Reserved

AFR

Civil Misc. Writ Petition No. 62427 of 2008

Hafiz Ataullah Ansari vs. State of UP and another

Hon'ble Yatindra Singh, J

Hon'ble Rajes Kumar, J

Hon'ble Krishna Murari, J

(Delivered by Justice Yatindra Singh)

1. A president of a municipality can be removed for misconduct under section 48 of

the UP Municipalities Act, 1916 (the Municipalities Act). He ceases to exercise,

perform, and discharge the financial and administrative powers and functions (in

short 'ceases to exercise financial and administrative powers') the moment a show

cause notice is issued against him satisfying the conditions under proviso to sub-

section 2 of section 48 {Section 48(2)} of the Municipalities Act. The main question

involved in this reference revolves around the right of the president before such a

notice is issued against him:

Is he entitled to an opportunity, before issuing such a show cause notice?

If it is necessary then, what is its extent?

THE FACTS

2. The nagar panchayats in our State are governed under the Municipalities Act.

The petitioner was elected Chairman/ president of Nagar Panchayat Dasna,

district- Ghaziabad (the Nagar Panchayat) on 31.10.2006.

3. The bye-laws of the Nagar Panchayat for collection of parking fees were already

proposed on 31.12.2001. They were approved and notified on 21.3.2007 after the

petitioner was elected its president.

4. The auction notice for collection of parking fee was published on 23.5.2007. It

was published by the beat of drums on 23.5.2007 and was also published in the

Hindi daily newspaper Rashtriya Sahara on 1.6.2007.

5. The auction in pursuance of notice was held on 8.6.2007 and one Chaudhary

Usman was the highest bidder. His bid of `36,000 was accepted and approved on

8.6.2007 itself.

6. Chaudhary Usman made a complaint that he was not being permitted to collect

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the parking fee by the unauthorised persons. It was referred to the District

Magistrate, Ghaziabad (the DM) by the executive officer (the EO) of the Nagar

Panchayat.

7. The DM wrote to the police authorities for providing help in collection of parking

fee.

8. In the meantime, one Mohd. Arif filed an application before the DM on 7.7.2007

that he was prepared to take auction for `50,000/- as against the highest bid of

`36,000/-.

9. On the aforesaid complaint, the District Magistrate asked for the comments from

Sub-Divisional Magistrate Sadar, Ghaziabad (the SDM). He submitted his report to

the DM on 12.7.2007 and Mohd Arif deposited `50,000. The DM;

•Cancelled the auction in favour of Chaudhary Usman on 17.7.2007; and

• Ordered for holding fresh auction for the parking fee.

10. The fresh auction was held on 4.8.2007. In this auction Chaudhary Usman was

again the highest bidder but this time his bid was of `7,00,000 against his previous

highest bid of `36,000 only.

11. One Asgar Teli sent a complaint before the Principal Secretary, Nagar Vikas

Vibhag, Uttar Pradesh against the petitioner that;

•The petitioner was committing financial irregularities;

•On the earlier occasion auction for parking fee was for `36,000; whereas,

subsequently auction for the same was for `7,00,000.

12. In pursuance of the aforesaid complaint, the SDM by his letter dated

20.11.2007 asked an explanation from the EO directing him to send the original file

relating to the auction dated 8.6.2007 along with his report within three days. The

EO sent his reply along with the original records on 6.12.2007.

13. A copy of the aforesaid letter of the SDM dated 20.11.2007 was also sent to

the President, asking him to show cause as to how he had approved the auction

without there being any report from the Executive Officer. In pursuance of this

query, the petitioner sent his reply on 28.11.2007.

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14. The SDM submitted his report to the DM on 22.2.2008. This report was sent to

the State Government by the DM on 29.2.2008.

15. Thereafter the impugned notice dated 24.10.2008 was issued against the

petitioner. In the notice, there is only one charge. It related to the auction dated

8.6.2007 to the effect that:

•The auction on 8.6.2007 was done secretly for `36,000 and was illegally

approved on the same day;

•Subsequently, the same auction was taken by the same person for

`7,00,000;

•Had the earlier auction not been cancelled, it would have caused financial

loss.

Thus, the petitioner has acted adversely to the interest of the Nagar Panchayat.

16. In the notice, apart from the charge, the following facts were also mentioned:

•The letters of the DM dated 29.2.2008 and the SDM dated 22.2.2008 as

evidence; and

•The cessation of the financial and administrative powers of the petitioner till

he was exonerated of the charge mentioned in the notice.

17. The petitioner sent his reply on 8.11.2008 and filed the present writ petition

against the impugned notice/ order dated 24.10.2008 ceasing his financial and

administrative powers.

QUESTIONS REFERRED

18. The writ petition was entertained and an interim order was granted on

19.12.2008 staying the operation of the notice dated 24.10.2008 so far it restrained

the petitioner from exercising the financial and administrative powers under the

proviso of sub-section (2) of Section 48 of the Municipalities Act.

19. The bench by a separate order, also referred the following three questions to

larger bench for decision.

(i)Whether the State Government in proceedings initiated for removal

under section 48(2) of the UP Municipalities Act, 1916 is required to

give any opportunity at the stage of invoking the powers in the first

proviso before restraining the president from exercising his financial

and administrative powers and as to whether any such preliminary

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inquiry is permissible to be read the aforesaid proviso?

(ii)Whether the State Government has to record a subjective satisfaction

separately for invoking the said powers even if the material for the

issuance of the show cause notice and the invoking of such powers is

the same?

(iii)Whether the views expressed by this Court in the decisions of Imran

Masood vs. State of UP and others, 2007 (1) ADJ 350 (DB), and in the

case of Rekha (Kinner) vs. State of UP and others, 2008 (3) ADJ 315

(DB), require reconsideration in the light of the observations as

contained in Smt. Vimla vs. State of UP and others, 2008 (1) ADJ 128

(DB) (LB), for an authoritative pronouncement on issue number-1 and

2?

20. During pendency of the writ petition before the full bench (FB), the writ petition

was amended and the petitioner was permitted to raise the question of

constitutionality of section 48(2) of the Municipalities Act.

21. Before we proceed further, it would be appropriate to mention the historical

background of the local bodies and notice legislative history of the Municipalities

Act as well as similar other enactment namely UP Panchayat Raj Act, 1947 (the

Panchayat Raj Act) and UP Kshettra and Zila Panchayat Adhiniyam, 1961 (the

Kshettra-Zila Panchayat Act). These two statues are jointly referred to as the

Rural-Areas Enactment in this judgement.

HISTORICAL BACKGROUND

Local Bodies: Constitutional Status

22. India that is Bharat, is union of States. Its territory consists of territories of the

States and the Union. Geographically, they are divided into districts. A district

consists of urban and rural areas. These areas are governed by the bodies that are

part of local self government.

23. Panchayats, Municipalities, the institutions of Local self Government, were

referred to in the constitution but were given only statutory status. Their functioning

was not happy. These institutions were not able to acquire the status and dignity

of viable and responsive people’s bodies due to a number of reasons including

absence of regular elections, prolonged suppressions, insufficient

representation of weaker sections like scheduled castes, scheduled

5

Tribes and women, inadequate devolution of powers, and lack of financial

resources. It was considered necessary that some basic and essential features of

Panchayati Raj Institutions and Local Self Government be enshrined in the

Constitution to impart certainty, continuity and strength to them. Accordingly

'Part IX' and 'IX-A' relating to Panchayats and Municipalities were added in the

Constitution by 73

rd

and 74

th

Constitutional Amendment Acts.

Rural Area

24. Seventy-third Constitutional amendment relates to panchayt raj institutions of

the rural areas. Article 243B in part IX envisages three tier system of panchayats at

village, district, and at intermediate level between the two. In our State, rural areas

of a district are divided into Blocks that in turn consist of villages. The three levels

of panchayats as envisaged by The Article 243B were already in existence.

25. A gram panchayat is a local body governing a village; it could comprise more

than one village as well. It is governed by the Panchayat Raj Act.

26. Kshettra panchayat governs a block (intermediate level) and zila panchayat a

district. They are governed by the Kshettra-Zila Panchayat Act.

27. There in another bunch of writ petitions that was heard along with this case.

That bunch related to similar questions regarding pradhan of a gram panchayat. In

that bunch of the writ petitions, we are answering the questions today. We have

treated WP 36881 of 2008, Vivekanand Yadav vs. state of UP (the Vivekananad

Case) as leading case in that bunch because it is the earliest of the four WPs,

where questions were referred. The historical point of view of panchayati raj

system is dealt in greater detail in that decision.

Urban Area

28. Seventy-fourth Constitutional amendment deals with the municipalities namely

the urban areas of a district. This is broadly dealt at two levels:

(i)Rural area in transition to becoming urban area—it was earlier known as

Town Area now designated as Nagar Panchayt; and

(ii)Urban areas, depending on its size, are known as Municipality (smaller

urban area) or Municipal Corporation (larger urban area).

29. The rural areas in transition of becoming urban areas were governed by UP

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Town Area Act and the smaller urban area by the Act. However after the 74

th

Constitutional amendment Act UP Town Area Act has been repealed and now both

such areas are governed by the Municipalities Act.

30. The larger urban areas were and are still governed by the Municipal

Corporation Act.

LEGISLATIVE HISTORY

31. Section 48 of the Municipalities Act is titled as 'Removal of President'. It

provides procedure as well as ground on which a President can be removed. This

section was amended by UP Municipalities (Amendment) Act, 1964 (the UP Act

No. 26 of 1964). By this amendment;

•Section 48(2) providing grounds for removing the president were

substituted;

•Sub-section 2A to section 48 {section 48(2A)} was inserted. It empowered

the State Government to remove the President for the reasons to be

recorded in writing after considering his explanation under section 48(2) of

the Municipalities Act. This sub-section had a proviso that provided that

instead of removing the president he could be given only a warning;

•Sub-section 3 of section 48 {Section 48(3)} was substituted. The newly

substituted section empowered the State Government to suspend a

president, in case he was asked to show cause in respect of some of the

grounds mentioned in section 48(2) of the Municipalities Act.

Sections 48(2A) and 48(3) of the Act as amended by UP Act No. 26 of 1964 are

given in Appendix-2; whereas Appendix-1 is the index of appendices and

includes abbreviations used in the judgement.

32. UP Urban Local Self Government Laws (Amendment) Act, 1994 (the UP Act

No. 12 of 1994) was enacted to amend the laws relating to local self government in

order to bring them in tune with 73

rd

and 74

th

Constitutional Amendment Act. By this

Act Section 48(3) was omitted. This meant that there was no power to suspend the

president of a municipality during the pendency of proceeding for his removal.

33. The Municipalities Act was again amended by the UP Municipalities

(Amendment) Act 2001 (UP Act No. 22 of 2001). Among others, it amended

section 48(2-A) of the Act. It deleted the proviso that empowered the State to give

a warning instead of removal.

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34. The aforesaid position continued for some years. However, UP Municipalities

(Amendment) Act, 2004 (UP Act No. 6 of 2004) was enacted. By this amending Act

another sub section 2-A was inserted in section 48. This sub section provided that:

•If a President or vice President was prima facie found to be guilty on any of

the ground referred to in section 48(2) on an inquiry by a person and under

the procedure as might be prescribed; and

•A show cause notice was issued to him containing the charges; then

•The president would cease to exercise the financial and administrative

powers till he was exonerated in the inquiry.

Section 48(2-A) as added by UP Act No.6 of 2004 is detailed in Appendix-2.

35. Sub-section 2A of Section 48 was already inserted by UP Act No. 26 of 1964.

By UP Act no. 6 of 2004, it was again inserted. This was a mistake. This was also

explained by a division bench (see below)

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of our court.

36. The aforesaid mistake was realised by the legislature and UP Municipalities

(Amendment) Act, 2005 (UP Act No. 2 of 2005) was enacted to rectify it. By this

amending Act, sub-section 2A to section 48 as inserted by UP Act No. 6 of 2004

was omitted and in its place the proviso was added in sub-section 2. This proviso is

still in force and we have to interpret the same. The relevant part of section 48 as

in existence at the time of issuance of show cause notice is detailed Appendix-3.

37. Section 95(1)(g) of the Panchayat Raj Act as well as sections 16(1) and 29(1)

of Kheshtra-Zila Panchayat Act also provide removal of a pradhan of a gram

panchayat, pramukh of a kshettra panchayat and adykshya of a zila panchayat.

Provisos to these sections also provide cessation of financial and administrative

powers on issuance of show cause notice. However, under these provisos, the

show cause notice can be issued only on they being prima facie found to have

committed financial and other irregularities in an enquiry (preliminary or fact

finding) by such person and such procedure as may be prescribed. Section 48(2A)

of the Municipalities Act that was inserted by UP Act no. 6 of 2004, was similar to

these provisos.

38. By this decision, apart from the other questions, we are also deciding the

question whether any opportunity is required before issuing any notice under

proviso to section 48(2) of the Municipalities Act or before passing any order

1 Girish Chandra Srivastava vs. State of UP: 2007 (4) ALJ 268.

8

ceasing financial and administrative powers. It is similar to the question relating to

opportunity to pradhan under the Panachayat Raj Act referred in the Vivekanand

case. This question relating to pradhan under the Panchayat Raj Act is being

decided in this decision. In both decisions, we are referring to the president of a

municipality, adhyaksh of a zila panchayat, pramukh of kshettra panchayat, and

pradhan of a gram panchayt as heads of the local bodies.

POINTS FOR DETERMINATION

39. We have heard Sri SMA Kazami, Senior Advocate and Sri Ashwani Mishra

counsel for the petitioners; Sri SG Hasnain Additional Advocate General and Sri

AK Sinha for the Respondents.

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40. The division bench has referred three questions. They are mentioned under the

heading 'QUESTIONS REFERRED'. For convenience, we have reformulated them

into the following points for determination and have added preliminary objection of

the respondent as the first point.

(i)Whether the reference should be sent back unanswered;

(ii)Can there be proceeding for removal of a president under section

48(2) of the Municipalities Act, without ceasing his financial and

administrative powers;

(iii)Whether any separate or specific order is required under proviso to

section 48(2) of the Municipalities Act for ceasing financial and

administrative power.

(iv)If the notice purported be given under proviso to Section 48(2) of

the Municipalities Act does not comply with it then what is the

consequence;

(v)What are the condition precedent (other than mentioned in the next

point) for ceasing financial and administrative powers under proviso

to section 48(2) of the Municipalities Act;

(vi)Whether any opportunity is also required to be afforded before

ceasing financial and administrative powers;

(vii)In case opportunity is required to be afforded then what is its

extent;

2We are thankful to the counsel appearing in the case for correcting the part of the

judgement under the heading 'THE FACTS', 'QUESTIONS REFERRED', 'HISTORICAL

BACKGROUND', 'LEGISLATIVE HISTORY', 'POINTS FOR DETERMINATION', and

'Appendices'. However, if there are any mistakes, they are ours.

9

1

st

POINT: PRELIMINARY OBJECTION —NO MERIT

41. The counsel for the respondents submitted that:

•Rekha (Kinner) vs. State of UP: 2008 (3) ADJ 315 (the Rekha case) and

Imran Masood vs. State of UP: 2007 (10) ADJ 350 (the Imran case) had

held that no opportunity was required before issuing a show cause notice

under proviso to section 48(2) of the Municipalities Act;

•In Smt. Vimla vs. State of UP and others: 2008 (10) ADJ 128 (the Vimla

case), the aforesaid cases were neither doubted nor could they be as the

question of opportunity was not involved there;

•There is no conflict of decisions;

•The reference is incompetent and should be returned unanswered;

The Rekha and Imran Case

42. In the Rekha case, the court had held (paragraphs 5 and 6):

'The proviso to sub-section (2) of Section 48 ... has been brought in as an

interim arrangement during the pendency of the proceedings for removal of

the President. A bare reading of proviso clearly demonstrates that the

proviso does not contemplate any enquiry, much less a preliminary

enquiry ... before passing of the order of cessation of financial and

administrative power ...

The aforesaid Scheme clearly demonstrates that power under the proviso is

only an interim arrangement pending finalization of the proceedings ... once

proceedings have been initiated under subsection (2) of Section 48, the

consequences are seizure of financial and administrative power.'

43. In the Imran case, the show cause notice was challenged on the ground that it

is malafide and without jurisdiction. The court held (paragraph 8) that:

'At first we say that complexity of service jurisprudence and revenue

jurisprudence are quite distinct from each other ... When the law itself says

that show cause notice can be issued by the State if it has reason to believe

that the allegations do not appear to be groundless, it requires lowest level

of sufficiency.'

The Vimla Case

44. It is correct that in the Vimla case (paragraphs 18 and 19) the court had

clarified that it was not considering the question of opportunity at the stage of

issuing notice as the writ petition was being allowed on the other question.

10

However, the reference has not been referred to the full bench because of the

contrary view in the Vimla case but because of the observations contained therein

as well as the opinion of the bench referring the case.

45. In the Vimla case, the court quashed the notice under proviso to section 48(2)

of the Municipalities Act (paragraph 49 of the judgement) on the finding that:

•In the inquiry report, the president was not found prima facie guilty of any of

the charges; and

• Depriving president from exercising financial and administrative functions

was arbitrary exercise of power.

46. The respondent in the Vimla case had raised the plea that the petition should

not be entertained as there would be ample opportunity, while submitting reply to

the show cause notice. This plea was negated on the finding (paragraph 50 of the

judgement) that:

•The notice was not a simple show cause notice;

•The president was deprived of administrative and financial powers;

•It had adverse civil consequence of taking away the statutory rights and

functions.

47. Needless to say, in case the order of issuing notice has adverse civil

consequences, then opportunity has to be afforded. These are some of the

observations in the Vimla case that imply that opportunity is required to be given.

48. Apart from above, the bench in referring order referred to the words used in the

proviso to section 48(2) of the Municipalities Act namely 'reason to believe',

'groundless', as well as 'shall' and held that minimal allegation for cessation of

financial and administrative powers as suggested in the Imran case might not be

enough. The bench observed:

'This ... may require even a summary procedure to be followed associating

the concerned person by at least allowing him to afford an explanation for

the purpose of his continuing to discharge the administrative and financial

powers. This would also eliminate any element of possibility of abuse of

power and criticism of the order as political victimisation.'

49. It is clear that the bench while referring this case had expressed its doubts

about the Vimla and Imran cases. The reference is proper; it is not incompetent

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and cannot be sent back. We consequently proceed to answer the questions

referred.

2

nd

to 4

th

POINT: THERE CAN BE PROCEEDING WITHOUT

CEASING POWER

Intention of Legislature—Serious and Non-serious Case

50. Section 48 of the Act provides for removal of the president. Its sub-section (2)

provides the grounds on which proceeding for removal of a president can be taken.

It provides that if the State Government has reason to believe that there has been

failure on the part of the president in performing his duties or the president has

committed misconduct mentioned in sub-clauses (i) to (xvii) of clause (b) of sub-

section 2 of Section 48 then he could be called upon to show cause why he be not

removed from the office.

51. Section 48(2A) provides that the State government after considering

explanation of the president and after recording reasons can remove the president.

52. A joint reading of Section 48(2) and 48(2A) ensures that before a president can

be removed, the following conditions must be satisfied:

(i)Opportunity must be afforded to the president;

(ii)His explanation has to be considered; and

(iii)In case of removal, the order has to be reasoned or speaking order.

53. The proviso to section 48(2) provides cessation of financial and administrative

powers under specified conditions mentioned therein. These are discussed, while

deciding points-5 to 7. Suffice to say, right to exercise financial and administrative

powers does not cease merely on issue of notice under section 48(2) of the Act

unless the conditions mentioned in the proviso to section 48(2) are also satisfied.

54. The intention of the legislature is clear from the language of the provision. It

envisages two kinds of proceedings under section 48(2) of the Municipalities Act:

•One, simpliciter where financial and administrative powers of the president

do not cease;

•The other, where his financial and administrative powers cease. This can

happen only if the conditions under proviso to section 48(2) are satisfied.

55. The proviso to section 48(2) is meant to apply in the serious situation where it

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is expedient to cease the financial and administrative powers of the president. It is

not to apply in every case. It is for this reason that extra precautions have been

provided in the proviso to section 48(2) of the Municipalities Act.

56. In case, the charges are not such so as to warrant cessation of financial and

administrative powers during the enquiry for removal, then the action may be taken

only under section 48(2) of the Municipalities Act without resorting to the proviso. In

such a case the proceeding will go on and opportunity will be given and ultimately

the final order may be passed.

57. Even in a case, where at the beginning it was not necessary to cease the

financial and administrative powers but at the later stage if it appears to the State

government that it is necessary to do so, then it may be done by complying with

the conditions mentioned in the proviso to section 48(2) of the Municipalities Act.

58. At this stage, we would also like to point out that the Supreme Court in two

cases arising out in similar enactments from the other States have observed (see

below)

3

that an elected head is not liable to be removed for—casual or singular

failure or mere irregularities: he could be removed only for grave illegality.

However, this point is not referred to us and we leave it open.

Not Necessary to Record the Reasons Separately

59. The president ceases to exercise the financial and administrative powers as

soon as a show cause notice under section 48(2) satisfying the conditions of the

proviso to section 48(2) or a valid show cause notice under proviso to section 48(2)

of the Municipalities Act is issued. The cessation of power is automatic: it is so

contemplated in the proviso itself.

60. Once, a valid notice under proviso to section 48(2) of the Municipalities Act is

issued, then even if it is not mentioned that the financial and administrative powers

of the president have ceased, it does not mean that he can still exercise them. The

cessation of the president's power is automatic and necessary consequence of

issuance of the valid notice complying with the conditions under the proviso.

61. In view of above, it is not necessary that order ceasing the right to exercise

3See Tarlochan Sharma vs. State of Punjab 2001 (6) SCC 260 (paragraph 11); and

Sharda Kailash Mittal vs. state of MP 319 (paragraph 27).

13

financial and administrative powers should be mentioned in the separate order or

in the show cause notice itself but what is necessary is that the notice should be

valid; it should comply with the conditions of the proviso to section 48(2) of the

Municipalities Act.

Notice Under Proviso Or Order Ceasing Power—Invalid

Proceeding for Removal U/S 48(2) to Continue

62. Under the sub-heading 'Intention of Legislature—Serious and non-serious

case', we have indicated that not in every case financial and administrative power

ceases. It is only in those cases where it is expedient to do so that it is to be done.

63. In the case, where it is expedient to do so, the notice under section 48(2) may

itself comply with the conditions under the proviso or it may be a notice simpliciter

under section 48(2) of the Municipalities Act and thereafter another notice

complying/ satisfying the condition of the proviso is given—resulting in cessation of

financial and administrative powers.

64. Let's consider the reverse case. Suppose a notice purporting to be satisfying

the conditions of the proviso is given,

•Stating that right to exercise financial and administrative powers is ceased;

or

•Treating that financial and administrative powers have ceased.

However, if in fact the notice did not comply with conditions or in other words, it is

an invalid notice under the proviso to section 48(2) of the Municipalities Act and is

also so held by the court then, what is the consequence:

(i)Does it only invalidate the order or effect of the notice to cease financial and

administrative power; or

(ii)It voids the proceeding for removal also?

65. In our opinion, as there can be proceeding simpliciter to remove a president,

the first of the aforementioned consequence ensues. In such a situation,

(i)The right to exercise financial and administrative power does not go away;

and

(ii)It becomes a proceeding simpliciter for removal of the president; and

(iii)The proceeding for removal of the president will continue. They are not

wiped out.

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66. The proceeding for removal under section 48(2) can only be quashed at the

stage of issuing notice, if the charges on the face of it or even if they are presumed

to be proved, do not make out a case of any of the grounds under section 48(2) of

the Municipalities Act.

Position in the Rural-Areas Enactment—Similar

67. The Kshettra-Zila Panchayat Act, and Panchayat Raj Act also provide for

removal of the heads of the local bodies under section 16, 29 and 95(1)(g) of the

Rural-Areas Enactments. These provisions are similar to section 48 of the Act

except the grounds for removal as well as conditions under the proviso for ceasing

financial and administrative power. The relevant parts of the sections dealing with

cessation of financial and administrative powers are given in Appendix-4.

68. The reason why the conditions under the provisos are different are indicated

while discussing the points-5 to 7 but the only point we wish to state at this stage is

that those provisions also envisage similar interpretation so far as points-2 to 4

under discussion are concerned. There is no difference in the interpretation. The

same reasoning applies there as well.

69. In our opinion, section 48 of the Municipalities Act, and section 95(1)(g) of the

Panchayat Raj Act contemplate,

(i)Two kinds of proceedings:

•One, simpliciter without cessation of financial and administrative

powers;

•The other, where the right to exercise financial and administrative

powers also ceases;

(ii)A notice purporting to satisfy the condition of the relevant proviso, if held

invalid, then it ends up voiding the order or effect of cessation of financial

and administrative power, but does not void the removal proceeding unless

the charges, even, on the face, or if presumed to be proved do not make out

a case for removal.

70. Let's consider the conditions that are necessary to comply before financial and

administrative powers can be ceased.

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5

th

POINT: CONDITIONS UNDER THE PROVISO

71. Section 48(2) of the Municipalities Act is titled as 'Removal of President'. It

provides grounds on which president can be removed.

72. Section 48(2A) of the Municipalities Act provides that the president can be

removed, after,

•Considering his explanation; and

•Conducting such inquiry as may be necessary; and

•Recording reasons for his removal.

73. The proviso to section 48(2) of the Municipalities Act prescribes conditions that

have to be fulfilled before the right of a president to exercise financial and

administrative powers can cease. It states that:

(i)The State Government should have reasons to believe that:

•The allegations do not appear to be groundless; and

•The president is prima facie guilty of any of the grounds mentioned in

section 48(2) of the Municipalities Act.

(ii)The State government should also issue show cause notice for removal

under section 48(2) of the Municipalities Act and it must contain charges.

74. The phrase 'reasons to believe' is often used in statutes and has been

repeatedly held by the courts (for citation of the rulings see below)

4

to mean that

reasons for the formation of the belief must have a rational connection or relevant

bearing on the formation of the belief. Rational connection postulates that there

must be a direct nexus or live link between the material and formation of the belief.

75. The 'reason to believe' or the satisfaction of the State government under the

proviso is not a subjective but is an objective satisfaction based on the relevant

material; the satisfaction is of reasonable man and has to be based on material: it

cannot be based on mere suspicion, gossip, rumour or just a complaint.

4Joti Parshad v. State of Haryana, 1993 Supp (2) SCC 497: AIR 1993 SC 1167; Pratap

Singh (Dr) v. Director of Enforcement, (1985) 3 SCC 72: 1985 SCC(Cri) 312: AIR 1985

SC 989; Jai Shanker v. State of HP, (1973) 3 SCC 83: AIR 1972 SC 2267; Sheo Nath

Singh v. Appellate CIT, (1972) 3 SCC 234: AIR 1971 SC 2451; S Narayanappa v. CIT,

AIR 1967 SC 523; ITO v. Lakhmani Mewal Das, (1976) 3 SCC 757: 1976 SCC (Tax)

402: AIR 1976 SC 1753; CST v. Bhagwan Industries (P) Ltd., (1973) 3 SCC 265: 1973

SCC (tax) 177: AIR 1973 SC 370.

16

76. The only time similar words were held to have subjective satisfaction was in

Liversidge vs. Anderson: 1941 (3) AllER 338 over famous dissent of Lord Atkin but

did not last long—it was soon overruled (see below)

5

.

77. What is the benefit of having relevant material unless the effected person is

informed about it. In our opinion, the relevant material should also be mentioned in

the notice/ order on the basis of which satisfaction of the State government is

reached. The president must know what had led the State government to form the

opinion against him.

78. The court cannot go into the question of sufficiency of the material but it can

always see:

•Whether there is any material or not; and

•Whether it is relevant for arriving at the objective satisfaction.

This may not be possible unless the material on which this objective satisfaction is

based is also indicated in the notice/ order.

79. The notice that results in ceasing the financial and administrative powers under

the proviso to section 48(2) of the Municipalities Act is not a simple show cause

notice—it must contain the charges as well. It is only when the show cause notice

contains the charges that the cessation of the financial and administrative power

takes place.

5 In Liversidge Vs Anderson 1941 (3) AllER 338 interpretation of Defence Regulation 18-

B was involved that used the words 'If the secretary of state has reasonable cause to

believe'. The question was, was the satisfaction of the secretary of state subjective or

objective?

The majority held it to be subjective over the strong and classic dissent of Lord Atkin, who

held it to be objective. In his judgement, he observed,

'I know of only one authority which might justify the suggested method of

construction. “When I use a word” Humpty Dumpty said in rather scornful tone, “it

means just what I choose it to mean, neither more nor less”’. “The question is” said

Alice, “whether you can make words mean different things”. “The question is”, said

Humpty Dumpty, “which is to be master that's all”... [T]he question is whether the

words ”If a man has” can mean “If a man thinks he has”, I am of the opinion that

they cannot, and the case should be decided accordingly.'

The view of Lord Atkin holding it to be objective has been justified by not only by CK Allen

in 'Law and Order' and in Wade's Administrative Law, but also by the later decisions in

England {see Nakkuda Ali Vs Jayaratne 1951 AC 66; R Vs Brixton Prison Governor (1969)

2 AllER 347; Registrar of Trading Vs. WH Smith (1969) AllER 1065}. Lord Diplock, in ITC

Vs. Rossminster 1980 (I) AllER 80 said,

'I think the time has come to acknowledge openly that the majority of this House in

Liversidge Vs. Anderson was expediently and at that time perhaps excusably

wrong; and the dissenting speech by Lord Atkin was right'.

17

80. The mere indication of the charges are meaningless, unless the evidence is

also indicated by which they are to be proved. The show cause notice should also

mention evidence from which charges are to be proved. It is another question that

in most of the cases the material relied upon by the State government for arriving

at the objective satisfaction and evidence by which the charges are to be proved

are the same.

81. Indication of relevant material and evidence by which charges are to be proved

is not only necessary to judge whether the power was validly exercised but also

reduces arbitrary exercise of power—a point that we would elaborate under the

sub-headings 'Natural Justice—Not a Rule of Thumb' and 'Brings About Fairness'

in the discussion regarding points-6 & 7.

82. The proviso to Section 16(1) as well 29(1) of the Kshettra-Zila Panchayat Act

and proviso to section 95(1)(g) of the Panchayat Raj Act (see Appendix-4) have

different conditions. Unlike the proviso to Section 48(2) of the Municipalities Act,

they contemplate a preliminary enquiry to be conducted by such person and such

procedure as may be prescribed. The government has also framed separate rules

under those Acts providing for the enquiry officer as well as the procedure. It is

only on being prima facie satisfied on the preliminary report in the enquiry that a

valid notice can be issued under those provisos.

83. The condition under proviso to section 48(2) of the Municipalities Act are more

rigorous than the conditions in the relevant proviso under the Rural-Areas

Enactment. Perhaps, the reason is the basis on which the notices are issued under

the different Acts:

•Under the Municipalities Act the conditions have to be satisfied on the basis

of material;

•Whereas under the other Acts, the conditions are on the prima facie finding

of the preliminary enquiry.

Needless to say an enquiry—even if it is a preliminary enquiry—is more rigorous

than having reasons to believe. This is the reason why under the Municipalities Act

the conditions are more rigorous than the Rural-Areas Enactment relating to rural

areas. The conditions under the provisos in the Rural-Areas Enactment are

discussed in the decision of the Vivekanand case.

84. In our opinion, the cessation of financial and administrative power can take

18

place only if the power under the proviso to section 48(2) of the Municipalities Act

is rightly exercised. It is rightly exercised only if atleast the following conditions are

satisfied in the notice/ order:

(i)There should be objective satisfaction of the State government that:

• The allegations do not appear to be groundless; and

• The president is prima facie guilty of the ground that have to be

indicated under section 48(2) of the Municipalities Act.

(ii) The show cause notice should contain the charges;

(iii)The show cause notice should not only indicates the material on which the

reason to believe or objective satisfaction is based, but the evidence by

which charges are to be proved should also mentioned. However, in most of

the cases they might be the same and there would not be any point in

repeating them.

85. Should there be another condition of affording opportunity to the president

before issuing notice and in case opportunity is to be afforded then of what is the

value of the same, if the president's explanation is not considered. This will be

considered in the next point.

6

th

& 7

th

POINT: PRESIDENT'S EXPLAINATION SHOULD BE SEEN

Not Necessary to Involve in Collection of Material/ Evidence

86. Section 48(2-A) inserted by UP Act no. 6 of 2004 (see Appendix-2) was to

effect that whether a president is prima facie guilty or not was to be found out by an

enquiry. In fact, it was in the nature of fact finding or preliminary enquiry. This was

similar to the provisions in the Rural-Areas Enactments. However, section 48(2-A)

as inserted by UP Act no. 6 of 2004 was deleted and the present proviso to

section 48(1) has been inserted.

87. Section 48 (2-A) as inserted by UP Act No. 6 of 2004 and proviso inserted in its

place by UP Act No. 2 of 2005 broadly provide cessation of the financial and

administrative powers of the President till completion of the final inquiry for removal

of the president under section 48 of the Municipalities Act, but there is some

difference:

•Under sub-section 2A of section 48 this could be done on his being prima

facie found to be guilty on the basis of an enquiry (preliminary or fact

finding) held by such person and in such manner as might have been

prescribed;

19

•However, under the existing proviso, the State Government should have

reasons to believe that the allegations do not appear to be groundless and

the President is prima facie guilty.

88. The words, requiring holding of a preliminary enquiry by such person, in such a

manner as prescribed, are no longer there. Nonetheless the State Government can

only have reasons to believe not merely on the basis of any complaint but on the

relevant material. The material has to be collected. It can be done by adopting any

one of the following methods:

•It could be done by a fact finding inquiry or preliminary inquiry: such an

inquiry can still be done as it is not prohibited under the proviso; or

• The State government could collect the material itself; or

•The material could be supplied to it by someone; or

•The State government could come into possession of it by any other means.

89. Nevertheless, irrespective of how the relevant material comes in the hands of

the State government, the question is, in absence of any specific provision,

•Should the president be associated with its collection;

• Should the principles of natural justice be read into it?

90. The position for removal of pradhan of a gram panchayat under section 95(1)

(g) is similar to the president of a municipality except instead of 'reason to believe'

there is provision for the preliminary enquiry. Both are heads of the local bodies. In

the Vivekanand case, we have held that proviso to section 95(1) providing

reasonable opportunity in removal proceeding is not applicable to proviso under

section 95(1)(g) providing preliminary enquiry. There is neither any specific

provision for providing opportunity in the preliminary enquiry, nor before passing

order ceasing the right to exercise financial and administrative powers. The only

question there, like this case, is,

'Whether, the opportunity should be provided to the pradhan as adverse

order is being passed.'

This question is common in the both cases and is being dealt with in this decision.

If Exonerated—Loss is Irreparable

91. The counsel for the respondents submitted that:

(i)The present proceeding is akin to,

•Suspension of a government employees in the departmental

20

proceeding; or

•Suspension of a licence during cancellation proceeding; or

•Proceeding to start reassessment in a taxing statute; and

In the aforesaid instances, the person effected is not afforded any

opportunity at the stage of issuing notice;

(ii)The words 'reasons to believe' are quite common in taxing statute

where proceeding for reassessment can be undertaken if the

authority has reason to believe. In such a situation, the only

requirement is that there should be material to take such action.

There is no necessity to provide opportunity before issuing show

cause notice;

92. The institutions of Local Self Government—be it for the rural area or for the

urban area—have become part of the constitution. We have mentioned their

transition under the heading 'HISTORICAL BACKGROUND'. They are no longer

statutory but, after 73

rd

and 74

th

constitutional amendments, have acquired the

Constitutional status.

93. Under our Constitution, a head of local body is entitled to continue for his entire

term unless he is unseated in an election petition. However, as there is no

provision that he cannot be removed even if he is guilty of misconduct, a law can

always be enacted to provide his,

•Removal on his committing irregularities; or

•Suspension or cessation of financial and administrative powers during

pendency of removal proceeding.

This has been done so far as head of local bodies of smaller urban areas and rural

areas are concerned. However, in the bigger urban area (Municipal Corporation)

removal cannot be done by any inquiry: it can be done only on a motion of no

confidence.

94. A head of a local body is an elected person; he is not a government servant: it

would improper to compare these proceeding with the departmental proceeding in

service jurisprudence. We are not alone in saying this but are in company of the

Supreme Court and another full bench of our court (see below)

6

.

6. See SDO Faizabad vs. SN Singh: AIR 1970 SC 140 (paragraph 5); Swami Prasad vs.

Hargovind Saha: AIR 1970 Allahabad 251 (FB) (paragraph 13).

21

95. The office of a local body is an elected office of a constitutional democratic

institution. He is not merely head of a society or an organisation. He is entitled to

hold office for the term that he was elected. It is not only his right but also that of

his constituency or the electoral college that he represents. The curtailment of his

rights is a serious matter. Here also, we are in company of the Supreme Court (see

below)

7

.

96. These proceedings are also not like reassessment proceedings under taxing

statutes: they are incomparable. The present proceedings are more serious. There

is also fundamental difference between service or taxing or other proceeding cited

by the respondents on one and this proceeding on the other hand:

•In service jurisprudence if an employee is suspended and later-on is

exonerated then he gets his salary and is reinstated with all consequential

benefits;

•Normally, whenever a license is granted, it is renewed from year to year. In

case it is suspended during cancellation proceeding, then after dropping of

the cancellation proceeding, the license is renewed. The license holder

continues to enjoy privilege year to year as it is not for a fixed term;

•In case the license is for the fixed period then it is not unusual to extend the

same for the period the licensee could not work;

•In taxing statutes, normally no final decision is taken by start of the

reassessment proceeding: it is merely initiation of the proceeding. Whether

any higher tax is to be imposed or not, is to be decided thereafter in the

proceeding.

However, this is not the case here.

97. A head of a local body is elected for a limited term. His term comes to end after

five years. If during the removal proceeding, he is denuded from exercising

financial and administrative powers then even if he is exonerated in the enquiry,

the time spent during enquiry is lost: he does not get his period extended.

98. The situation in case of a head of a local body is much more drastic than the

instances cited by the counsel for the respondent. There is no such irreparable

loss: the law or principles applicable there cannot apply to a head of a local body

7. See Tarlochan Dev Sharma vs. State of Punjab 2001 (6) SCC 260 (paragraph 7) and

Sharad Kailash Mittal vs State of MP 2010 SCC 319 (paragraph 27), where the

observations of the earlier case were approved.

22

who is deprived of exercising financial and administrative powers.

99. The case here, is an example. The facts of this case are as follows:

•The petitioner submitted his reply to the notice dated 20.11.2007 by

the SDM on 28.11.2007;

•He also submitted his reply to the show cause notice dated

24.10.2008 by the State government on 8.11.2008;

•Both replies were submitted without any delay;

•There is no interim order prohibiting the State from deciding the

proceeding; yet

•About two years have elapsed, since submission of the reply to the

State government, the proceeding have not been finalised.

100. Had the court not stayed that part of the order ceasing the petitioner's right to

exercise financial and administrative powers then the petitioner would have been

deprived to exercise it.

101. We would like to point out that there is no order restraining the state

government from completing the removal proceeding. Yet, it has not been finalised.

We had asked the Additional Advocate General the reason as to why the State

government had not yet concluded the proceeding but there was no reply from his

side: his silence was more eloquent than his submissions.

Natural Justice—May Apply at Interim Stage

102. There is no specific provision of affording opportunity before issuing notice

under proviso to section 48(2) of the Municipalities Act. In the Vivekanand case, we

have held the position to be same under proviso to the relevant sections of the

Rural-Areas Enactments. Nevertheless,

•Do the principles of natural justice apply to the situation as loss is

irreparable;

•In case they do apply then, what is their extent?

103. The counsel for the respondent submitted that:

•The show cause notice under proviso to section 48(2) of the Municipalities

Act or the proviso to the relevant sections of the Rural-Areas Enactments

and the cessation of right to exercise financial and administrative powers is

merely a step in the finalisation of removal proceeding;

23

•There is no question of affording any opportunity to a head of a local body at

the stage of issuing notice. Their case would be seen in the final inquiry,

where the question of their removal is to be considered and the reasonable

opportunity would be afforded at that time;

•The principles of natural justice do not apply at this stage;

104. The cessation of exercise of financial and administrative power is a step in

finalisation of removal proceeding but this does not mean that principles of natural

justice would not apply. Depending on the circumstances, the order in a step to

finalisation of a proceedings may also attract principles of natural justice. The

principles of natural justice apply at interim stage too; it depends on the

consequences.

105. Section 142(2-A) of the Income Tax Act, 1961 (the Income Tax Act)

empowers an assessing officer to order a special audit under specified conditions.

The order of special audit is a step in the assessment proceeding. A question

arose whether the assesses should be heard before passing the order or not. Yet

the Supreme Court in Rajesh Kumar vs. Dy CIT: 2007 (2) SCC 181 (The

RajeshKumar case) held that opportunity should be given.

106. The law laid down by the RajeshKumar case was doubted and matter was

referred to the larger bench. The Supreme Court in Sahara India (Firm) vs. CIT

2008 (14) SCC 151 (the Sahara case) approved the same. The court in the Sahara

case noticed the objection of the Income Tax Department (paragraph 28) as

follows:

'The order of special audit is only a step towards assessment and being in

the nature of an inquiry before assessment, is purely an administrative act

giving rise to no [adverse] civil consequence and, therefore, at that stage a

pre-decisional hearing is not required.'

107. Nevertheless, it was rejected by the Supreme Court observing;

'The growth of the administrative law, the old distinction between a judicial

act and an administrative act has withered away. Therefore, it hardly needs

reiteration that even a purely administrative order which entails civil

consequences, must be consistent with the rules of natural justice.

... The expression "civil consequences" encompasses infraction of not

merely property or personal rights but of civil liberties, material deprivations

24

and non-pecuniary damages. Anything which affects a citizen in his civil life

comes under its wide umbrella...

We are also unable to persuade ourselves to agree with the proposition

canvassed by learned counsel for the Revenue that since a post-decisional

hearing in terms of sub-section (3) of section 142 is contemplated, the

requirement of natural justice is fully met.

.... It is well settled that the principle audi alteram partem can be excluded

only when a statute contemplates a post-decisional hearing amounting to a

full review of the original order on merit.'

108. In the case, where a head of a local body is deprived to exercise financial and

administrative power, and ultimately the proceeding for removal are dropped then

in such an event his loss can never be compensated. A post decisional hearing

cannot cure the harm/ damage done to him.

109. In some of the cases cited before us, these proceedings have been placed on

the same footing as departmental proceeding and this has been compared as

suspension during departmental proceeding or suspension during cancellation of

licence proceeding. In some cases, the principles of natural justice have been

made inapplicable on the ground that they are a step in the final proceedings. With

due respect, we are unable to agree with them. In our opinion, the Imran case and

the Rekha case mentioned in the referring order do require reconsideration.

110. This brings up the question, as to what extent do the principles of natural

justice—affording opportunity—should apply?

Natural Justice – Not a Rule of Thumb

111. It has been held that the principles of natural justice are not rigid rules but

vary according to the circumstance:

•Lord Denning

8

remarked,

'It is not possible to lay down rigid rules as to when the principles of

natural justice are to apply; nor as to their scope and their extent.

Everything depends on the subject matter.'

8 This was in R Vs Gaming Board 1970(2) All ER 528. This in turn was based on off

quoted dictum of Tucker LJ in Russell Vs. Duke of Norfolk; 1964(1) ALL ER 109 and

Durayappah Vs Fernando; 1967(2) ALL ER 152.

25

• Halsbury’s laws of England 4

th

edition volume 1 (paragraph 74) states,

'The presumption in favour of importing the rule [Audi alteram partem]

may be partly or wholly displaced: … where it is impracticable to give

prior notice or an opportunity to be heard; or where an adequate

substitute for a prior hearing is available.'

• So does the Garner’s Administrative Law (page 256),

The question that needs to be considered is not the very general one

“what does audi alteram partem require?”, but rather “what in

particular situations may audi alteram partem be held to require?” To

predict the operation of the audi alteram partem principle requires

judgement of context rather than mere knowledge of ‘black-letter’

rules.'

112.The proposition—that the principles of natural justice are not carved on

stone and are flexible—is part of our jurisprudence too. The Supreme Court

observes,

'The applicability of the principles of natural justice is not a rule of thumb or a

straitjacket formula as an abstract proposition law.'

{Maharashtra State

Board of HS Education Vs S. Gandhi 1991 (2) SCC 716 (22)}.

'[They] are not rigid rules… [but] are flexible and their application depends

upon the setting.' {RS Dass vs Union of India AIR 1987 SC 593 (24) and

Sarat Kumar Das Vs Biswajit Patnaik 1995 (Supp) 1 SCC 434 (11)}

'What particular rule of natural justice should apply to a given case must

depend to a great extent on the facts and circumstances of that case. (AK

Karipak Vs. Union of India; AIR 1970 SC 150)

113. The question—to what extent do the principles of natural justice apply—

require consideration of fairness.

Fairness—the Ultimate Aim of Jurisprudence

114. It is often said that laws themselves are neither good nor bad: it is the people

executing them make it good or bad. Lord Acton said it in his own way,

'Power tends to corrupt and absolute power corrupts absolutely.'

26

115. Article 14 of the Constitution is antithesis of arbitrary exercise of power. It

strikes at its root cause. This brings up the question regarding fairness: the ultimate

aim of every jurisprudence.

116. While interpreting a statute, many have emphasised it, in their own way.

'The courts will not only require the procedure prescribed by the statute to

be followed, but will readily imply so much and no more to be introduced by

way of additional procedural safeguards as will ensure the attainment of

fairness.' {Lloyd Vs. Mc Mahaon (1987) A.C.625, 702-3}

'The test today of whether to supplement statutory procedure is no longer

whether the statutory procedure alone could result in manifest unfairness.

The preferable view is that fairness tout court [French words meaning

without nothing added or simply] must be attained … Under either test

factors … likely to be relevant [are]: the comprehensiveness of the code, the

degree of deviation from the statutory procedure required, and the overall

fairness of the procedures to the individual concerned.' (Judicial Review of

Administrative Action – De Smith V

th

Ed. 409)

'If it can be demonstrated … that the … procedure … followed … has

represented a genuine attempt, reasonable in all the circumstances, … it is

unlikely the court will intervene through judicial review and to strike [it]

down.' {Waite Jin R Vs. Norfolk Country Council, ex p M (1989) 2 All ER 359

at 367}

117.The courts have evolved different principles to ensure fairness. May it be:

the promissory estoppel, or the legitimate expectation, or the principles of the

natural justice, or the Wednesbury principle, or any other ground (bad faith,

irrelevant consideration, acting under dictation etc.) on which judicial review is

permissible. These are different tools to ensure that the proceeding and the end

result is fair. These tools, or principles will (if not already) merge into one –

fairness. The World of Physics has yet to find its Theory of Everything (TOE)

9

but

9 There are four fundamental forces governing our Universe. They are known as

·Strong Nuclear force.

·Electromagnetic force.

·Gravitational force.

·Weak interaction force.

27

the jurisprudence has already found its TOE

10

, its ultimate aim, in fairness. It is on

this yardstick that every action is to be judged.

118.To sum up, the relevant question is, ‘But, is it fair’

11

If, the procedure is fair,

the end result is fair; then it is not only sufficient compliance of the principles of

natural justice but is an end of the matter. Fairness, and not the blind application of

the principles of natural justice, is the end result. Let's consider what is fair in the

case of cessation of financial and administrative powers of a head of a local body.

Fairness—Reference to Head of a Local Body

119. The issuance of notice satisfying conditions under relevant proviso (see

Appendix 2 & 3) dealing with the heads of the different local bodies result into

ceasing of right to exercise the financial and administrative powers, till they are

exonerated of the charges mentioned in the show cause notice.

120. The main enquiry is for removal of the head of the local body. That is yet to be

conducted. It is only on the basis of the main inquiry—where reasonable

opportunity is to be given—that the heads of different local bodies can be removed.

In case full length opportunity is afforded at the stage of issuing notice then what is

the point in conducting the final enquiry at the later stage and giving similar

opportunity. That would be futile exercise.

121. The reasons for depriving a president from exercising financial and

administrative functions were mentioned in 'Statements of Objects and Reasons' of

UP Act no. 6 of 2004 by which section 48(2-A) was introduced. It indicated that,

'Most of the Presidents used to delay the proceedings by not replying the

show-cause notice in time and they continue to misuse their financial

powers. It has, therefore, been decided to amend the said Act to cease the

financial powers of such President or a Vice-President during the pendency

The ultimate aim of physics is to unite these forces together – Theory of Everything (TOE).

But will it ever unite, is a question troubling all. Albert Einstein worked on it but could

not succeed. Many thought this could be done by the end of this century. But it has not

happened. It may happen in the next (21

st

) century

10Administrative jurisprudence, the World over, are moving in this direction. Indian courts

are also repeatedly using this concept to judge the validity of the administrative actions.

11Chief Justice Earl Warren, born on March 19, 1891, was the 14th Chief Justice of the

United States of America (1953-69). ‘But, is it fair’ was a question that most of the

lawyers appearing before him had to answer. It was on this touchstone that he tested

all state actions. And this may well be the question to ask so far as administrative law

is concerned.

28

of the inquiry and his financial powers and functions will be exercised and

performed by the District Magistrate until he is exonerated of the charges.'

This sub-section was deleted and re-introduced as proviso to section 48(2) by UP

Act 2 of 2005 in the slightly modified form.

122. In the Rural-Areas Enactment, no object and reason is mentioned for the

relevant provisios but the aforesaid reason appears to be the ground for the same.

123. The reason to deprive the heads of the local bodies from exercising financial

and administrative function is that they used to delay the proceeding and abuse the

powers during the inquiry. This may be correct. The facts in the present case may

not negate the general trend as stated in the aforesaid object and reason.

124. Considering the object and reason, there is no justification to involve the

heads of the local bodies at every step of collection of material or in the preliminary

enquiry. The principles of natural justice or the yardstick of fairness would be met if

the explanation of the effected head of the local body or his point of view or

version is considered before recording the satisfaction or finding of prima facie

guilt before issuing notice and passing order for ceasing financial and

administrative powers.

125. Affording opportunity to submit explanation of the head or considering it, is not

to be as detailed as in the regular inquiry or to the extent of permitting cross-

examination of any witness, who might be examined in the preliminary enquiry. It

is in the sense of getting his point of view or version to the charges before being so

satisfied. But what is the point in affording the opportunity if the explanation is not

considered. It has to be considered too: there has to be application of mind.

126. In our opinion, getting explanation or point of view or version of a head of a

local body regarding charges and considering them before issuing show cause

notice under relevant provisos, not only strikes at the arbitrary exercise of power

but brings about fairness in the procedure; in the circumstances, it is also sufficient

compliance of the principles of natural justice.

127. However, it will depend from case to case, whether the opportunity to submit

29

explanation or point of view or version has been given in a particular case or not:

this will depend on the facts of each case. We would like to explain it, with

reference to the facts of this case.

128. In the present case, there is only one charge. The SDM had asked the

president to submit his explanation to it. In this case, the requirement of getting

explanation of the petitioner has been met. The impugned notice/ order cannot be

invalidated on this ground. However, we wish to clarify that we have not examined

the question the petitioner's explanation was considered or not.

129. The counsel for the petitioner submitted that:

•The decision to issue notice and to cease the financial and administrative

powers was taken by the State Government on the basis of the letter of the

SDM and the DM;

•These letters were not given to him;

•The explanation the petitioner ought to have been taken after the copies of

the aforesaid letter were given to him.

130. The petitioner was asked to give his explanation regarding his conduct in

giving out theka for `36,000 on 8.6.2007. He has given his reply in detail about the

same. The letters of the SDM and DM are also in respect of the same incident. It is

in respect this incident that the report of the EO was sought by the SDM. These

letters are merely material for considering whether there is any reason to believe

that the petitioner was prima facie guilty or not. It was not necessary to hand over

the aforementioned letters at the stage of asking his explanation or point of view to

the allegation. These copies would be given to him at the stage of final enquiry

where reasonable opportunity has to be afforded to the petitioner.

131. In case these letters were not supplied to the petitioners then he can ask for

the same and they must be given to him as without handing them over it cannot be

said that reasonable opportunity was afforded as contemplated in section 48(2) of

the Municipalities Act. However, the show cause notice issued by the state

government cannot be invalidated on the ground that these letters were not given

to the petitioner before issuing notice to him or requiring him to submit his point of

view.

132. In our opinion,

•It is not necessary to involve a head of a local body in the process of

30

collecting material or in the preliminary inquiry or supply them copy of

preliminary report. However, it is necessary to ask and consider his

explanation, or point of view or version regarding charges before issuing

notice under the relevant provisos under the different enactment;

•In this case, the explanation of the petitioner to the charges was asked for.

The order cannot be invalidated on this ground. However, the second

aspect whether his explanation was considered or not was not examined by

us. It may, along with other submissions of the petitioner, be examined by

the appropriate bench.

CONCLUSIONS

133. Our conclusions are as follows:

(a)There can be proceeding for removal of president under section 48(2) of the

Municipalities Act without ceasing his financial and administrative power

under its proviso;

(b)The following conditions must be satisfied before cessation of financial and

administrative powers of a president of a Municipality can take place:

(i) The explanation or point of view or the version of the affected

president should be obtained regarding charges and should be

considered before recording satisfaction and issuing notice/ order

under proviso to section 48(2) of the Municipalities Act;

(ii) The State government should be objectively satisfied on the basis

of relevant material that:

•The allegations do not appear to be groundless; and

•The president is prima facie guilty of any of the grounds under

section 48(2) of the Municipalities Act.

(iii) The show cause notice must contain the charges against the

president;

(iv) The show cause notice should also indicate the material on which

the objective satisfaction for reason to believe is based as well as the

evidence by which charges against the president are to be proved.

Though in most of the cases they may be the same;

(c)It is not necessary to pass separate order under proviso to section 48(2) of

the Municipalities Act. It could be included in the notice satisfying the other

conditions under proviso to section 48(2). In fact it is not even necessary. It

comes into operation by the Statute itself on issuance of a valid notice

under proviso to Section 48(2) of the Municipalities Act.

31

(d)In case a notice/ order ceasing financial and administrative powers is held to

be invalid on any ground then this does not mean that the proceeding of

removal are also invalid. They have to continue and taken to their logical

end. The proceeding to remove can come to an end only if the charges on

the their face or even taken to be proved do not make out a case for

removal under section 48(2) of the Municipalities Act.

(e)It is not necessary to involve the president with the process of collecting

material or give president the copies of the material before asking his

explanation or point of view or version of the president to the charges.

(f)In the present case, the impugned notice/ order cannot be invalidated on the

following ground that:

(i)The explanation or point of view of the petitioner to the charge

was not obtained (as it was asked). However, we have not

considered, whether his explanation was considered or not;

(ii)The letters of the SDM and DM were not given to the petitioner

before obtaining petitioner's explanation or his point of view to the

charges as this was unnecessary at that stage. In case these copies

were not given along with show cause notice by the State

government, it is open to the petitioner to ask for the same and then

file an additional reply.

134. Our conclusions mentioned in the preceding paragraph also answer the

questions referred to the FB. Let the papers of this case and other connected

cases be placed before the appropriate division bench dealing with such cases for

deciding them on merit.

Date: 26.10.2010

BBL

32

Appendix-1

Index of all other appendixes and the words used in the judgement

Appendix-1: Index of all other appendixes and the words used in the judgement

Appendix-2: Section 48(2A) and 48(3) of the Act as amended by UP Act No. 26 of

1964 as well as Section 48(2-A) as added by UP Act No. 6 of 2004 in

the Municipalities Act.

Appendix-3: The relevant part of section 48(2) of the Municipalities Act at the time

when the notice was issued to the petitioner.

Appendix-4: The relevant parts of the -sections of the Rural-Areas Enactments

providing cessation of financial and administrative powers.

Words and Abbreviations

Abbreviation Words

Ceases to exercise financial and

administrative powers

Ceases to exercise, perform, and

discharge the financial and

administrative powers and functions

Heads of the local bodies President or a chairman of a

Municipality, Adhyaksh of a Zila

Panchayat, Pramukh of Kshettra

Panchayat, and Pradhan of a Gram

Panchayt

The DM District Magistrate, Ghaziabad

The EO Executive Officer Nagar Panchayat

Dasna, Ghaziabad

The Kshetra-Zila Panchayat Act UP Kshettra Panchayat and Zila

Panchayat Adhiniyam, 1961

The Municipalities Act UP Municipalities Act, 1916

The Nagar Panchayat Nagar Panchayat Dasna, Ghaziabad

The Rural-Areas Enactment The Panchayat Raj Act and the Kshetra-

Zila Panchayat Act

The Panchayat Raj Act UP Panchayat Act, 1947

The SDM Sub Divisional Magistrate Sadar,

Ghaziabad

33

Appendix-2

1. Sub-section (2-A) and (3) of Section 48 of the Act as inserted by the UP

Municipalities (Amendment) Act, 1964 ( UP Act 26 of 1964) was as follows:

(2-A) After considering any explanation that may be offered by the President

and making such enquiry as sit may consider necessary, the State

Government may for reasons to be recorded in writing, remove the

President from his office:

Provided that in a case where the State Government has issued

notice in respect of any ground mentioned in clause (a) or sub-clause (ii),

(iii), (iv), (vi), (vii) or (viii) of clause (b) of sub-section it may instead of

removing him give him a warning.

(3) The State Government may place under suspension a President who is

called upon to show cause in respect of any ground mentioned in clause (a)

or sub-clause (vi), (vii) or (viii) of clause (b) of sub-section (2) or against

whom a prosecution for an offence which in the opinion of the State

Government involves moral turpitude is commenced until the conclusion of

the enquiry or the prosecution, as the case may be, and where a President

has been so suspended he shall not, for so long as the order of suspension

continues, be entitled—

(a) to exercise the powers or perform the duties of a President

conferred or imposed upon him by or under this Act or any other

enactment for the time being in force, or

(b) to take part in any proceedings of the board.

2. Sub-section (2-A) to Section 48 of the Act as inserted by UP Municipalities

(Amendment) Act, 2004 (UP Act No. 6 of 2004) was as follows:

(2-A) Where in an inquiry held by such person and in such manner as may

be prescribed, if a President or a Vice President is prima facie found to be

guilty on any of the grounds referred to in sub-section (2), he shall cease to

exercise, perform and discharge the financial and administrative powers,

functions and duties of the President or the Vice-President, as the case

may be, which shall, until he is exonerated of the charges mentioned in the

show-cause notice issued to him under sub-section (2), be exercised and

performed by the District Magistrate or by an officer nominated by him not

below the rank of the Deputy Collector.

34

Appendix-3

The relevant part of section 48(2) of the Municipalities Act at the time when notice

was issued is as follows:

48. Removal of President. (1) ...

(2) Where the State Government has, at any time, reason to believe that,—

(a) there has been a failure on the part of the President in performing

his duties; or

(b) the President has—

(i)incurred any of the disqualifications mentioned in

Sections 12-D and 43-AA; or

(ii)within the meaning of Section 82 knowingly acquired or

continued to have, directly or indirectly or by a partner,

any share or interest, whether pecuniary or of any other

nature, in any contract or employment with by or on

behalf of the Municipality; or

(iii)knowingly acted as a President or as a member in a

matter other than a matter referred to in clauses (a) to

(g) of sub-section (2) of Section 32, in which he has,

directly or indirectly, or by a partner, any share or

interest whether pecuniary or of any other nature, or in

which he was professionally interested on behalf of a

client, principal or other person; or

(iv)being a legal practitioner acted or appeared in any suit or

other proceeding on behalf of any person against the

Municipality or against the State Government in respect

of nazul land entrusted to the management of the

Municipality or against the State Government in respect

of nazul land entrusted to the management of the

Municipality, or acted or appeared for or on behalf of any

person against whom a criminal proceeding has been

instituted by or on behalf of the Municipality; or

(v)abandoned his ordinary place of residence in the

municipal area concerned; or

(vi)been guilty of misconduct in the discharge of his duties;

or

(vii)during the current or the last preceding term of the

Municipality, acting as President or as Chairman of a

Committee, or as member or in any other capacity

whatsoever, whether before or after the commencement

of the Uttar Pradesh Urban Local Self- Government

Laws (Amendment) act, 1976, so flagrantly abused his

position, or so wilfully contravened any of the provisions

of this Act or any rule, regulation or bye-law, or caused

such loss of damage to fund or property of the

Municipality as to render him unfit to continue to be

President; or

(viii)been guilty of any other misconduct whether committed

before or after the commencement of the Uttar Pradesh

Urban Local self Government Laws (Amendment) Act,

1976 whether as President or as exercising the powers

of President, or as member; or

(ix)caused loss or damage to any property of the

municipality;

(x)misappropriated or misused of Municipal found; or

(xi)acted against the interest of the municipality; or

35

(xii)contravened the provisions of this Act or the rules made

thereunder; or

(xiii)created an obstacle in a meeting of the municipality in

such manner that it becomes impossible for the

municipality to conduct its business in the meeting or

instigated someone to do so; or

(xiv)wilfully contravened any order or direction of the State

Government given under this Act; or

(xv)misbehaved without any lawful justification with the

officers or employees of the municipality; or

(xvi)disposed of any property belonging to the municipality at

a price less than its market value; or

(xvii)encroached, or assisted or instigated any other person to

encroach upon the land, building or any other immovable

property of the municipality;

It may call upon him to show cause within the time to be specified in the

notice why he should not be removed from office.

Provided that where the State Government has reason to believe that the

allegations do not appear to be groundless and the President is prima facie

guilty on any of the grounds of this sub-section resulting in the issuance of

the show-cause notice and proceedings under this sub-section he shall,

from the date of issuance of the show-cause notice containing charges,

cease to exercise, perform and discharge the financial and administrative

powers, functions and duties of the President until he is exonerated of the

charges mentioned in the show-cause notice issued to him under this sub-

section and finalization of the proceedings under sub-section (2-A) and the

said powers, functions and duties of the President during the period of such

ceasing shall be exercised, performed and discharged by the District

Magistrate or an officer nominated by him not below the rank of Deputy

Collector.

(2-A) After considering any explanation that may be offered by the President

and making such enquiry as it may consider necessary, the State

Government may for reasons to be recorded in writing, remove the

President from his office:

(2-B) An order passed by the State Government under sub-section (2-A)

shall be final and shall not be questioned in any court.

(3) ... [Omitted by UP Act No. 12 of 1994.]

(4)A President removed under sub-section (2-A) shall also cease to be a

member of the Municipality and in case of removal on any of the grounds

mentioned in clause (a) or sub-clause (vi), (vii) or (viii) of clause (b) of sub-

section (2) shall not be eligible for re-election as President or member for a

period of five years from the date of his removal.

36

Appendix-4

The relevant part of the sections of the Rural-Areas Enactments providing

cessation of financial and administrative powers

1. Section 95(1)(g) of Panchayat Raj Act is as follows:

95. Inspection- (1) The State Government may—

…

(f)...

(g) remove a Pradhan, Up-Pradhan or member of a Gram Panchayat or a Joint

Comittee or Bhumi Prabandhak Samiti, or a Panch, Sahayak Sarpanch or

Sarpanch of a Nyaya Panchayat if he—

(i) absents himself without sufficient cause for more than three consecutive

meetings or sittings.

(ii) refuses to act or becomes incapable of acting for any reason whatsoever

or he is accused of or charged for an offence involving moral turpitude,

(iii) has abused his position as such or has persistently failed to perform the

duties imposed by this Act or rules made thereunder or his continuance as

such is not desirable in public interest, or

(iii-a) has taken the benefit of reservation under sub-section (2) of Section

11-A or sub-section (5) of Section 12, as the case may be, onthe basis of a

false declaration subscribed by him stating that he is a member of

Scheduled Castes, the Scheduled Tribes or tUntitled 1he backward classes,

as the case may be.

(iv) being a Sahayak Sarpanch or a Sarpanch of the Nyaya Panchayat takes

active part in politics, or

(v) suffers from any of the disqualifications mentioned in Clauses (a) to (m)

of Section 5-A:

Provided that where, in an enquiry held by such person and in such manner

as may be prescribed, a Pradhan or UP-Pradhan is prima facie found to

have committed financial and other irregularities such Pradhan or UP-

Pradhan shall cease to exercise and perform the financial and administrative

powers and functions, which shall, until he is exonerated of the charges in

the final enquiry, be exercised and performed by a Committee consisting of

three members of Gram Pacnahayat appointed by the State Government.

(gg) Deleted by UP Act no 9 of 1994

(h) Deleted by UP Act no 9 of 1994

Provided that

(i) No action shall be taken under Clause (f), Clause (g) except after giving

to the body or person concerned a reasonable opportunity of showing cause

against the action proposed;

...

2. Section 16 of the Kshettra-Zila Panchayat Act deals with removal of Pramukh

(head) of a Kshettra Panchayat. It is as follows:

16. Removal of Pramukh - (1) If in the opinion of the State Government the

Pramukh or any of a Kshettra Panchayat wilfully omits or refuses to perform

his duties and functions under this act, or abuses the powers vested in him

or is found to be guilty of misconduct in the discharge of his duties or

becomes physically or mentally incapacitated for performing his duties, the

State Government may, after giving the Pramukh or such as the case may

be, a reasonable opportunity for explanation and after consulting the

Adhyaksha of the Zila Panchayat at concerned in the matter and taking into

consideration his opinion, if received within thirty days from the date of the

despatch of the communication for such consultation, by order, remove such

Pramukh or as the case may be, from office, and such order shall be final

and not open to the questioned in a Court of law:

37

Provided that where, in an enquiry held by such person and in such

manner as may be prescribed, a Pramukh or is prima facie found to have

committed financial and other irregularities, such Pramukh or shall cease to

exercise and perform the financial and administrative powers and functions,

which shall, until he is exonerated of the charges in the final enquiry, be

exercised and performed by a committee consisting of three elected

members of the Kshettra Panchayat appointed in this behalf by the State

Government.

(2) A Pramukh or , removed from his office under this section, shall not be

eligible for re-election as Pramukh or for a period of three years from the

date of his removal.

3. Section 29 of the Kshettra-Zila Panchayat Act deals with removal of Adhyaksha

(head) of a Zila Panchayat. It is as follows:

29. Removal of Adhyaksha or- (1) If in the opinion of the State Government

the Adhyaksha or the while acting in place of Adhyaksha wilfully omits or

refuses to perform his duties or functions under this Act or abuses the

powers vested in him or is found to be guilty of misconduct in the discharge

of his duties, or because physically or mentally incapacitated for performing

his duties the State Government, after giving the Adhyaksha or as the case

may be, a reasonable opportunity for explanation may by order remove him

from office and such order shall be final and not open to be questioned in a

court of law.

Provided that where in an enquiry held by such person and in such

manner as may be prescribed, an Adhyaksha or Upadhyaksha is prima facie

found to have committed financial and other irregularities such Adhyaksha

or Upadhyaksha shall cease to exercise and perform the financial and

administrative powers and functions, which shall, until he is exonerated of

the charges in the final enquiry, be exercised and performed by a committee

consisting of three elected members of the Zila Panchayat appointed in this

behalf by the State Government.