# Babi Kasaudhan v. State of U.P. & Ors

- **Citation:** (2016) 3 ILRA 438
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2016-02-24
- **Bench:** Krishna Murari, Raghvendra Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/babi-kasaudhan-v-state-of-u-p-ors-43469
- **Pages:** 20

## Headnote

Government's show-cause notice dated 15.10.2015 issued under Section 48(2) of the U.P.
Municipalities Act, 1916, by which proceedings for her removal were initiated and her financial and
administrative powers were ceased. Although an inquiry report was relied upon, the petitioner's
detailed explanation denying the allegations was neither properly considered nor dealt with by the
State Government. The cessation of her powers was based on a report of the District Magistrate
obtained behind her back and without supplying her its copy, thereby violating principles of natural
justice.

The High Court held that cessation of financial and administrative powers of an elected municipal head
is not automatic and can be done only after objective satisfaction, consideration of the reply, and
recording of reasons as required by law and judicial precedents. Since the impugned notice did not
record any reasons, did not show application of mind to the petitioner's reply, and was passed in
violation of natural justice and Articles 14 and 21 of the Constitution, it was quashed. The Court
restored the petitioner's financial and administrative powers, while allowing the State Government to
continue and conclude the removal proceedings in accordance with law within two months.

Petition Allowed.

List of Case Laws Cited -

1.Imran Masood vs. State of U.P. & Ors., 2007 (1) ADJ 350 (DB)

2.Rekha (Kinner) vs. State of U.P. & Ors., 2008 (3) ADJ 315 (DB)

3.Smt. Vimla vs. State of U.P. & Ors., 2008 (1) ADJ 128 (DB) (LB)

4.Hafiz Ataullah Ansari vs. State of U.P. & Ors., 2011 (3) ADJ 502 (FB)

5.Paras Jain vs. State of U.P. & Ors., 2016 (1) ADJ 1 (FB)

6.Barium Chemicals Ltd. & Anr. Vs. Company Law Board & Ors., AIR 1967 SC 295

7.Bhikhubhai Vithlabhai Patel & Ors. Vs. State of Gujarat & Anr., (2008) 4 SCC 144

8.Prasad vs. State of Karnataka, AIR 2009 SC 1911

9.Rani Lakshmi Bai Kshetriya Gramin Bank vs. Jagdish Sharan Varshney, (2009) 4 SCC 240

10.Ravi Yashwant Bhoir vs. Collector, (2012) 4 SCC 407

11.Krishna Swami vs. Union of India & Ors., AIR 1993 SC 1407

12.Sant Lal Gupta vs. Modern Co-operative Group Housing Society Ltd., (2010) 13 SCC 336
440 INDIAN LAW REPORTS ALLAHABAD SERIES

13.Institute of Chartered Accountants of India vs. L.K. Ratna & Ors., AIR 1987 SC 71

14.Indian National Congress (I) vs. Institute of Social Welfare

15.Bachhitar Singh vs. State of Punjab

16.Union of India vs. H.C. Goel

## Text

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438 INDIAN LAW REPORTS ALLAHABAD SERIES
account of default unless on the case being called out, an application signed by the party or his
Advocate or brief-holder together with the requisite process fee, cost or notices, as the case may be, is
presented to the Court or an application similarly signed discharging from the case the persons not
served on account of the said default or withdrawing it as against them and the Court deems fit to
grant it.

5. The provision in question is clear that in case requisite steps are not at all taken as against the
party for whom notices have been issued then, the crux of the matter is that as against the said party
no orders could be passed and as against the aforesaid party, the proceedings ought to have been
accepted as dismissed. Thus, the provision in question on its face is clear that it is applicable only in
case of those individuals to whom notices have been issued and as far as entire writ petition is
concerned i.e. rest of the writ petition as against other opposite parties, the petition will survive and
proceedings will have to be continued.

6. Once such a scheme is provided under Chapter XII Rule 4 of the High Court Rules then in
view of the this we are of the considered opinion that once the petitioner-appellant was not at all
claiming any relief against Ramesh Chandra Verma and he was merely a proforma opposite party
then in case steps were not taken, the writ petition was to be accepted to be dismissed only as against
him. Even otherwise before us petitioner is submitting that the petitioner has died and as there is no
direct lis between the petitioner-appellant and the aforementioned opposite party. Consequently, in
our considered opinion, on account of non-taking of steps for effecting service upon the
aforementioned opposite party no relief could have been granted against him. It is informed that he is
no more, then even otherwise as far as the prayer that has been made by the petitioner before this
Court against the other opposite parties, the same has to be necessarily considered by the learned
Single Judge on merits.

7. In view of this, the order dated 13.10.2014, passed by the learned Single Judge is hereby
quashed and set aside. The matter is remitted back to the learned Single Judge for deciding on merits
in accordance with law and in front of the name of proforma opposite party, a note be made that he is
no more and no relief is claimed as against him.

8. In the result, the present Special Appeal stands allowed.
----------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 24.02.2016

BEFORE

THE HON'BLE KRISHNA MURARI, J.
THE HON'BLE RAGHVENDRA KUMAR, J.

Civil Misc. Writ Petition No./(Writ C )- 61940 of 2015

Babi Kasaudhan ...Petitioner
Versus
State of U.P. & Ors. ...Respondents
3 All. Babi Kasaudhan Vs State Of U.P. & Ors.
439

Counsel for the Petitioner:
Shri Hari Pratap Gupta, Shri Manish Goyal

Counsel for the Respondents:
C.S.C., Chandra Shekhar Singh, R.N. Pandey, Y.K. Srivastava.

Held -

The petitioner, an elected Chairman of Nagar Panchayat, Shohratgarh, challenged the State
Government's show-cause notice dated 15.10.2015 issued under Section 48(2) of the U.P.
Municipalities Act, 1916, by which proceedings for her removal were initiated and her financial and
administrative powers were ceased. Although an inquiry report was relied upon, the petitioner's
detailed explanation denying the allegations was neither properly considered nor dealt with by the
State Government. The cessation of her powers was based on a report of the District Magistrate
obtained behind her back and without supplying her its copy, thereby violating principles of natural
justice.

The High Court held that cessation of financial and administrative powers of an elected municipal head
is not automatic and can be done only after objective satisfaction, consideration of the reply, and
recording of reasons as required by law and judicial precedents. Since the impugned notice did not
record any reasons, did not show application of mind to the petitioner's reply, and was passed in
violation of natural justice and Articles 14 and 21 of the Constitution, it was quashed. The Court
restored the petitioner's financial and administrative powers, while allowing the State Government to
continue and conclude the removal proceedings in accordance with law within two months.

Petition Allowed.

List of Case Laws Cited -

1.Imran Masood vs. State of U.P. & Ors., 2007 (1) ADJ 350 (DB)

2.Rekha (Kinner) vs. State of U.P. & Ors., 2008 (3) ADJ 315 (DB)

3.Smt. Vimla vs. State of U.P. & Ors., 2008 (1) ADJ 128 (DB) (LB)

4.Hafiz Ataullah Ansari vs. State of U.P. & Ors., 2011 (3) ADJ 502 (FB)

5.Paras Jain vs. State of U.P. & Ors., 2016 (1) ADJ 1 (FB)

6.Barium Chemicals Ltd. & Anr. Vs. Company Law Board & Ors., AIR 1967 SC 295

7.Bhikhubhai Vithlabhai Patel & Ors. Vs. State of Gujarat & Anr., (2008) 4 SCC 144

8.Prasad vs. State of Karnataka, AIR 2009 SC 1911

9.Rani Lakshmi Bai Kshetriya Gramin Bank vs. Jagdish Sharan Varshney, (2009) 4 SCC 240

10.Ravi Yashwant Bhoir vs. Collector, (2012) 4 SCC 407

11.Krishna Swami vs. Union of India & Ors., AIR 1993 SC 1407

12.Sant Lal Gupta vs. Modern Co-operative Group Housing Society Ltd., (2010) 13 SCC 336
440 INDIAN LAW REPORTS ALLAHABAD SERIES

13.Institute of Chartered Accountants of India vs. L.K. Ratna & Ors., AIR 1987 SC 71

14.Indian National Congress (I) vs. Institute of Social Welfare

15.Bachhitar Singh vs. State of Punjab

16.Union of India vs. H.C. Goel

(Delivered by Hon'ble Krishna Murari, J.)

1. Petitioner, an elected Chairman of the Nagar Panchayat, Shohratgarh, District
Siddharth Nagar, has approached this Court challenging the show cause notice issued by
respondent no. 1 dated 15.10.2015 in exercise of the powers conferred by Section 48 (2) of
the U.P. Municipalities Act, 1967 (hereinafter referred to as the 'Act') as to why she may not
be removed from the elected post. The financial and administrative powers were also ceased
during the pendency of the proceedings for removal.

2. We have heard Shri Manish Goyal, learned counsel for the petitioner and Shri Ashok
Kumar Pandey, learned Additional Advocate General assisted by S/Shri Y.K. Srivastava and
R.N. Pandey for the State respondents.

3. With the consent of learned counsel for the parties, we have proceeded to hear the
petition on merits and decide the same at this stage.

4. Undisputed facts are as follows.

5. Certain complaints were made against the petitioner alleging irregularities in grant of
contractual work by Nagar Panchayat resulting into financial loss, which were inquired into
through a committee consisting of Sub Divisional Magistrate, Naugarh and Executive
Engineer, Provincial Division, P.W.D., Siddharth Nagar, which submitted a report dated
07.02.2015, whereupon the District Magistrate forwarded the same to the State Government.
An explanation was called from the petitioner vide notice dated 23.03.2015. After the
petitioner submitted her explanation dated 16.04.2015, respondent no. 1 issued a notice
dated 15.10.2015 requiring her to show cause within a period of 15 days as to why she
should not be removed from the post of Chairman, Nagar Panchayat. The financial and
administrative powers during the pendency of the proceedings were ceased.

6. Learned counsel for the petitioner contends that there has been total non-application
of mind by the State Government to the explanation dated 16.04.2015 submitted by the
petitioner, inasmuch as the show cause notice does not record any reason as to why the
explanation submitted by the petitioner was not found to be satisfactory. Total nonapplication of mind and non-consideration of the explanation submitted by the petitioner
vitiates the order ceasing financial and administrative powers. It is further submitted that no
opportunity of hearing was provided to the petitioner after she submitted her explanation
3 All. Babi Kasaudhan Vs State Of U.P. & Ors.
441
and, thus, cessation of financial and administrative power is in gross violation of principles
of natural justice.

7. In reply, learned Additional Advocate General submits that an enquiry was instituted
into the charges levelled against the petitioner, which was conducted by a committee
constituted by Sub Divisional Magistrate and the Executive Engineer, Provincial Division,
P.W.D., who submitted their report dated 07.02.2015. The copy of the enquiry report was
duly supplied to the petitioner along with the notice calling upon her to submit her
explanation. The entire matter was forwarded to the State Government, after being satisfied
that the petitioner was prima facie guilty of the charges levelled, issued a show cause notice
calling for her explanation as to why she should not be removed from the elected post and
since the charges were serious and grave in nature, her financial and administrative power
shall remain ceased during the pendency of the proceedings.

8. The State Government is empowered to remove an elected President of a
municipality in exercise of powers conferred by Section 48 (2) of the Act. The said section
reads as under.

"48. Removal of President.-

[omitted]

(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 82, 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 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
442 INDIAN LAW REPORTS ALLAHABAD SERIES

(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
willfully contravened any of the provisions of this Act or any rule, regulation or bye-laws, or
caused such loss or damage to the 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 member; or

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

(x) misappropriated or misused Municipal fund; or

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

(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) willfully 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
3 All. Babi Kasaudhan Vs State Of U.P. & Ors.
443
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."

9. A perusal of the aforesaid provision goes to show that State Government is
empowered to issue a show cause notice to the elected President of a municipality to explain
why he should not be removed from the office in a case where it has reason to believe that
any of the provisions of clause (a) or (b) are attracted. In other words, the reason to believe
is referable to clause (a) or sub clauses (i) to (xvii) of clause (b). In other words, if the State
Government has reason to believe that any of the stipulation mentioned therein is attracted,
it can call upon the elected President to show cause why he should not be removed from the
office.

10. Proviso to Section 48 (2) provides that where the allegations levelled against the
elected President do not appear to be groundless and he is prima facie guilty of any of the
grounds enumerated in the sub-section, which has resulted in issuance of a show cause
notice to him for removal and during the pendency of such proceedings, until he is
exonerated by the charges levelled against him, he shall cease to exercise, perform and
discharge the financial and administrative powers, functions and duties of the elected
President.

11. The issue for adjudication raised before us involves interpretation of proviso to
Section 48 (2) of the U.P. Municipalities Act, 1916 and petitioner's rights before the
financial and administrative powers can be ceased.

12. The issue is no longer res integra. A Division Bench noticing that the views
expressed by two Division Benches of this Court in the cases of Imran Masood Vs. State
of U.P. & Ors., 2007 (1) ADJ 350 (DB) and Rekha (Kinner) Vs. State of U.P. & Ors.,
2008 (3) ADJ 315 (DB), are in conflict with the observation made by another Division
Bench in the case of Smt. Vimla Vs. State of U.P. & Ors., 2008 (1) ADJ 128 (DB) (LB),
referred the following three questions for adjudication by a larger Bench.

"(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
inquiry is permissible to be read the aforesaid proviso?
444 INDIAN LAW REPORTS ALLAHABAD SERIES

(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?"

13. A Full Bench of this Court in the case of Hafiz Ataullah Ansari Vs. State of U.P.
& Ors., 2011 (3) ADJ 502 (FB), of which one of us (Krishna Murari, J.) was a member,
after analysing the provisions of Section 48 (2) of the Act held that the financial and
administrative power does not cease merely on the issue of notice under Section 48 (2) of
the Act, unless the conditions mentioned in the proviso to Section 48 (2) are also satisfied. It
may be relevant to quote the following paragraphs from the Full Bench judgment of Hafiz
Ataullah Ansari (supra).

"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
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."
3 All. Babi Kasaudhan Vs State Of U.P. & Ors.
445

14. Analysing the power of the State Government for cessation of financial and
administrative power of the elected Preside of the municipality contained in the proviso to
Section 48 (2) of the Act, the Full Bench in paragraphs 73 and 74 observed as under.

"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."

15. While considering the application of principles of natural justice, the Full Bench
observed that the cessation of exercise of financial and administrative power is a step
towards finalization of removal proceedings, but this does not mean that principles of
natural justice would not apply and depending upon the circumstances, the order in a step to
finalization may apply at intermediate stage depending upon the consequences.

16. It has further been held by the Full Bench that where a head of a local body is
deprived of exercise of financial and administrative power and ultimately the proceedings
for removal are dropped, then in such an event, his loss can never be compensated and a
post decisional hearing cannot cure the harm and damage done to him.

17. The Full bench while considering the question, to what extent do the principles of
natural justice apply, opined that getting explanation or version of a head of a local body
regarding charges and considering them before issuance of show cause notice not only
eliminates arbitrary exercise of power, but also brings fairness in procedure.

18. In paragraphs 124 to 126, after noticing that the main inquiry is for removal of a
head of a local body, which is yet to be conducted and concluded where reasonable
opportunity is to be given and, in case, a full length opportunity is afforded at the stage of
issue of a notice, then it is totally a futile exercise. However, after noticing the reasons for
446 INDIAN LAW REPORTS ALLAHABAD SERIES
depriving a President from exercising a financial and administrative function as contained in
Statements of Objects and Reasons of U.P. Act No. 6 of 2004 by which Section 48 (2) was
introduced, held as under.

"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."

19. The conclusions arrived by the Full Bench are as under.

"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;
3 All. Babi Kasaudhan Vs State Of U.P. & Ors.
447

(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.

(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."

20. Another Division Bench finding itself unable to accept the law laid down by the
Full Bench in the case of Hafiz Ataullah Ansari (supra), in Writ Petition No. 8179 of 2015,
Paras Jain Vs. State of U.P. & Ors., [2016 (1) ADJ 1 (FB)], vide order dated 10.02.2015
referred the following questions to be answered by a larger Bench.

"(a) Whether the Full Bench judgment in the case of Hafiz Ataullah Ansari Vs.
State of U.P. (supra) lays down the correct law;

(b) Whether in view of the language of the proviso to Section 48(2) of the U P
Municipalities Act, there can be any proceedings for removal of the President without his
financial and administrative powers ceasing, under the proviso;

(c) Whether cessation of financial and administrative powers of the President
follows automatically with the issuance of a show cause notice under Section 48 (2) calling
upon him to show cause as to why he may not be removed;

(d) Whether any separate order for cessation of financial and administrative
powers of the President is required to be made while issuing a notice under the proviso to
Section 48(2) or such cessation follows automatically; and

(e) Whether in view of the specific language of Section 48(2), the question of
opportunity of hearing before cessation of the financial and administrative powers of the
President stands excluded."
448 INDIAN LAW REPORTS ALLAHABAD SERIES

21. A larger Bench of five Judges, after analysing the Full Bench judgment in the case
of Hafiz Ataullah Ansari (supra) and the provisions of Section 48 of the Act as well as the
legislative history and the various decisions of the Hon'ble Apex Court on the applicability
of the principles of natural justice observed as under.

"The cessation of financial and administrative powers of an elected head of a
municipality is a matter of significance and is replete with serious consequences. The effect
of the financial and administrative powers, functions and duties being ceased, has a direct
impact upon the authority of the elected head. It erodes authority and impacts upon the
ability of the President to effectively discharge the functions of the office by preventing the
discharge of financial and administrative authority. Bereft of financial and administrative
powers, functions and duties, the office of the President of a municipality is reduced to a
cipher. In fact, the proviso envisages that upon the powers being ceased, they shall be
exercised by the District Magistrate or an officer nominated, not below the rank of a Deputy
Collector. This consequence is serious enough to warrant the Court to read a compliance
with the principles of natural justice into the provision so as to ensure a fair procedure and
safeguard against an unfair recourse to its power by the State Government. The principles of
natural justice, as we have noted above, are required to be observed as a matter of first
principle when a decision - administrative, quas-judicial or judicial - adversely affects the
rights of parties. The principle of reading into the statutory provision a requirement of
complying with the principles of natural justice is a mandate of Article 14 because it would
be an anathema to a fair procedure for the State Government to issue dictats that abrogate
the financial 10 and administrative powers of an elected head of a local self-governing
institution without complying with the principles of natural justice. The requirement of
observing the principles of natural justice, as a matter of first principle, must be weighed in
together with the additional factors present in the proviso to Section 48(2) that lead to the
conclusion that a decision to cease financial and administrative powers must be preceded by
adherence to a fair procedure. The first of the three indicia in the proviso is the existence of
a reason to believe on the part of the State that the allegations do not appear to be
groundless. The second indicia is the requirement of the formation of the reason to believe
that the President of a municipality is prima facie guilty on any of the grounds mentioned in
the sub-section, resulting in the notice to show cause. Arriving at a determination in regard
to the prima facie guilt of a person, as the statute mandates, must be upon due observance of
the principles of natural justice. The third indicia is that the notice to show cause has to
contain the charges against the person. Hence, even though the proviso to sub-section (2) of
Section 48 does not contain an explicit requirement of observing the principles of natural
justice, nonetheless such a requirement must necessarily be read into the provision.

The rules of natural justice require that the person against whom action is
proposed, must be made aware of the grounds of the proposed action and must have an
opportunity to respond to the action proposed, by setting forth an explanation. Undoubtedly,
the formation of the reason to believe under the proviso to sub-section (2) is not final having
due regard to the fact that the enquiry is still to be concluded and the cessation of financial
and administrative powers is to enure during the period when the proceedings in pursuance
of the notice to show cause are still to be concluded. A personal hearing is not a necessary
3 All. Babi Kasaudhan Vs State Of U.P. & Ors.
449
ingredient of complying with the principles of natural justice at every stage. The minimum
requirement of the principle is that the President of a municipality should be made aware of
the grounds on which the action against him is proposed in the formulation of the charges
which are issued to him, as mandated by the proviso. The person who is sought to be
proceeded against must be informed of the basis on which the State Government proposes to
entertain a reason to believe that the allegations do not appear to be groundless and that he
or she is prima facie guilty on any of the grounds of sub-section (2) resulting in the issuance
of the notice to show cause and the proceedings in the sub-section. The period which is
allowed to the elected head to explain must be reasonable: what is a 11 reasonable period
being dependent upon the facts and circumstances of each case. In a case involving an
element of urgency where there is a need for the State to take an expeditious decision, the
period during which an explanation can be submitted, can be suitably tailored to meet the
exigencies of the situation. No absolute rule can be laid down in the abstract on what
constitutes a reasonable period to show cause. But the minimum requirements of fair
procedure must be fulfilled. An opportunity has to be granted. Otherwise, the provision
would be capable of grave misuse to derogate from the authority of an elected head on
arbitrary and whimsical grounds."

22 The larger Bench answered the question referred for adjudication as under.

"We accordingly proceed to answer the reference in the following terms:

(I) Re Question (a): The decision of the Full Bench in Hafiz Ataullah Ansari Vs
State of U P (supra) lays down the correct position in law.

(II) Re Questions (b) & (c): The cessation of financial and administrative powers
of the President does not necessarily follow merely upon the issuance of a notice to show
cause under the substantive part of Section 48(2). The financial and administrative powers
of the President shall stand ceased if the State Government has reason to believe that (i) the
allegations do not appear to be groundless; and (ii) the President is prima facie guilty on any
of the grounds of sub-section (2) resulting in the issuance of the notice to show cause and
proceedings thereunder. The President of the municipality will, in that event, cease to
exercise, perform and discharge financial and administrative powers, functions and duties
from the date of the issuance of the notice to show cause containing the charges. For a
cessation of financial and administrative powers to take effect, the requirements of the
proviso to Section 48(2) must be fulfilled. Hence, proceedings for removal of a President of
a municipality under Section 48(2) may take place in a given situation though the financial
and administrative powers have not ceased under the terms of the proviso.

(III) Re Question (d): There is no requirement under the statute that a separate
order has to be passed under the proviso to Section 48(2) when the financial and
administrative powers of the President of a municipality cease. Such a consequence would
come into being upon the requirements specified in the proviso to Section 48(2) being
fulfilled.
450 INDIAN LAW REPORTS ALLAHABAD SERIES

(IV) Re Question (e): An opportunity of being heard, consistent with the principles
of natural justice, before there is a cessation of the financial and 12 administrative powers of
the President does not stand excluded by the provisions of Section 48(2). As a matter of
textual interpretation, the requirement of complying with the principles of natural justice is
an integral element of the proviso to Section 48(2). The requirements of natural justice
would warrant the grant of an opportunity to the elected head of a municipality to respond to
the notice issued by the State indicating the basis for the formation of a reason to believe
that the charges do not appear to be groundless and that the President is prima facie guilty on
any of the grounds mentioned in sub-section (2) of Section 48. The period of notice can be
suitably molded to deal with the exigencies of the situation."

23. The legal position being settled by the aforesaid two pronouncements, we now
proceed to test the facts of the case in the light of the same.

24. As already noticed above, the State Government issued a notice dated 23.03.2015
calling upon the petitioner to submit her explanation. Petitioner submitted her explanation
on 16.04.2015. Notice dated 15.10.2015 was issued to her to show cause why she should not
be removed from the post of Chairman, Nagar Panchayat. Her administrative and financial
powers during the pendency of the proceedings were ceased. In so far as substantive
provision of Section 48 (2) of the Act is concerned, since a show cause notice has been
issued, to which the petitioner has already submitted her reply, the same stands complied.

25. However, since the financial and administrative power has also been ceased during
the pendency of the proceedings of removal, the issue arising for consideration is whether
the exercise of power conferred by proviso, stand the test laid down by judicial
pronouncements in the case of Hafiz Ataullah Ansari (supra) and Paras Jain (supra).

26. A bare reading of proviso goes to show that where the conditions mentioned therein
are satisfied, the president of the municipality shall cease to perform and discharge financial
and administrative powers until he is exonerated of charges mentioned in the notice till the
finalization of the proceedings. In order to attract the proviso, the conditions required to be
fulfilled are:-

(i) State Government must have reason to believe that allegations do not appear to
be groundless.

(ii) State Government must have reason to believe that president is prima facie
guilty of any of the grounds contained in the sub-section which has resulted into the
proceedings for removal.

(iii) Notice to show cause must contain the charges.

27. It is relevant to note that proviso does not stipulate automatic cessation of financial
and administrative power of an elected president on issuance of show cause notice under
3 All. Babi Kasaudhan Vs State Of U.P. & Ors.
451
substantive part of Section 48 (2). It is only after fulfilment of above mentioned three
conditions, the financial and administrative power can be ceased.

28. The use of words "reason to believe" by the legislature in the proviso postulates an
objective satisfaction on application of mind to the material and relevant circumstances
which is quite distinct and distinguishable from purely subjective satisfaction.

29. Hon'ble Supreme Court in the case of Barium Chemicals Ltd. & Anr. Vs.
Company Law Board & Ors., AIR 1967 SC 295, observed that explanation "has reason to
believe" or "is satisfied" or "is of the opinion" are indicative of objective satisfaction. In
paragraph 63 of the reports, it has been observed as under.

"63......... Therefore, the words, "reason to believe" or "in the opinion of" do not
always lead to the construction that the process of entertaining "reason to believe" or "the
opinion" is an altogether subjective process not lending itself even to a limited scrutiny by
the court that such "a reason to be believe" or "opinion" was not formed on relevant facts or
within the limits or as Lord Radcliffe and Lord Reid called the restraints of the statute as an
alternative safeguard to rules of nature justice where the function is administrative."

30. Again in the case of Bhikhubhai Vithlabhai Patel & Ors. Vs. State of Gujarat &
Anr., (2008) 4 SCC 144, the Hon'ble Apex Court has held in paragraph 33 as under.

"33. The court is entitled to examine whether there has been any material available
with the State Government and the reasons recorded, if any, in the formation of opinion and
whether they have any rational connection with or relevant bearing on the formation of the
opinion. The court is entitled particularly, in the event, when the formation of the opinion is
challenged to determine whether the formation of opinion is arbitrary, capricious or
whimsical. It is always open to the court to examine the question whether reasons for
formation of opinion have rational connection or relevant bearing to the formation of such
opinion and are not extraneous to the purposes of the statute."

31. Requirement of giving reasons in the decision taken is an integral part of the natural
justice.