Punjab-Haryana High Court
Gram Panchayat vs State Of Punjab And Others on 2 April, 2012
Bench: Hemant Gupta, A.N.Jindal
CWP No. 17225 of 2008 [1]
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
Date of decision: 2.4.2012
CWP No. 17225 of 2008
Gram Panchayat, Manne Majra and others ......Petitioners
vs.
State of Punjab and Others .....Respondents
CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA
HON'BLE MR. JUSTICE A.N.JINDAL
1. Whether Reporters of local papers may be allowed to see the
judgment?
2. To be referred to the Reporters or not?
3. Whether the judgment should be reported in the Digest?
Present: - Mr. Gurminder Singh, Advocate for the petitioners.
Mr. Hari Pal Verma, Addl. A.G., Pubjab
for respondents No. 1, 3 to 5.
Mr. Vishal Gupta, Advocate for
Mr. G.S. Attariwala, Advocate for respondent No. 2.
HEMANT GUPTA, J
Challenge in the present petition is to the notification dated
7.3.2008 (Annexure P-1), whereby the Chamkaur Sahib was notified
as a transitional area under the Punjab Municipal Act, 1911 (for short
the 'Act'); the order dated 2.7.2008 (Annexure P-2) vide which
CWP No. 17225 of 2008 [2]
transitional area was notified as Nagar Panchayat; and the
notification dated 18.7.2008 (Annexure P-3) under Section 4(1) of the
Act constituting Nagar Panchayat, Chamkaur Sahib in respect of
Villages Chamkaur Sahib, Saloh Majra, Manne Majra and Raipur of
District Rupnagar.
Petitioners are the Gram Panchayats of the aforesaid four
villages included in Nagar Panchayat, Chamkaur Sahib. The elections
of the said Gram Panchayats were held on 26.5.2008 and the oath of
the allegiance was administered to the elected members of the Gram
Panchayat in July 2008. Petitioners assert that in terms of Article
243Q of the Constitution of India, the term of the elected Panchayats
is five years until and unless, it is dissolved under any law.
Petitioners challenge the Constitution of the Nagar Panchayat
inter alia on the ground that there is no urban activity, therefore, the
Gram Panchayat cannot be made to lose its existence; that the
residents of these villages do not pay any tax such as octroi or house
tax whereas the residents will have to pay the same in respect of
Nagar Panchayat. The entire income derived from this land by leasing
out the same is spent for the benefit of the villages whereas on
creation of a Nagar Panchayat, the income of Gram Panchayat from
land will cease to exist. It is asserted that the residents of village
Chamkaur Sahib have a right to decide as to what the nature of
society in which they want to live i.e. agrarian, semi urban or urban.
By converting their Gram Panchayat into that of Nagar Panchayat,
civil consequences, like loss of office and status of the Gram
Panchayat are going to take place and they will be compelled to adopt
the way of life which they are reluctant to adopt on account of higher
incidence of taxes and the like.
In the written statement filed, it has been averred that Section 4
(1) of the Act empowers the State Government, having regard to the
CWP No. 17225 of 2008 [3]
population of area and other conditions, could convert any area in its
jurisdiction to be transitional area. It is pointed out that the State
Government has constituted Committees in every district comprising
of Deputy Commissioner, Divisional Town Planner, Deputy Director,
Urban Local Bodies and Executive Officers of the nearby Municipal
Councils. The said committee is to examine as to whether any area
under them could be made "transitional area" for the welfare of the
people and to provide better civic amenities to the individuals residing
in that particular area. The Gram Panchayat, Chamkaur Sahib
requested the State Government that it cannot give better amenities
to the residents so the area be declared into Notified Area Committee
so that more funds could flow in from the State of Punjab. A non-
government organization by the name of Chamkaur Sahib
Development Forum (Registered) also communicated to the State of
Punjab in this regard. It was also pointed out that the Gram
Panchayat has usually funds of Rs. 5-6 lacs annually for development
and welfare of the individuals residing in the areas coming under
them, while if that particular area is converted into a "transitional
area" then huge funds to a tune of a crore or more could be spent for
better civic amenities. The State Government has sanctioned an
amount of Rs. One Crore for the development of this area. The
Committee constituted has submitted its report as Annexure R-1/1
and after considering the report of the Committee, a draft notification
(Annexure P-1) was issued. The same was published in daily Ajit on
28.3.2008 and in The Tribune dated 1.4.2008. Substance of the
notification was also published in the locality for the information of
the inhabitants by beat of drums as well. Copies of the notifications
were also sent to each of the Sarpanches of the villages. Only one
objection from Jaspal Singh, Sarpanch of village Raipur was received.
But during hearing, he withdrew his objections being satisfied with
CWP No. 17225 of 2008 [4]
the proposal. It was villagers of the village Raipur who have requested
for constitution of the Nagar Panchayat.
It is pointed out that the area is growing with urban activities
as they are two main bazars comprising of 729 shops, 3 banks, 2
petrol pumps, 8 rice shellers, 3 godowns namely F.C.I, Markfed and of
warehousing Corporation, one grain market, one vegetable market, 3
government hospitals, 3 private hospitals, 23 workshops, 4 hotels and
34 restaurant/dhabas to show that the commercial/trading activities
is going on in the area and it is not correct that the area is purely
agricultural.
Learned counsel for the petitioners has vehemently argued that
the constitution of notified area without considering the factors as
stipulated in Section 4 of the Act is illegal. The petitioners rely upon a
judgment of Hon'ble Supreme Court in Baldev Singh and ors vs. State
of Himachat Pradesh and ors AIR 1987 SC 1239 to contend that
Nagar Panchayat has been constituted without providing any
opportunity of hearing to the petitioners as well. Reliance is also
placed upon Division Bench judgments of this court reported as
Harjinder Singh and others v. State of Punjab, 2002(1) RCR (Civil)
610; Kamaljeet Singh v. State of Punjab through Principal Secretary
to Gvoernemnt of Punjab, Local Government Department, 2002(3)
RCR (Civil) 438 and Sewa Singh v. State of Punjab, 2001(3) RCR
(Civil) 292 in support of the arguments that the notified area
committee has been constituted in an arbitrary and illegal manner.
On the other hand, learned counsel for the respondents has
relied upon Division Bench judgments of this Court reported as
Bhupinder Singh v. Union of India, 1996 (3) RCR (Civil) 180; Madan
Lal v. State of Punjab, (2009) 2 RCR (Civil) 536 and Indian Sucrose
CWP No. 17225 of 2008 [5]
Limited v. Secretary, Department of Local Bodies, (2006) 4 RCR (Civil)
56, to contend that the constitution of municipality and extension of
its limits are the legislative functions and therefore such notification
cannot be set aside in exercise of the powers of the judicial review of
this Court merely for the reason that an opportunity of hearing was
not granted. It is contended that there is no grievance made by the
petitioners in respect of grant of opportunity of hearing. It is
contended that since the notification extending or constituting the
Municipality is a legislative function, therefore the grounds to
challenge are not the same as against the administrative order and
that no foundation has been laid to challenge a legislative function.
Before we consider the respective arguments of the learned
counsel for the parties, it would be relevant to notice that the Hon'ble
Supreme Court in State of U.P. v. Pradhan Sangh Kshettra Samiti,
1995 Supp (2) SCC 305, was considering the establishment of Gram
Sabha for a group of villages. The High Court set aside establishment
of a common Gram Sabha for the reason that power to specify villages
vests with the people and not with the State Government and that the
villages cannot simply be a revenue village. The Supreme Court, inter-
alia, held that the Court cannot substitute the concept of village for
that of the State Government and that it is for the Government to
decide in what manner the panchayat areas and the constituencies in
each panchayat area will be delimited. It is not for the court to dictate
the manner in which the same should be done. So long as the
panchayat areas and the constituencies are delimited in conformity
with the constitutional provisions or without committing a breach
thereof, the courts cannot interfere with the same. The Court held
to the following effect:-
CWP No. 17225 of 2008 [6]
"32. It is common knowledge that the needs of the people
change with the development in the economic, scientific and
technological fields as also with the developments in transport
and communication. With them, the concept of self-sufficiency
and the means, mode and range of self-governance also
change. What is more, the units of self-governance at the lower
level being interrelated and integrated with those at the higher
levels as parts of the whole scheme of administration and
development in the State, have to respond to and fall in line
with the growth in the size and operation of the units at the
higher level to form a coordinated democratic polity and
administrative machinery. The concept of grassroot or lowest
level administration must, therefore, necessarily change with
the advance and progress at other levels. The governing units
at all levels have to fit in a pattern and a scheme for
administration both for law and order and economic growth.
They have to act as vehicles of overall stability and progress.
For that purpose, their constitution and functioning have to be
in conformity with the larger social, political and economic
goals.
33. Hence there cannot be any immutable social, political,
economic or organisational concept of village as a self-
governing unit. In a developing country like ours, where the
population is growing fast, where the society is in ferment on
all fronts, where divisive forces of all kinds abound, where the
vast majority of population is illiterate and is the victim of
ignorance, superstition, blind faith, biases and prejudices and
is shackled by tradition, and irrational customs and practices,
there is an urgent need to evolve means to unite and integrate
the society, to expose the populace to larger and higher goals,
to imbibe in them the wider perspectives and to forge a socially
cohesive front for breaking the barriers of race, caste, class,
religion and region rather than to pander to the age-old, self-
centred physical and mental barriers. ................What is
further forgotten is that over the years, not only the population
in the rural areas has grown enormously but the complexion
of the rural areas has also undergone a change. With the
increasing pressure on land, there has been a steady
migration from the rural to the urban and semi-urban areas.
Some villages are almost deserted while others survive much
below the poverty line. At the same time, some have emerged
as small pockets of comparative prosperity, thanks to marginal
industrial and commercial activities around them and the
nearness to the urban and semi-urban areas. There is further
a limit to the number of village panchayats which may be
CWP No. 17225 of 2008 [7]
constituted with all the overhead expenses involved in the
exercise which must have a rational relation to the result
sought to be achieved."
With the said background, the question required to be
examined is "Whether the constitution of a Municipality or extension
of its boundaries is an administrative or legislative function" and
Whether such action, in the present case, can be interfered with in
exercise of judicial review by this Court?
Few of the judgments dealing with the issue as to what are the
administrative and legislative functions, need to be noticed. It has
been held that there is large area of overlap between what is plainly
legislative and what is plainly administrative functions. But the
courts, nevertheless, for practical reasons, have distinguished
legislative orders from the rest of the orders by reference to the
principle that the former is of general application. They are made
formally by publication and for general guidance, with reference to
which individual decisions are taken in particular situations.
A Seven-Judge Bench in Prag Ice and Oil Mills v. Union of India,
1978(3) SCC 459, wherein an order fixing the price under the
Essential Commodities Act, was subject matter of consideration, held
to the following effect:-
"37. We think that unless, by the terms of a
particular statute, or order, price fixation is made a
quasi-judicial function for specified purposes or
cases, it is really legislative in character in the type of
control order which is now before us because it
satisfies the tests of legislation. A legislative measure
does not concern itself with the facts of an individual
case. It is meant to lay down a general rule applicable
to all persons or objects or transactions of a
particular kind or class. In the case before us, the
CWP No. 17225 of 2008 [8]
Control Order applies to sales of mustard oil
anywhere in India by any dealer. Its validity does
not depend on the observance of any procedure to be
complied with or particular types of evidence to be
taken on any specified matters as conditions
precedent to its validity. The test of validity is
constituted by the nexus shewn between the order
passed and the purposes for which it can be passed,
or, in other words by reasonableness judged by
possible or probable consequences."
In Ramesh Chandra Kachardas Porwal v. State of Maharashtra,
(1981) 2 SCC 722, the court was considering the establishment of
market yard in terms of the State Agriculture Marketing Board Acts.
It was held that declaration by notification of the government that a
certain place shall be a principal market yard for a market area, is an
act legislative in nature and does not oblige the observance of the
rules of natural justice.
In Union of India and another v. Cynamide India Ltd. and
another, 1987 (2) SCC 720, the question arose regarding fixation of
price of the drugs under the Drugs (Price Control) Order 1979 issued
under the Essential Commodities Act, 1955. In the said case, the
Hon'ble Supreme Court observed that the legislative action, plenary or
subordinate, is not subject to rules of natural justice. In the case of
Parliamentary legislation, the proposition is self-evident. In the case of
subordinate legislation, it may happen that Parliament may itself
provide for a notice and for a hearing. It was further held that there
are several instances of the legislature requiring the subordinate
legislating authority to give public notice and a public hearing before
say, for example, levying a municipal rate, in which case the
"substantial non-observance" of the statutorily prescribed mode of
CWP No. 17225 of 2008 [9]
observing natural justice may have the effect of invalidating the
subordinate legislation. Such right given is in the nature of a
concession which is not to detract from the character of the activity as
legislative and not quasi-judicial. But, where the legislature has not
chosen to provide for any notice or hearing, no one can insist upon it
and it will not be permissible to read natural justice into such
legislative activity. It was held to the following effect:-
"6. Occasionally, the legislature directs the subordinate
legislating body to make "such enquiry as it thinks fit"
before making the subordinate legislation. In such a
situation, while such enquiry by the subordinate
legislating body as it deems fit is a condition precedent
to the subordinate legislation, the nature and the extent
of the enquiry is in the discretion of the subordinate
legislating body and the subordinate legislation is not
open to question on the ground that the enquiry was
not as full as it might have been. The provision for
"such enquiry as it thinks fit" is generally an enabling
provision, intended to facilitate the subordinate
legislating body to obtain relevant information from all
and whatever source and not intended to vest any right
in anyone other than the subordinate legislating body.
It is the sort of enquiry which the legislature itself may
cause to be made before legislating, an enquiry which
will not confer any right on anyone.
xx xx xx
14. We may refer at this juncture to some illuminating
passages from Schwartz's book on "Administrative Law"
1976, pp. 143-44. He said:-
"If a particular function is termed 'legislative' or
'rule-making' rather than 'judicial' or
'adjudication', it may have substantial effects
upon the parties concerned. If the function is
treated as legislative in nature, there is no right
to notice and hearing, unless a statute expressly
requires them. If a hearing is held in accordance
with a statutory requirement, it normally need
CWP No. 17225 of 2008 [10]
not be a formal one, governed by the
requirements discussed in Chapters 6 and 7 The
characterization of an administrative act as
legislative instead of judicial is thus of great
significance"
As a federal court has recently pointed out, there is no 'bright
line' between rule-making and adjudication. The most famous
pre-APA attempt to explain the difference between legislative
and judicial functions was made by Justice Holmes in Prentis
v. Atlantic Coast Line Co, (1908)211 US 210, 226 'A judicial
inquiry', said he, 'investigates, declares and enforces liabilities
as they stand on present or past facts and under laws
supposed already to exist That is its purpose and end.
Legislation on the other hand looks to the future and changes
existing conditions by making a new rule to be applied
thereafter to all or some part of those subject to its power.' The
key factor in the Holmes analysis is time: a rule prescribes
future patterns of conduct; a decision determines liabilities
upon the basis of present or past facts.
The element of applicability has been emphasized by
others as the key in differentiating legislative from judicial
functions. According to Chief Justice Burger, 'Rule-making is
normally directed toward the formulation of requirements
having a general application to all members of a broadly
identifiable class. (Dissenting in American Air Lines, Inc. v.
CAB, 359 F 2d 624, 636) An adjudication, on the other hand,
applies to specific individuals or situations. Rule-making
affects the rights of individuals in the abstract and must be
applied in a further proceeding before the legal position of any
particular individual will be definitely affected; adjudication
operates concretely upon individuals in their individual
capacity."
In Shri Sitaram Sugar Co. Ltd. v. Union of India, (1990) 3 SCC
223, the Constitutional Bench of the Hon'ble Supreme Court was
considering the determination of price of the sugar in terms of sub-
section 3(3-C) of the Essential Commodities Act, 1955 in respect of
sale price of the sugar by each individual producer. The stand of the
State before the Hon'ble Supreme Court was that determination of the
price of sugar in terms of sub-section 3-C of the Essential
CWP No. 17225 of 2008 [11]
Commodities Act, is of general application, therefore legislative in
character. Omission, if any, to consider any peculiar problems of
individual producer is not a ground for judicial review. Reliance was
placed on an earlier judgment in Cynamide India Ltd.'s case (supra).
The Court held to the following effect:-
"32. .... ............... Wade points out that legislative power is
the power to prescribe the law for people in general, while
administrative power is the power to prescribe the law for
them, or apply the law to them, in particular situations. A
scheme for centralising the electricity supply undertakings
may be called administrative, but it might be just as well
legislative. Same is the case with ministerial orders
establishing new towns or airports etc. He asks: "And what of
'directions of a general character' given by a minister to a
nationalised industry? Are these various orders legislative or
administrative?" Wade says that the correct answer would be
that they are both. He says: "...there is an infinite series of
gradations, with a large area of overlap, between what is
plainly legislation and what is plainly administration".(Ibid.)
Courts, nevertheless, for practical reasons, have distinguished
legislative orders from the rest of the orders by reference to the
principle that the former is of general application. They are
made formally by publication and for general guidance with
reference to which individual decisions are taken in particular
situations.
xx xx xx
"33. According to Griffith and Street, an instruction may be
treated as legislative even when they are not issued formally,
but by a circular or a letter or the like. What matters is the
substance and not the form, or the name. The learned authors
say: "...where a Minister (or other authority) is given power in a
statute or an instrument to exercise executive, as opposed to
legislative, powers -- as, for example, to requisition property or
to issue a licence -- and delegates those powers generally,
then any instructions which he gives to his delegates may be
legislative". Where an authority to whom power is delegated is
entitled to sub-delegate his power, be it legislative, executive
or judicial, then such authority may also give instructions to
his delegates and these instructions may be regarded as
legislative. However, as pointed out by Denning, L.J., (as he
then was) a judicial tribunal cannot delegate its functions
CWP No. 17225 of 2008 [12]
except when it is authorised to do so expressly or by necessary
implication: see Barnard v. National Dock Labour Board, (1953)
2 QB 18, 40.
34. Kenneth Culp Davis says: "What distinguishes legislation
from adjudication is that the former affects the rights of
individuals in the abstract and must be applied in a further
proceeding before the legal position of any particular
individual will be definitely touched by it; while adjudication
operates concretely upon individuals in their individual
capacity". Justice Holmes' definition, which is what is called
the "time test" and which Davis describes as one which has
produced many unsatisfactory practical results, reads:-
(Prentis v. Atlantic Coast Line Co., 211 US 210.)
"A judicial inquiry investigates, declares, and enforces
liabilities as they stand on present or past facts and
under laws supposed already to exist. That is its
purpose and end. Legislation, on the other hand, looks
to the future and changes existing conditions by making
a new rule, to be applied thereafter to all or some part of
those subject to its power. The establishment of a rate
is the making of a rule for the future, and therefore is
an act legislative, not judicial...."
35. The element of general application is often cited as a
distinct feature of legislative activity. In the words of Chief
Justice Burger, "rule making is normally directed toward the
formulation of requirements having a general application to all
members of a broadly identifiable class".(quoted by Bernard
Schwartz in Administrative Law p. 144 (1976). Bernard
Schwartz says: "An adjudication, on the other hand, applies to
specific individuals or situations. Rule making affects the
rights of individuals in the abstract and must be applied in a
further proceeding before the legal position of any particular
individual will be definitely affected; adjudication operates
concretely upon individuals in their individual capacity".
According to Schwartz, the "time test" and the "applicability
test" are workable in most cases, although in certain
situations distinctions are indeed difficult to draw.
36. A statutory instrument (such as a rule, order or
regulation) emanates from the exercise of delegated legislative
power which is the part of the administrative process
resembling enactment of law by the legislature. A quasi-
judicial order emanates from adjudication which is the part of
the administrative process resembling a judicial decision by a
CWP No. 17225 of 2008 [13]
court of law. This analogy is imperfect and perhaps unhelpful
in classifying borderline or mixed cases which are better left
unclassified. (See Davis, Administrative Law Text. P. 123).
37. If a particular function is termed legislative rather than
judicial, practical results may follow as far as the parties are
concerned. When the function is treated as legislative, a party
affected by the order has no right to notice and hearing,
unless, of course, the statute so requires. It being of general
application engulfing a wide sweep of powers, applicable to all
persons and situations of a broadly identifiable class, the
legislative order may not be vulnerable to challenge merely by
reason of its omission to take into account individual
peculiarities and differences amongst those falling within the
class.
xx xx xx
44. The individual orders, calculating the "amounts" payable
to the individual producers, being administrative orders
founded on the mechanics of price fixation, they must be left
to the better instructed judgment of the executive, and in
regard to them the principle of audi alteram partem is not
applicable. All that is required is reasonableness and fair play
which are in essence emanations from the doctrine of natural
justice as explained by this Court in A.K. Kraipak v. Union of
India, (1969)2 SCC 262 See also the observation of Mukharji,
J., as he then was, in Renusagar, (1908) 1 KB 441.
45. Price fixation is in the nature of a legislative action even
when it is based on objective criteria founded on relevant
material. No rule of natural justice is applicable to any such
order. It is nevertheless imperative that the action of the
authority should be inspired by reason: Saraswati Industrial
Syndicate Ltd, (1974)2 SCC 630. The government cannot fix
any arbitrary price. It cannot fix prices on extraneous
considerations: Renusagar."
Recently, the Constitution Bench in PTC India Limited v.
Central Electricity Regulatory Commission, (2010) 4 SCC 603, was
analysing the provisions of the Electricity Act, 2003. It was observed
that the decision-making and regulation-making functions are both
assigned to Centralised Electricity Regulatory Commission. A
CWP No. 17225 of 2008 [14]
statutory instrument, such as a rule or regulation, emanates from the
exercise of delegated legislative power which is a part of
administrative process resembling enactment of law by the legislature
whereas a quasi-judicial order comes from adjudication which is also
a part of administrative process resembling a judicial decision by a
court of law. Approving the view taken in Shri Sitaram Sugar Co. Ltd's
case (supra), it was held to the following effect:-
"51. In Narinder Chand Hem Raj v. Lt. Governor, H.P., (1971)2
SCC 747. this Court has held that power to tax is a legislative
power which can be exercised by the legislature directly or
subject to certain conditions. The legislature can delegate that
power to some other authority. But the exercise of that power,
whether by the legislature or by the delegate will be an
exercise of legislative power. The fact that the power can be
delegated will not make it an administrative power or
adjudicatory power. In the said judgment, it has been further
held that no court can direct a subordinate legislative body or
the legislature to enact a law or to modify the existing law and
if courts cannot so direct, much less the tribunal, unless
power to annul or modify is expressly given to it.
xx xx xx
78. One more aspect needs to be mentioned. The judgment of
this Court in Shri Sitaram Sugar Co. Ltd. has laid down various
tests to distinguish legislative from administrative functions. It
further held that price fixation is a legislative function unless
the statute provides otherwise. It also laid down the scope of
judicial review in such cases."
In view of the above, it can be held that a legislative act is the
creation and promulgation of a general rule of conduct without
reference to particular cases, whereas an administrative act is the
making and issue of a specific direction or the application of a general
rule to a particular case in accordance with the requirements of
policy. Legislation is the process usually operating in future,
administration is the process of performing particular acts, of issuing
particular orders or of making decisions which apply general rules to
CWP No. 17225 of 2008 [15]
particular cases. An adjudication, on the other hand, applies to
specific individuals or situations. But, these are only a broad
distinctions. The object of the rule, the reach of its application, the
rights and obligations arising out of it, its intended effect on past,
present and future events, its form, the manner of its promulgation
are some factors which may help in drawing the line between
legislative and non-legislative acts. The said factors have been applied
for holding that the fixation of price under the provisions of the
Essential Commodities Act or tariff under the Electricity Act, 2003,
are legislative in nature. Such principles have been applied even in
respect of the constitution of the Municipality or extension of its
limits, the reference to such judgments is made hereinafter.
A Full Bench of this Court in Gram Sabha Begowal v. State of
Punjab, ILR (1981) 1 P&H 293, relied upon the Hon'ble Supreme
Court judgment in Tulsipur Sugar Co. Ltd. v. Notified Area
Committee, (1980) 2 SCC 295, to return a finding that challenge to
the creation of Notified Area Town Area on the ground that it was
done without affording opportunity of hearing or filing of objections, is
not sustainable. In the aforesaid case a Notified Area Committee was
constituted in terms of Section 241 of the Punjab Municipal Act,
1911, which does not provide for any opportunity of hearing as is
provided in Sections 4 to 7 of the Act. The Court observed as under:-
"There, the learned Judges were considering section 13 of the
Punjab Co-operative Societies Act, 1961, which provided
opportunity of hearing to the co-operative societies and the
creditors before ordering amalgamation of societies but no
such hearing was afforded to the individual members of the
societies and it was sought to be urged that even individual
members would be entitled to a hearing. It was ruled that the
individual members who are not allowed a hearing by the
statute cannot urge that the provision would be violative of the
Constitution.
CWP No. 17225 of 2008 [16]
10. The aforesaid view finds further support from The Tulsipur
Sugar Co. Ltd. v. The Notified Area Committee, Tulsipur,. In,
that case, the Supreme Court was interpreting section 3 of the
U.P. Town Area Act (2 of 1914), which authorised the State
Government to declare any town, village, suburb, bazar or
inhabited place to be a town area for the purposes of the Act.
The State Government had issued a notification under this
provision notifying a town area and the notification was
challenged on the ground that since no provision was made in
section 3 for publishing notice of the proposed notification and
for considering any representation or objections filed in that
behalf by the members of the public, the notification was liable
to be struck down. The Supreme Court ruled as follows:--
"Section 3 does not provide that the State Government
should give previous publicity to its proposal to declare
any area as a town area and should make such
declaration after taking into consideration any
representation or objection filed in that behalf by the
members of the public. Nor section 3 of the Act by
necessary implication Imposed a duty on the State
Government to follow the principles of natural justice
i.e. to give publicity to its proposal to declare any area
as a town area and to decide the question whether any
declaration under section 3 of the Act should be made
or not after taking into consideration the
representations or objections submitted by the
members of the Public in that regard. Therefore, the
failure to comply with such procedure would not
invalidate any declaration made under section 3. The
power of the State Government to make a declaration
under section 3 is legislative in character because the
application of the rest of the provisions of the Act to the
geographical area which is declared as a town area is
dependent upon such declaration. Section 3 of the Act
is in the nature of a conditional legislation. The maxim
"audi alteram partem" does not become applicable to the
case by necessary implication.
A notification issued under section 3 which has the effect of
making the Act applicable to a geographical area is in the
nature of a conditional legislation and it cannot be
characterised as a piece of subordinate legislation. Therefore,
it is not necessary for the State Government to follow the same
procedure which, is applicable to the promulgation of rules
under section 39 of the Act. It is not possible to equate a
CWP No. 17225 of 2008 [17]
declaration to be made under section 3 with rules made under
section 39."
The decision of the Supreme Court in Tulsipur Sugar Co's case
(supra), is on all fours with the present case. In both the cases
the challenge is to the creation of a notified area/town area on
the ground that it was done without affording an opportunity
of filing objections against the proposed action of the State
Government. Therefore, for the reasons recorded in the said
judgment of the Supreme Court, we do not find any merit in
the second point raised on behalf of the petitioners and hold
that section 241 of the Act is not ultra vires Article 14 of the
Constitution merely because there is no provision therein for
inviting objections from the inhabitants of the area before
declaring a notified area.
11. Therefore, for the reasons recorded above, we hold that
sections 241 and 242 of the Act are not ultra vires Article 14 of
the Constitution."
The Hon'ble Supreme Court in Sub-Divisional Officer v. Mehar
Singh, (1988) 4 SCC 200, approved the aforesaid judgment of the Full
Bench of this Court, when it held to the following effect:-
"8. It will be appropriate first to notice the Full Bench decision
of Punjab High Court in Gram Sabha Begowal v. State of
Punjab, AIR 1981 P&H 101, repelling a similar challenge to the
provisions of Sections 241 and 242. Two objections were
raised to the validity of Sections 241 and 242. It was said first
that these sections do not provide enough guidelines regarding
the circumstances in which an area can be constituted into a
notified area and empowered to administer its own fund for
local administration. Secondly, it was submitted that there
was no provision to provide persons affected by such
notification with an opportunity of hearing and that this was
violative of Article 14. In that case, an area comprised in a
gram sabha was included under Section 241 and the gram
sabha came to the court urging that it could not be so notified
without hearing its objections. These contentions were
overruled by the Full Bench (to which one of the members of
the Bench which heard the present batch of cases was a
party). The principle of the decision is contained in the
headnote of the report of the said case:
"Section 241 of the Act gives sufficient guidelines to the
State Government as to which area deserves to be
CWP No. 17225 of 2008 [18]
declared as notified area. Whenever the State
Government...................
The Full Bench, with which we are in agreement, clearly laid
down that the provisions of Section 241 are not liable to
challenge on grounds similar to those raised in the present
petition."
In Tulsipur Sugar Co.'s case (supra), the challenge was to a
notification extending the limit of Tulsipur Town Area bringing within
its limit the village of Shitlapur. The said notification was challenged
for the reason that it was promulgated without giving opportunity of
hearing to those affected regarding admissibility of extending the
limits of Tulsipur Town Area Committee. The U.P. Town Area Act,
1914 under which such notification was issued does not provide for
any previous publicity to its proposal to declare any area as town
area. The Court held to the following effect:-
"7. We are concerned in the present case with the power of the
State Government to make a declaration constituting a
geographical area into a town area under Section 3 of the Act
which does not require the State Government to make such
declaration after giving notice of its intention so to do to the
members of the public and inviting their representations
regarding such action. The power of the State Government to
make a declaration under Section 3 of the Act is legislative in
character because the application of the rest of the provisions
of the Act to the geographical area which is declared as a town
area is dependent upon such declaration. Section 3 of the Act
is in the nature of a conditional legislation. Dealing with the
nature of functions of a non-judicial authority, Prof. S.A. De
Smith in Judicial Review of Administrative Action (3rd Edn.)
observes at p. 163:
"However, the analytical classification of a function may
be a conclusive factor in excluding the operation of the
audi alteram partem rule. It is generally assumed that
in English law the making of a subordinate legislative
instrument need not be preceded by notice or hearing
unless the parent Act so provides."
CWP No. 17225 of 2008 [19]
8. In Bates v. Lord Hailsham of St. Marylebone & Ors. the
facts were these: In 1964, the British Legal Association was
formed. Out of about 26,000 practising solicitors some 2,900
were members of the association. The Lord Chancellor
announced on May, 1, 1972, that the scale of fees under
Schedule I to the Solicitors' Remuneration Order, 1883 were
proposed to be abolished and that for all conveyancing
transactions the system of quantum meruit was to be applied.
On June 6, pursuant to section 56 (3) of the Solicitors Act
1957, the Law Society was sent by the committee set up under
section 56 (1) a draft of the order proposed to be made under
section 56 (2). The draft order was published in The Law
Society's Gazette on June 21. The association set out two
circulars about the proposed order, the first at the end of May,
to all solicitors, and the second on July 17, making a series of
accusations against the Lord Chancellor and the Law Society.
On July 11, the association sent printed submissions to the
statutory committee, requesting that the order should not be
approved at this juncture and that the Lord Chancellor should
seek further consultations with the profession and
professional organisations. On July 14, the association wrote
to each member of the committee asking for further time and a
deferment of the decision for two months. The Lord
Chancellor's reply dated July 18, was that he saw no reason
for postponing the meeting or for refraining from making the
order in such terms as the committee approved. On July 18,
the plaintiff as a member of the national executive committee
of the association, took out a writ against all members of the
statutory committee, seeking a declaration and an injunction,
and on July 19, at 2 P.M. having previously notified the
Treasury Solicitor of the intention, he moved the court ex
parte, seeking to restrain the committee from holding the
meeting which was to be held at 4.30 P.M. on that day. The
motion was dismissed by Megarry, J. and we feel rightly with
the following observations:
"In the present case, the committee in question has an
entirely different function: It is legislative rather than
administrative or executive. The function of the
committee is to make or refuse to make a legislative
instrument under delegated powers. The order, when
made, will lay down the emuneration for solicitors
generally; and the terms of the order will have to be
considered and construed and applied in numberless
cases in the future. Let me accept that in the sphere of
the so-called quasi-judicial the rules of natural justice
CWP No. 17225 of 2008 [20]
run, and that in the administrative or executive field
there is a general duty of fairness. Nevertheless, these
considerations do not seem to me to affect the process
of legislation, whether primary or delegated. Many of
those affected by delegated legislation, and effected very
substantially, are never consulted in the process of
enacting that legislation, and yet they have no remedy.
Of course the informal consultation of representative
bodies by the legislative authority is a commonplace,
but although a few statutes have specifically provided
for a general process of publishing draft delegated
legislation and considering objections (see for example,
the Factories Act 1961, Schedule 4), I do not know of
any implied right to be consulted or make objections, or
any principle upon which the courts may enjoin the
legislative process at the suit of those who contend that
insufficient time for consultation and consideration has
been given. I accept that the fact that the order will take
the form of a statutory instrument does not per
se make it immune from attack, whether by injunction
or otherwise; but what is important is not its form but
its nature, which is plainly legislative".
The Court concluded that the maxim audi alteram partem does
not become applicable to the case by necessary implication.
In State of Punjab v. Tehal Singh, (2002) 2 SCC 7, challenge
was to the establishment of Gram Sabha Khanpur and its territorial
area without providing any opportunity of hearing to the residents of
the area. It was held to the following effect:-
"7. The principles of law that emerge from the aforesaid
decisions are: (1) where provisions of a statute provide
for the legislative activity i.e. making of a legislative
instrument or promulgation of general rule of conduct
or a declaration by a notification by the Government
that certain place or area shall be part of a Gram Sabha
and on issue of such a declaration certain other
statutory provisions come into action forthwith which
provide for certain consequences; (2) where the power to
be exercised by the Government under provisions of a
statute does not concern with the interest of an
CWP No. 17225 of 2008 [21]
individual and it relates to public in general or concerns
with a general direction of a general character and not
directed against an individual or to a particular
situation; and (3) lay down future course of actions, the
same is generally held to be legislative in character.
8. Viewed in the light of the statement of law stated
hereinbefore, we find that the provisions of Sections 3
and 4 of the Act which provide for declaring territorial
area of a Gram Sabha and establishing a Gram Sabha
for that area do not concern with the interest of an
individual citizen or a particular resident of that area.
Declaration contemplated under Section 3 of the Act
relates to an area inhabited by the residents which is
sought to be excluded or included in a Gram Sabha.
The declaration under Section 3 of the Act by the
Government is general in character and not directed to
a particular resident of that area. Further, the
declarations so made under Sections 3 and 4 of the Act
do not operate for the past transactions but for future
situations. Under the aforesaid situation, when
declarations by issue of notifications by the Government
are made under Sections 3 and 4 of the Act respectively,
determining the territorial area of a Gram Sabha and
establishing a Gram Sabha for that area, such
declarations become operative at once. ........................
..........................................................
The power exercisable under Sections 3 and 4 of the Act respectively by the Government was, therefore, not an exercise of a judicial or quasi-judicial function where the very nature of function involves the principles of natural justice or in any case of an administrative function affecting the rights of an individual. We are, therefore, of the view that on making of declaration under Section 3 of the Act determining the territorial area of a Gram Sabha and thereafter establishing a Gram Sabha for that area is an act legislative in character in the context of the provisions of the Act.
9. Once it is found that the power exercisable under Sections 3 and 4 of the Act respectively is legislative in character, the question that arises is whether the State Government, while exercising that power, the rule of natural justice is required to be observed. It is almost settled law that an act legislative in character -- primary or subordinate, is not subjected to rule of CWP No. 17225 of 2008 [22] natural justice. In case of legislative act of legislature, no question of application of rule of natural justice arises. However, in case of subordinate legislation, the legislature may provide for observance of principles of natural justice or provide for hearing to the residents of the area before making any declaration in regard to the territorial area of a Gram Sabha and also before establishing a Gram Sabha for that area."
In Sundarjas Kanyalal Bhatija & ors v. Collector, Thane, Maharashtra & ors, AIR 1990 SC 261, the court held that the rule of natural justice are not applicable to legislative activities, parliamentary or subordinate and that constitution of a Nagar Panchayat from the Municipal Corporation is a legislative activity. The Court set aside, the order of the High Court accepting the argument of the learned counsel for the appellants that the power to constitute municipal corporation is legislative function. It was held to the following effect: -
"13. We have heard counsel for all parties and gave our best attention to the questions raised by the appellants. Counsel for the appellants reiterated the stand taken by the Government before the High Court. He urged that the State has a wide discretion in the selection of areas for constituting the Corporation and the court cannot interfere with such discretion. The court has no jurisdiction to examine the validity of the reason that goes into the decision of the Government. The power to constitute Municipal Corporations under Section 3 of the Act is legislative in character. It is an extension of legislative process for which rules of natural justice have no application. He said that the Government in the instant case has complied with the statutory requirements and it was not expected to do anything more in the premises. And, at any rate, it is wholly unnecessary according to the counsel to go through that exercise again as the High Court has suggested.
31. In Baldev Singh v. State of H.P., a similar question arose for consideration. An attempt was made to constitute a notified area as provided under Section 256 of the Himachal Pradesh Municipal Act, 1968, by including portions of the four villages for such purposes. The residents of the villages who were mostly agriculturists challenged the validity of the notification CWP No. 17225 of 2008 [23] before the High Court on the ground that they had no opportunity to have their say against that notification. The High Court summarily dismissed the writ petition. .....
32. The principles and precedents thus enjoin us not to support the view taken by the High Court. We may only observe that the Government is expected to act and must act in a way which would make it consistent with the good administration. It is they, and no one else -- who must pass judgment on this matter. We must, therefore, leave it to the Government".
In another judgment of the Full Bench of this Court reported as, District Bar Association v. State of Haryana, ILR (1997) 1 P&H 322, the challenge was to the creation of a revenue district under the Land Revenue Act. The Court observed as under:-
"(19) The only interpretation which can be put on the aforementioned provisions is that it is the discretion of the Government to create a new district and the Courts would not be justified in quashing the notification even if there was any breach of the guidelines although in the present cases, no violation was pointed out. The High Court in exercise of its jurisdiction under Article 226 cannot sit in appeal over the government decision to create a district and evaluate the merits and demerits of such a decision. Although paragraph 834 of the Punjab Land Administration Manual, as reproduced in the earlier part of the judgment, does contemplate that the changes should be proposed when they are essentially necessary for the proper management of the estate or tract concerned yet it is ultimately for the State Government to take a final decision as to whether the proposed changes are necessary or not for the creation of a new district. The decision of the Government with regard to the altering the limits of a district is final and the Court cannot substitute its opinion.
xx xx xx (21) In Sundarajas Kanyalal Bhatija's case (supra), the Apex Court while upholding the notification forming a Municipal Corporation under Section 3 of the Bombay Provincial Municipal Corporation Act, 1949, observed that the Court would not interfere with such legislative process of forming a Corporation and that the principles of natural justice are not attracted to a decision taken in legislative process. Such a decision, it was held was not amenable to judicial review.CWP No. 17225 of 2008 [24]
(22) In view of the law laid down in the aforesaid two authoritative judicial pronouncements and in view of the clear wording of the two sections of the Punjab Land Revenue Act and the Registration Act, it can safely be reiterated that power to vary the limits and alter the number of Tehsils. Districts and Divisions, the State Government has got complete discretion. It is for the State to think as to how many districts should be created in a State for the purposes of better administration particularly when it is necessary to take the administration nearer to the people. If the Government is of the opinion that for better revenue administration and for serving the interests of the people in a more appropriate, effective and suitable manner, a particular district is to be divided into two districts, the Court cannot come to the rescue of one district bar or the other and opine that the creation of a district was bad in law. The creation of a new district sometimes becomes necessary in view of the increase in the population."
Another Division Bench of this Court in Bhupinder Singh v. Union of India, 1997(3) PLR 334 examined the provisions of the Punjab Municipal Corporation Act, an Act pari materia in this aspect with Punjab Municipal Act, 1911. In Bhupinder Singh's case (supra), the villagers in the pheriphery of Chandigarh were included in the Muncipal Corporation. While considering the aforesaid challenge and the judgment of Hon'ble Supreme Court in Baldev Singh's case (supra), it was held to the following effect: -
"17. In view of the observations and the authoritative pronouncements referred to above and consistently and precedently accepted norms, we are of the considered view that providing for and authorising the administration for declaration of the area to be the Municipal Area, that too as a one-time act, by no stretch of reasoning or logic, can be said to be an administrative act. We are of the considered view that it is a legislative act, at the most, in legal phraseology, it can be termed as conditional legislation, which, with the passage of time, has come to be accepted as a delegated legislation. There is no dispute that legislature can constitute Corporation. Which in fact has been done in the facts and circumstances of the present case. Only CWP No. 17225 of 2008 [25] function left to be delegated was to prescribe the territorial area of the Corporation which in our view, is a sequel or a natural corollary of the legislative act constituting a Corporation, which was delegated to the designated administrative agency to carry out the object of the Act.
xx xx xx
20. In view of the observations made above, we are of the considered view that the constitution of the Municipal Corporation specifying the territorial jurisdiction or area in which the Corporation is to function, or the declaration of the constitution of a Notified Area as a Corporation, is a legislative process. Even if it is assumed to be a delegated legislative power, it does not suffer from the vice of being unbridled excessive power without guidelines or policy which are said to be quintessential for delegation of legislative function.
21. Learned counsel for the appellant argued that the principles of natural justice are inherent though it may not be specifically indicated in Section 3 of the Corporation Act, especially when the civil rights of the citizens are being adversely affected because of their being residents of the Corporation. Certain liabilities are fixed in the citizens by solely coming into force of the Act. Thus, the basic question raised by the learned counsel is whether an opportunity of hearing should have been granted to the Gram Panchayats which have ceased and whose proprietary rights have been adversely affected, and also to the citizens living within the territorial jurisdiction of the Corporation as certain liabilities also fall on them under the Act, for example, loss of voice in Gram Panchayats, imposition of urban way of life, high incidence of tax etc. In order to support his submission, learned counsel for the appellant relied repeatedly on Baldev Singh's case's supra. Learned counsel for the respondents refuted the submissions made by learned counsel for the appellant and urged that in view of the function of constituting a Corporation being legislative process, the principles of natural justice cannot be applied. Learned counsel for the respondents relied on Tulsipur Sugar Company Ltd vs. Notified Area Committee, Tulsipur, AIR 1980 SC 882.
22. It is well known that the principles of natural justice cannot be extended to an extent whereby the legislative CWP No. 17225 of 2008 [26] function would be rendered illusory. Making of a law is not an end in itself but means to an end which the Legislature desires to secure. In the legislative history and by tradition as well, the principles of natural justice cannot be imbibed in the legislative functions unless the legislatures themselves, expressly or impliedly, provide for the same. One cannot set aside the State action of a particular character for not imbibing the principles of natural justice in it. The nature of individual's rights is one of the considerations. Applicability of principles of natural justice cannot be left at large. Its applicability is to be tested on the touchstone of public interest, convenience, necessity etc. We can say that incidentally legislatures are in fact, delegatories of the people. As observed earlier, Hon'ble Supreme Court in R.K.Porwal v. State of Maharashtra, AIR 1981 SC 1127 observed that in case of legislative activity or making a legislative instrument, declaration by government notification that a certain place shall be principal market yard, upon which declaration certain statutory provisions spring into action and certain consequences prescribed by statute, follow forthwith, which implies the observance of the principles of natural justice is neither called for nor it is obligatory for the legislative function to discharge."
Similar is the view of the in the other judgments relied upon by learned counsel for the petitioners i.e Mohan Lal's Case (supra) and Indian Sucrose Ltd.'s case (supra). The judgments referred to by the learned counsel for the petitioner proceed on the assumption that a notification constituting a Municipality or extending its municipal limits is administrative in nature. Such assumption was probably for the reason that the provisions of the Act contemplate an opportunity of hearing. In none of the judgments referred to by the learned counsel for the petitioner, the distinction between the administrative and legislative functions was brought to the notice of the Court, which has been subject matter of consideration before the larger Benches of the Hon'ble Supreme Court. In respect of the Municipalities as also other analogous provisions, even the Full Bench judgments of this CWP No. 17225 of 2008 [27] Court have taken the similar view. Therefore, reliance of the learned counsel for the petitioner on the Division Bench judgments of this Court or the judgment of the Supreme Court in Baldev Singh's case (supra), is of no help to petitioner. The judgment in Baldev Singh's case (supra) has been considered in other cases and has been distinguished. Therefore, we find that action of the State Government in notifying constitution of the Municipality or extending its limit is a legislative function and the same, does not require an opportunity of hearing. But since the statute contemplates an opportunity of hearing, the rigour of grant of opportunity of hearing is not the same as is required for an administrative or quasi judicial function nor such opportunity can deem to include opportunity of personal hearing.
The material in the shape of the report of the committee and non agricultural activities have been taken into consideration by the State Government before constituting such Municipality within the meaning of Article 243Q of the Constitution (Part-IX of the Constitution) and Section 4 of the Act. There was prior publication of the notification of the constitution of the municipality in terms of the Section 4 of the Act. The petitioners have not filed any objections whereas, the objections filed have been considered. The procedure contemplated under Section 4 has been complied with. Equally we do not find any merit in the argument raised by the learned counsel for the petitioner that Panchayat cannot be dissolved by such action. The decision of the State Government constituting the Notified Area Committee is in larger public interest keeping in view the non agricultural activities, which were founds to be in existing in the area in question and is in tune with the changing times, as has been noticed by the Hon'ble Supreme Court in Pradhan Sangh Kshettra Samiti's case (supra).
CWP No. 17225 of 2008 [28]
In view of the above discussion, we find that the action of the State Government in constituting a Notified Area Committee cannot be said to be arbitrary in exercise of its power of judicial review of this Court. Thus, we do not find any merit in the present petition. The same is dismissed.
(Hemant Gupta) Judge (A.N. Jindal) Judge 2.4.2012 ds