not stand in the way of the Page 95 of 96 C/SCA/12112/2013 CAV JUDGMENT petitioner in challenging the merit of the resolution before the appropriate forum in accordance with law.
(BHASKAR BHATTACHARYA, CJ.) (J.B.PARDIWALA, J.) mathew Page 96 of 96