# KHAMBALIA MUNICIPALITY & ANR v. STATE OF GUJARAT

- **Citation:** [1967] 2 S.C.R. 631
- **Court:** Supreme Court of India
- **Decided:** 1967-02-16
- **Case number:** Civil Appeal No. 1340 of 1966
- **Bench:** K. N. Wanchoo, R. S. Bachawat, J.M. She!.At
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/khambalia-municipality-anr-v-state-of-gujarat-4167
- **Pages:** 19

## Headnote

Gujarat Panc/wyats Act, 1961 (G11j. Act No. 6 of 1962), s. 9(1) and
(2j-lnquiry, if delegated-Applicability ro m1111icipa/ di.urict-Sectio11 9
if suffers from excessive delegation.
The respondent-State authorised
its Development
Commissioner
to
exercise powers exercisable by the Government under
s. 9( I)
of the
Gujarat Panchayats Act, 1961. After
making the
prescribed
inquiry
under s. 9(1) of the Act the Development Commissioner i8'ued a notification under s. 9(1) of the Act declaring the whole
area of the existin1
limits of the appellant-municipalitr, to be a nagar. The appellants field a
writ petition for quashing the notdlcation and declariag s. 9 of the Act as
ultra vires and unconstitutional which the High Court dismissed.
In ap~
peal to this Court. the appellants contended that (i) the power to make
enquiry under s. 9(1) was not delegated to the Development Commi.-
sioner; (ii) s. 9 of the Act did not apply to a municipal district as it was
not a local area or such other administrative unit or part thereof; (iii)
the notification was issued in mala fide exercise of power as it was issued
after the mμnicipatity indicated its unwillingness to accept the opinion of
tfle Gove·mment to include within its limits certain vadi areas; and (iv)
s. 9 of the Act was ultra vires by reasons of excessive delegation of legislative power in favour of the State Government.
HELD : (per Full Court) (i) The power to
make
the
declaration
necessarily carries with it the power to make the inquiry prelimina~y to
the declaration.
There can be no declaration without an inquiry.
The
Development Commissioner was sufficiently authorised to issue the declaration after making the prescribed inquirv. [635 G-Hl
(ii) Section 307 Of the Act shows that a local area co-extensive with
or included within ·the limits of a municipal district or a municipal borough
may be declared to be a gram or nagar under s. 9 and on such a declara~
tion, the Municipality functioning within the local area or part thereof
ceases to exist.
On a combined reading of ss. 9 and 307, it would appear
that a municipal borough is an administrative unit within the meaning of
s. 9( 1) and a local area co-extensive
with o·r included in a municipal
borough may be declared to be a gram or nagar. [636 B·CJ
(iii) Tb.ere was no mala fide in the issuance of the notification. Under
s. 4(1 )(b) of the Gujarat Municipalities
Act, 1963, the State Gov~rn
ment has the power to alter the limits of the municipal borough
after
consulting the municipality. The State Government had duly consulted
the .municipality.
If the Government wanted to exercise its powers under
the aforesaid s. 4(l)(b), it could do so without the consent of the municipality.
For the purpose of imposing its opinion, it wa~ not necessary
for the gove·rnment to take recourse to the device of a declaration under
s. 9( I) of the Gujarat Panchayats Act., 1961.
Nor was the surroundinc
vadi area included in the nagar declared by the notification under s. 9( 1).
[636 F'. GJ
632
SUPRl!MI! CO~T Rl!PORTS
[1967] 2 S.C.R.
(iv) (PN Wanchoo and Bachawat, JJ.) Section 9(l) does not suffer
from the vice of cxccs~ive delegation.
An
cssentiul legislative function
consists in the determination of a legislative policy and its formulation as
<t binding rule of conduct.
Having laid down the legislative policy, the
legislature nL1y confer discretion on an administrative agency as
to
the
1..·xccution of 1hc policy Jnd leave it lo the agency to \1,.·ork out the details
within the frame work of the policy.
[637 B-C]
It i• the policy of the Act that panchayats •hould be established within
a reasonable time in all local areas "''ith population not exceeding 3(},000
;ind not included in a noiificd area or a cantonment. This policy guides
and controls tbc di~crctionary power of the Slate Government under
s. 9( 1).
Having re~ard to the policy of the Act, it is plain that the discrelionary power under s. 9(2) is vested in the State Government for the
purpo~e of rco

## Text

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KHAMBALIA MUNICIPALITY & ANR.
v.
STATE OF GUJARAT
February 16, 1967
[K. N. WANCHOO, R. S. BACHAWAT AND J.M. SHE!.AT, JJ.)
Gujarat Panc/wyats Act, 1961 (G11j. Act No. 6 of 1962), s. 9(1) and
(2j-lnquiry, if delegated-Applicability ro m1111icipa/ di.urict-Sectio11 9
if suffers from excessive delegation.
The respondent-State authorised
its Development
Commissioner
to
exercise powers exercisable by the Government under
s. 9( I)
of the
Gujarat Panchayats Act, 1961. After
making the
prescribed
inquiry
under s. 9(1) of the Act the Development Commissioner i8'ued a notification under s. 9(1) of the Act declaring the whole
area of the existin1
limits of the appellant-municipalitr, to be a nagar. The appellants field a
writ petition for quashing the notdlcation and declariag s. 9 of the Act as
ultra vires and unconstitutional which the High Court dismissed.
In ap~
peal to this Court. the appellants contended that (i) the power to make
enquiry under s. 9(1) was not delegated to the Development Commi.-
sioner; (ii) s. 9 of the Act did not apply to a municipal district as it was
not a local area or such other administrative unit or part thereof; (iii)
the notification was issued in mala fide exercise of power as it was issued
after the mμnicipatity indicated its unwillingness to accept the opinion of
tfle Gove·mment to include within its limits certain vadi areas; and (iv)
s. 9 of the Act was ultra vires by reasons of excessive delegation of legislative power in favour of the State Government.
HELD : (per Full Court) (i) The power to
make
the
declaration
necessarily carries with it the power to make the inquiry prelimina~y to
the declaration.
There can be no declaration without an inquiry.
The
Development Commissioner was sufficiently authorised to issue the declaration after making the prescribed inquirv. [635 G-Hl
(ii) Section 307 Of the Act shows that a local area co-extensive with
or included within ·the limits of a municipal district or a municipal borough
may be declared to be a gram or nagar under s. 9 and on such a declara~
tion, the Municipality functioning within the local area or part thereof
ceases to exist.
On a combined reading of ss. 9 and 307, it would appear
that a municipal borough is an administrative unit within the meaning of
s. 9( 1) and a local area co-extensive
with o·r included in a municipal
borough may be declared to be a gram or nagar. [636 B·CJ
(iii) Tb.ere was no mala fide in the issuance of the notification. Under
s. 4(1 )(b) of the Gujarat Municipalities
Act, 1963, the State Gov~rn
ment has the power to alter the limits of the municipal borough
after
consulting the municipality. The State Government had duly consulted
the .municipality.
If the Government wanted to exercise its powers under
the aforesaid s. 4(l)(b), it could do so without the consent of the municipality.
For the purpose of imposing its opinion, it wa~ not necessary
for the gove·rnment to take recourse to the device of a declaration under
s. 9( I) of the Gujarat Panchayats Act., 1961.
Nor was the surroundinc
vadi area included in the nagar declared by the notification under s. 9( 1).
[636 F'. GJ
632
SUPRl!MI! CO~T Rl!PORTS
[1967] 2 S.C.R.
(iv) (PN Wanchoo and Bachawat, JJ.) Section 9(l) does not suffer
from the vice of cxccs~ive delegation.
An
cssentiul legislative function
consists in the determination of a legislative policy and its formulation as
<t binding rule of conduct.
Having laid down the legislative policy, the
legislature nL1y confer discretion on an administrative agency as
to
the
1..·xccution of 1hc policy Jnd leave it lo the agency to \1,.·ork out the details
within the frame work of the policy.
[637 B-C]
It i• the policy of the Act that panchayats •hould be established within
a reasonable time in all local areas "''ith population not exceeding 3(},000
;ind not included in a noiificd area or a cantonment. This policy guides
and controls tbc di~crctionary power of the Slate Government under
s. 9( 1).
Having re~ard to the policy of the Act, it is plain that the discrelionary power under s. 9(2) is vested in the State Government for the
purpo~e of rcor~ani.;ing. the local ;ircas into
new
units
0f local sclfGovernment. [6J8 C.D]
It i1 not correct to say that even a municipal borough '"°'ith a population of over 30,000 i• at the mercy of the State Government under s. 9(1).
Under s. 9( 1) read with '· 307, the government has no power to declare
a municipal horough with a population
exceeding 30,000 as a gram or
M[?ar.
It wilJ he an ahuse of the power under s. 9(1) if hy declaring
sn1all fragments of such municipal borough
into
~eparate grams
or
nagar.f, the government seeks to achie\e indirectly
what it cannot
do
directly.
But s. 9(1) cannot be
held unconstitutional
because of the
possibility that it may be unfaithfully •dministered
by those
who II"
charged with its execution. [638 H-639 BJ
In" Delhi law.1· Act [1951] S.C.R. 747 and Raj Narain Si11gh v. The
Chaim1an, Pa11w Administration Commirt.u, [ 1955] 1 S.C.R.
290, referred to.
(Ptr Shelat, J. <li\senting) : Section 9 suffers from the vice of excessive delegation.
Even if a policy is declared by a statute it may be couched in such
vague terrn'i thJt it may not set down a definite standard or criterion forthc guidance of the delegate. (644 D-E]
In spite of the avowed policy of the
Act to set up Panchayat Raj
throughout the State the Government, by virtue of the power to declare
being discretionary under s. 9( 1) 1 may or may not declare a local area
to be nagar or a gram, The only fetter is that where it desires to make
a declaration in respect of any particular local area it can do so after
making an inquiry as prescribed.
But neither s. 9 nor any other proviliion In the Act lays down that even if the inquiry ends in a particular
conclusion the Goverrunent must make the declaration
What the requisite
result of such an inquiry for a declaration should be is also not prescribed
in the Act and the Government is left to decide its course of action after'
such an inquiry. (645 D-F]
Sub-section 2 confers a discretionary power on the Government . to
•liter by inclusion or exclusion any area or areas from a nagar or a gram
panchayat and convert one into the other, the only re.•triction on such
power being the necessity to consult the district, the taluka, and the 1llll/Dr
or the gram panchayat as the case may be.
The restriction is consultation but not the consent of the concerned panchayats. Suh-section 2 does
not require c\"cn an inquiry <ts sub-s. I docs at the time of the decbraA
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KHAMBALIA MUNICIPALITY v. GUJAitAT (Bachawat, J.)
833
lion. Nor does it lay down any principle or criterion as to when and in
what circumstances the Government can launch upon such alteration of
the local limits. Thus the Government can modify at any time the structure and the nature of a panchayat from a nagar to a gram panchayat
and vice versa by simply altering its area a!Wr a mere consultation and
even if the pancbayats concerned are against such alteration. Under thi1
power the Government can also transfer a portion or portions of a nagar
or gram panchayat after formally going through the process of con1ulta·
tion and join it or them with another panchayat even if the people con·
cerned were (0 be unwilling to such a transfer. [645 F-646 BJ
Raj Narain Singh v.
Cha.,.man,
Patna Administration Committee,
[19SS] 1 S.C.R. 290, In re Delhi Laws Act, [1951] S.C.R. 747, Vm1J11tlal
Maganbhai v. State of Bombay, [1961] 1 S.C.R. 341 and Mamdard Dawttkhana's case, [1960] 2 S.C.R. 671, referred to.
CIVIL APPELLATE JURISDICTION Civil Appeal No. 1340 of 1966.
Appeal from the judgment and order dated April 5 and 6, 1966
of the Gujarat High Court in Special Civil Application No. 657
of 1965.
Purshottam Trikamdas, and Ravinder Narain, for the appellants.
N. S. Bindra, K. L. Hathi, S. P. Nayvar and R. H. Dhebar,
for the respondents.
The Judgment of WANCHOO and
BACHAWAT,
JJ.
wa~
delivered by BACHAWAT,
J. SHELAT, J. delivered a dissenting
Opinion
Bachawat, J. This appeal arises out of a writ application
· challenging a notifieation issued on June 14, 1965,
declaring
the area of Khambalia
municipality
in Jamnagar
district
to be a nagar under s. 9(1) of the Gujarat Panchayats Act,
1961 (Gujarat Act No. VI of 1962). The Jamnagar district
was formerly a part of the State of Saurashtra which merged
in the State of Bombay
in
1956.
Before
the merger,
the State of Saurashtra adopted the Bombay District Municipalities
Act 1901 under which the town of Khambalia was constituted into a
municipality. On the bifurcation of the State of Bombay, the district of Jamnagar became a part of the State of Gujarat. The
Gujarat Panchayats Act 1961 was passed on February 24, 1962.
The population of Khambalia municipality according to the census
of 1961 was 12,249. By a notification dated August 17, 1962,
issued under s. 9 of the Gujarat Panchayats Act 1961, the local area
within the limits of the Khambalia municipality was declared to be a
nagar and the municipality ceased to exist. On February 5, 1963,
upon the publication of the Gujarat Panchayats (Suspension of
)>rovisions and reconversion of certain local areas into municipal
districts) Act, 1962 the Kharnbalia municipalityandothermunicipalities converted into nagar panchayats by notifications under s. 9(1) of
the Na.gar Panchayats Act 1961 stood revived. On February 7, 1963,
634
SUP REM I! COURT REPORTS
(1967) 2 S.C.R
the Gujarat Panchayat Laws (Amendment) Ordinance 1963 repealed
s. 3
of the Gujarat Panchayats (suspension of provisions
and
reconversion of certain local areas into municipal districts) Act
1962 and all the provisions of the Gujarat Panchayats Act 1961
became again
operative. In April 1962, the State Government
converted some of the revived municipalities into nagar or gram
Panchayats, but the Khambalia municipality was not then so converted.
Meanwhile. the State Government started proceedings for
the supersession of the Khambalia municipality under s. 179 of the
Bombay District Municipal Act, 1901 and in this connection there
was litigation between the Government and the municipality. On
December 23, 1964, the Gujarat Municipalities Act, 1963 (Act
No. XXXIV of 1964) was passed, and the Khambalia municipality
becam~ a municipality constituted under this Act for the Khambalia
municipal borough. On June 14, 1965, the Development Commissioner, Gujarat State, issued a notification under s. 9 (1) of the
Gujarat Panchayats Act, 1961, declaring "the whole area of the
cii:isting
limits of the Khambalia
municipality in
Jamnagar
district'" to be a nagar with effect from the date of the issue of the
notification. This notification was issued by the Development
Commissioner after making the prescribed enquiry under s. 9(1).
The effect of the notification was that the entire local area included
within the limits of the municipal borough for which the Khambalia
municipality was constituted became a nagar. On June 22. 1965.
the appellants filed a writ petition in the High Court of Gujarat.
praying for an order quashing the notification dated June 14. 1965
.and declaring s. 9 of the Gujarat Panchayats Act, 1961 as 11/tra vires
and unconstitutional, and for other reliefs. The High Court dismissed this application. The appellants now appeal to this Court
under a certificate granted by the High Court.
To appreciate the contentions raised by learned counsel for
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the appellants, it is necessary to read s. 9 of the Gujarat Panchayats
ll'
Act, 1961.
That section is in these terms:-
"9. (I) After making such inquiries as may be prescribed, the State Government may. by notification
in
the Official Gazette, declare any local area. comprising a
revenue village, or a group of fC\'ellUC villages Of hamlets
forming part of a revenue village, or such other administrati\'e unit or part thereof,-
(a) to be a nagar, if the population of such local area
exceeds 10,()()(1 but does not exceed 30,000. and
(b) to be a gram, if the population of such local area
does not exceed 10,000.
•
(2) After consultation with the taluka panchayat,
the district panchayat and the nagar or gram panchayat
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KHAMBAL!A MUNICIPALir.Y v. GUJARAT (Bachawat, J.)
635"
concerned (if already constituted) the State Government
may, by like notification, at any time-
(a) include within, or exclude frcm, any nagar or
gram, any local area or otherwise
alter the limits of
any nagar or gram; or
(b) declare that any loc&l area shall cease to be a
nagar or gram;
and thereupon the local area shall be so included or
excluded, or the limits of the nagar or gram so altered
or, as the case may be, the local area shall cease to be a
nagar or gram."
Rule 2 of the Gujarat Panchayats (Declaration of nagal' or
gram) Inquiry Rules, 1962, prescribes the inquiry to be made by the
State Government under s. 9 (I) it reads:
"2. Inquiry by State Government.-(!) Before declaring any local area to be a nagar or gram under subsection ( 1) of section 9 of the Act, the State Government
shall make inquiries as to:-
( 1) the population and the ordinary land revenue of the
revenue village or each of the revenue villages or hamlets,
or as the case may he, any other administrative unit or
part thereof, comprised in the local area,
(2) whether the revenue villages or ham lets or other
administrative units or parts thereof can be conveniently
grouped so as to form a gram or nagar, as the case
may be,
(3) for the purpose of sub-rule (1), the District
Development Officer or where there is no such officer
the Collector when so required by the State Government,
shall submit to the State Government a statement in the
form appended hereto".
Sec. 321 of the Gujarat Panchayats Act empowers the State
Government to authorise by notification in the official gazette any
officer of the government to exercise any of the powers exercisable
by the government under the Act.
By a notification dated June 13,
1963, as amended by a notification dated May 5, 1964, the State
government authorised the development commissioner, Gujarat
State, to exercise the powers exercisable by the government under
s. 9(1) "declaring a loc:il area to be a gram or nagar". Counsel
contends that the power to make the inquiry under s. 9(1) was not
delegated by the State government to the development commissioner.
There is no force in this contention. The power to make
the
'636
SUPREME COUllT llBPOllTS
[1967] 2 S.C.ll.
declaration necessarily carries with it the power to make the inquiry
preliminary to the declaration. There can be no declaration without
any inquiry. The relevant notification sufficiently authorised the
development commissioner to issue the declaration after making the
prescribed inquiry.
The next contention is that the local area of a municipal borough
is not "any local area, comprising a revenue village, or a group
of revenue villages or hamlets forming part of a revenue village, or
such other administrative unit or part thereof" within the meaning of
s. 9 of the Gujarat Panchayats Act 1961, and that consequently the
local area of the municipal borough for which the Khambalia
municipality was constituted could not he declared to be a nagar.
We cannot accept this contention. Section 307 of the Act shows
that a local area co-extensive with or included within the limits of a
municipal district or a municipal borough may be declared to be a
gram or nagar under s. 9 and on such a declaration, the municipality functioning within the local area or part thereof ceases
to exist. On a combined.reading of ss. 9 and 307, it would appear
that a municipal borough is an administrative unit within the meaning
of s. 9(1) and a local area co-extensive with or included in a municipal
borough may be declared to be a gram or nagar.
The next contention is that the notification under s. 9( I) dated
June 14, 1965, was made ma/a fide.
Before 'the notification was
issued, there was some correspondence in course of which the State
Government on the representation of Shri Haribhai :-.lakum MLA,
inquired of the Khambalia municipality whether it was willing to
include the surrounding vadi areas within its limits.
It was after
the municipality indicated its unwillingness to include the vadi
areas within its limits that the Development Commissioner issued a
notification under s. 9(!). The suggestion is that the State government having failed to impose its opinion regarding the inclusion
of the vadi areas upon the municipality, adopted the device of the
declaration under s. 9(1) for imposing its opinion at the instance of
Shri Nakum as the ruling Congress party was hostile to the majority
group in control of the municipality. The High Court rightly
rejected this suggestion. Under s. 4(1) (b) of the Gujarat Municipalities Act, 1963, the State government had the power to alter the
limits of the municipal borough after consulting the munidpality.
The State government had duly consulted the municipality. If
the Government wanted to exercise its powers under the aforesaid
s. 4(1) (b), it could do so without the consent of the municipality.
For the purpose of imposing its opinion, it was not necessary for the
government to take recourse to the device of a declaration under
s. 9(1) of the Gujarat Panchayats Act, 1961. Nor was the surrounding vadi area included in the Khambalia nagar declared by the
notification under s. 9(1). It is not shown how Shri Nakum
or the ruling party would stand to gain by this notification. The
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mAMBALIA MUNICIPALITY v. GUJARAT (Bachawat, 1.)
637
allegation of mala.fides was categorically denied in the affidavit filed
on behalf of the State government.
The next contention is thats. 9(1) of the Gujarat Pan cha ya ts Act,
1961 is ultra vires and unconstitutional on the ground of excessive
delegation of legislative power to the State government. It is said
that the legislature has not sufficiently indicated the policy which
is to guide the State government in declaring a local area to be a gram
or nagar or in the matter of making an inquiry preliminary to the
declaration and the framing of the rules for the inquiry and has given
a naked and arbitrary discretion to the State government to declare
or not to declare a local area to be a gram or nagar or alter the limits
of any nagar or gram or declare that any local area shall cease to be
a nagar or a gram. We think that this contention has no merit.
The legislature cannot delegate its essential legislative functions
to an administrative agency, see In re. Delhi Laws Act(') and Raj
Narain Singh v. The Chairman, Patna Administration Committee(2).
An essential legislative function consists in the determination of
a legislative policy and its formulation as a binding rule of conduct.
Having laid down the legislative policy, the legislature may confer
discretion on an administrative agency as to the execution of the
policy and leave it to the agency to work out the details within
the frame work of the policy. Judged by this test, we think thats. 9(1)
does not suffer from the vice of excessive delegation.
The preamble to the Gujarat Panchayats Act, 1961 shows that
it is an Act to consolidate and amend the law relating to village
panchayats and district local authorities in the State of Gujarat with
a view to reorganize the administration pertaining to local government in furtherance of the object of the democratic decentralisation
of powers in favour of different classes of panchayats. The ·Act
extends to the whole of the State of Gujarat (s. 1(2).) It makes special
provision for the district of Dang having regard to the sparsity of
its population and other peculiar features (ss. 311 to 314). In
other districts the Act seeks to introduce a three tier panchayat
organization in the State for the purpose of securing a greater
measure of participation by the people of the State in local and
governmental functions (ss. 3, 8 and 287). At the summit of the
panchayat organization is the district panchayat. Below the district panchayat and
subordinate to it is the taluka panchayat.
For each district as constituted from time to time under the Land
Revenue Code, there is a district panchayat, and for each taluka or
a mahal as constituted from time to time under the Land Revenue
Code, there is a taluka panc!:ayat (ss. 3 and 10). A district
panchayat and subject to the authority of the district panchayat, a
taluka panchayat
has authority over the
area for which it is
constituted except that portion of the area which for the time
(I) [19511 S.C.R. 747.
(2) [19551 I S.C.R. 290.
6.18
SUPREME COUllT REPORTS
(1967) 2 S.C.R.
being is within the limits of a city municipal borough, municipal
district, notified area or cantonment constituted under any law
for the
time being in force.
Below the taluka panchayat and the
district panchayat and subordinate to them are the gram and nagar
panchayats. For each gram, there is a gram panchayat and for each
nagar there is a nagar panchayat. Sec. 9(1) provides for the constitu·
tion of grams and nagars. The State government may declare a local
area comprising a group of revenue villages or a revenue village or
part of it or such other administrative unit or part of it to be a
gr:im if the population does not exceed 10,000 or a nagar if the
population exceeds 10,000 hut docs not exceed 30,000.
Before
making the declaration it is necessary to find out whether the local
area can be conveniC'lltly constituted into a gram or nagar. The
necessary inquiries to be made arc prescribed by the Gujarat Pan·
chayats (declaration of nagar or gram) Inquiry Rules, 1962. Obviously the State legislature cannot make th~ necessary inquiry
as to whether a village or a part of it or two or more villages grouped
together or an administrative unit or part of it is a viable unit fit to
be constituted as a separate gram or nagar. The inquiry and the
framing of proper rules with regard to the inquiry are subordinate
or ancillary matters which were properly left to an administrative
agency.
It is the policy of the Act that panchayats should be established within a reasonable time in all local areas with populations
not exceeding 30,000 and not included in a notified area or a cantonment. This policy guides and controls the discretionary power of the
State government under s. 9( l ). Having regard to this policy s. 9(1)
cannot be said to suffer from the vice of excessive delegation of
legislative power to the State government.
Pursuant to this policy
the Gujarat government has established panchayats in all villages
witJiin the State. The table at p. 4 of the "Panchayat Raj at a
glance as on March 31, 1966" published by the Ministry of Food,
Agriculture, Community Development and Cooperation (Department
of Community Development) Government of India, New Delhi,
shows that in the State of Gujarat there are 11, 785 Panchayats,
covering 18,247 villages and that 100 per cent of the villages and
all the rural population are now included ln the panchayats.
Section 9 (I) read withs. 307 shows that a local area co-extensive
with or included within the limits of a municipal borough or a municipal district with a population not exceeding 30,000 may be declared
to a gram or nagar. The democratic decentra lisation committe
set up under the government resolution dated July 15, 1960 recom·
mended .in paragraph 4 · 6 of its report that the life of towns with
populations over 30,000 is different from that of villages . They are
helter served by municipalities. For this reason they are excluded
from the purview puvw of s. 9( 1 ).
On behalf of the appellant, it is contended that even a municipal
borough with a population over 30,000 is at the mercy of the State
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JrnAMBALIA MUNICIPALITY v. GUJARAT (Bachawat, 1.)
639
government under s. 9(1). It is said that out of such a municipal
borough, .small fragments with populations less than 30,000 may be
carved out and may be separately declared to be grams and nagars
and by adopting this method, the government may convert the entire
municipal borough into several grams and nagars. We are not
impressed with this argument. Under s. 9(1) read with s. 307, the
government has no power to declare a municipal borough with a
population exceeding 30,000 as a gram or nagar. It will be an
abuse of the power under s. 9(1) if by declaring small fragments
of such a municipal borough into separate grams or nagars, the
government seeks to achieve indirectly what it cannot do directly.
If the government abuses the power vested in it bys. 9(1), its action
will be struck down. But s. 9(1) cannot be held unconstitutional
because of the possibility that it may be unfaithfully administered
by those who are charged with its execution.
The Act envisages that gram and nagar panchayats should be
established in all local areas having population not exceeding 30,000.
But it appears that on February 12, 1963, the Gujarat government
arrived at the following policy decision:
"(a) The Municipalities whose population does not
exceed 10,000 may be converted into Gram Panchaytas.
(b) Those with a population exceeding 10,000 but not
exceeding 20,000 may be converted into Nagar Panchayat.
(c) Municipalities having a population exceeding
20,000 but not exceeding 25,000 may be given option to
be converted into Nagar Panchayats.
(d) There are certain Muncipalities in respect of
which disciplinary and such other actions are either pending
or is proposed to be initiated. To enable such actions to
proceed legally uninterrupted, under the relevant Municipal
Act, it is decided that such Municipalities should not be
converted
either into Gram or Nagar
Panchayats,
irrespective of their population. The question of converting
such Muncipalities may be considered only after the
finalisation of such disciplinary or other proceedings
under the Municipal Act."
Now
the classification of municipalities on
the
basis
of population between 10,000 and 20,000, 20,000 and 25,000
and 25,000·and 30,000 is not justified by s. 9(1) which places all local
areas with population between I 0,000 and 30,000 on the same
footing. Counsel for the
respondent was unable to justify the
classification. The policy decision in so far as it makes this classification is not lawful and is liable to be struck down. From the statement
filed by counsel for the State of Gujarat before us it appears that
uo
SUPIBMI! COUllT IBPOITS
[1967) 2 S.C.ll.
the State government has so far not converted into grams or naprs
eight municipalities in Saurashtra and thirteen municipalities
in Gujarat, having populations between 20,000 and 30,000.
If and
in
so far
this
non-conversion is
based
solely
on the policy decision, it cannot be justified and it will
be the duty of the State government to establish panchayats
in those municipalities as soon as possible. The appellant particularly complained in the writ petition that the State had not converted
the municipalities of Bagasra and Wadhawan into nagar panchayats.
Counsel for the State conceded that their non-conversion could not
be supported on the ground that their population was between
20,000 and 30,000. It appears, however, that on July 12, 196S,
during the pendency of the writ petit;ion, the Bagasra area was
declared to be a nagar. With regard to Wadhawan municipality,
counsel for the State stated that the question of its amalgamation
with
Surendra.nagar municipality was under consideration by the
State government and that is the reason why the Wadhawan municipality was not so far converted into a nagar panchayat. We have no
reason to doubt that appropriate steps will be taken by the State
government with regard to the Wadhawan area. But the nonconversion of any of these municipalities into nagar panchayats
does not vitiate the notification of June 14, 1965. This notification
is lawful and is justified by s. 9(1). Khambalia has a population
of 12,249 and was rightly declared to be a nagar. Having regard
to the policy of the Act, it was the duty of the State government to
declare it to be a nagar and the government has carried out its
duty.
Counsel for the appellant contended that s. 9(2) also suffers
Crom the vice of excessive delegation. We are unable to accept this
contention. For the purpose of reorganizing the local areas, it may
be necessary to include within or exclude from any nagar or gram
any local area or otherwise alter the limits of any nagar or gram or
to declare that any local area shall cease to be a nagar or gram,
and this is provided by s. 9(2) of the Act. Action under s. 9(2) can
be taken only after consultation with the taluka panchayat, the
district panchayat and the nagar or gram panchayat concerned
(if already constituted). The Act
makes incidental provisions
for the
establishment and reconstitution of the
panchayat•
consequential upon the alteration of the area of a gram or nagar
(ss. 298, 299), for amalgamation or division of grams consequential
upon an area ceasing to be a gram (ss. 309, 310), and for special
cases where an area excluded from a gram or nagar ceasing to be 11
gram or nagar is not merged in an area having local self-government
(ss. 300, 301). Having regard to the policy of the Act, it is plain that
the discretionary power under s. 9(2) is vested in the State government for the purpose of reorganizing the local areas into new units
of local self-government. For such purposes, It may be necessary
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ICHAMBALIA MUNICIPALITY v. GUJARAT (She/at, /.)
8' t
to establish new panchayats, reconstitute old panchayats, amalgamate or divide existing grams and pending such reorganization it
may sometimes be even necessary that an area should cease to be a
gram or nagar. It is impossible to visualise all the contingencies when
action under s. 9(2) should be taken and the necessary discretion was
properly left to the State government. We arc satisfied that s. 9(2}
cannot be held unconstitutional on the ground of excessive delegation.
We may add that no action has been taken against the
appellant under s. 9(2).
In the result the appeal is dismissed without cost.
Shelat, J. The appellant municipality of Khambalia 1s m
Jamnagar District which prior to 1956 formed part of the then
State of Saurashtra. The State had adopted the Bombay District
Municipal Act, 1901 and had thereunder constituted the appellantmunicipality. On the merger of Saurashtra with the State of Bombay in 1956, Jamnagar District became part of the then Bombay
State. But on bifurcation of the Bombay State the District of
Jamnagar became part of the new State of Gujarat.
The Gujarat Panchayats Act,1961 was enacted on November 24
1962. At that time the population of Khambaliam unicipality accord
ing to the census report of 1961 stood at 12,249. ~ya notification
dated August 17, 1962 issued under section 9 of the Panchayats
Act the Government of Gujarat declared the local area comprised
in Khambalia municipality as a nagar. Consequently the appellant
municipality ceased to exist and a Nagar Panchayat was set up
in its stead. On account of emergency declared by the President
the State Legislature passed the Gujarat Panchayats (Suspension
of Provisions and Reconversion of certain local areas into municipal
districts) Act, 1962, which was published on February 5, 1963.
The effect of this Act was that the appellant municipality and certain
other municipalities which were converted into nagar Panchayats
stood revived. This result was however short lived because on
February 7, 1963 the State Government promulgated the Gujarat
Panchayat Laws (Amendment) Ordinance, 1963 repealing s. 3 of
the Suspension Act. In April 1963 the Government once again
converted some of the municipalities into nagar or gram panchayats.
Not so the appellant municipality as the Government, it is said,
desired to supersede it under section 179 of the Bombay District
Municipal Act, 1901. As soon as the Government took action
under that Act the appellant municipality filed a suit challenging
that action.
On December 23, 1964 the Gujarat Municipalities Act, 1963
(Act XXXIV of 1964) was enacted and under itfi provisions the
appellant municipality was deemed to be a municipality constituted
.thereunder. On June 14, 1965 the Development Commissioner
642
SUPREME COURT REPORTS
(1967) 2 S.C.R.
und~r powers delegated to him under sec. 321 of the Panchayats
Act issued the impugned notification under sec. 9(1) thereof declaring the area comprised in .the appellant municipality to be a
nagar. Counsel for the Municipality chaUenged the legality of
this notification under five heads, viz ..
(l) that sec. 9 of the Panchayats Act did not apply to a municipal district as it is not a local area or such other administrative
unit or part thereof:
(2) that tne notification was invalid as no inquiry as prescribed
by Rule 2 of the Gujarat Panchayats (declaration of nagar or
gram) Inquiry Rules, 1962 was in fact made:
(3) that the inquiry, if any. could be held by the State Government and not by. the Development Commissioner because though
the Government's power under sec. 9 was delegated the obligation
to hold such an inquiry was not and could not be delegated;
(4) that the notification was issued in ma/a fide exercise of
power; and
(5) that sec. 9 of the Act is ultra vires by reason of excessive
delegation of legislative power in favour of the State Government.
I have had the advantage of perusing the judgment prepared
by my brother Bachawat J. and while I am prepared to go along with
him so far as his conclusions on contentions I to 4 are concerned,
I regret I cannot concur with his conclusion as regards the fifth
contention which challenges the validity of sec. 9 and the notification.
To appreciate the challenge to sec. 9 it is necessary to recite
that section. The section reads as follows:-
"(9) (I) After making such inquiries as
may
be
prescribed, the State Government may by notification in
the Official Gazette, declare any local area, comprising a
revenue village, or a group of revenue villages or hamlets
forming part of a revenue village, or such other administrative unit or part thereof,-
(a) to be a nagar, if the population of such local area
exceeds 10,000 but does not exceed 30,000 and
(b) to be a gram, if the population of such local area
docs not exceed 10,000.
(2) After consultation with the taluka panchayat,
the district panchayat and the nagar or gram panchayat
concerned (if already constituted) the State Government
may, by like notification, at any timeA
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XHAMIALIA MUNICIPALITY V. GUJARAT (Shelat, J.)
643
(a) include within, or exclude :from, any nagar or
gram, any local area or otherwise alter the limits of any
nagar or gram; or
(b) declare that any local area shall cease to be a
nagar or gram;
and thereupon the local area shall be so included or
excluded or the limits of the nagar or gram so altered
or as the case may be, the local area shall cease to be a
nagar or gram. M
The inquiries to be made under the section are dealt with by Rule
2 of the Inquiry Rules, 1962. Rule 2 is as follows:-
"2. Inquiry
by
State
Government.-(!)
Before
declaring any local area to be a nagar or gram under
sub-sec. (I) of sec. 9 of the Act, the State Government
shaH make inquiries as to-
(!) the population and the ordinary land revenue
of the revenue village or each of the revenue villages or
hamlets, or as the case may be, any other administrative
unit or part thereof, comprised in the local area.
(2) whether the revenue villages or hamlets or other
administrative units or parts thereof can be conveniently
grouped so as to form a gram or nagar, as the case may be."
Thus the inquiry involves consideration of two factors only; (I)
population and the ordinary land revenue and (2) whether the revenue villages or hamlets or other units or parts thereof can be
conveniently grouped together to form a gram or a nagar.
Now it is clear from the preamble of the Act that the object
of the Act is to set up a Panchayat Raj througl!out the State of
Gujarat with a three-tiered organisation ranging from the village
to the district level. To achieve this the Act provides for a gram
or a nagar panchayat, a taluka ·panchayat and a district pan;;hayat
in each of the districts. It is also clear from several provisions of
the Act that though the policy was· to set up such a Panchayat
Raj it was considered that a panchayat would not be suitable for
local areas with populations exceeding 30,000 and that such areas
would be best served by municipalities. Therefore the Act leaves
out certain urban areas and their municipalities untouched.
Jn.
deed it was bocause the legislature knew that such urban areas
should be-left out from the scope of the Act that it passed a comprehensive statute, the Gujarat Municipalities Act, 1963, which
gD'Verns all municipalities including the existing ones constituted
either under the Bombay District Municipal Act 1901 or the Bombay
M2Sup. C. 1/67-12
644
SUPREME COURT REPORTS
(1967]2 s.c R.
Municipal Boroughs Act, 1925. Though the policy was that it is
only local areas with populations exceeding 30,000 which should
be left out from the purview of the Act and all the areas with popula.
tions below 30,000 should be brought under the panchayat system,
the Gujarat Municipalities Act, 1963 curiously enough does not lay
down any minimum limit as to population for a municipality to be
set up. Prima facie the State Government under that Act can consti·
tute or permit an existing municipality to continue even if its
population is less than 30,000. The effect of this gap in the implementation of the avowed legislative policy in the Panchayats Act
will be easily perceived hereafter.
A declaration under sec. 9(1) that a local area shall be a nagar
or a gram is a legislative function. As stated on several occasions
by this Court an essential legislative function consists in the determination of the legislative policy and its formulation as a binding
rule of conduct. (Cf. Raj Narain Singh v. Chairman, Patna Admi11is1ratio11 Committee(') and Delhi Lall'S Act case.(2)). Such a function
cannot be surrendered or delegated in favour of another authority
or agency for the Constitution entrusts the legislative function to
the legislatures. In view however of the diverse activities of a modern
state it is recognised that a legislature cannot be expected to work
out all the details of a complex statute such as the instant Act.
It i; therefore competent for a legislature to delegate in suitable
cases some of its ancillary legislative powers to the executive or any
other authority to work out such details. But there
is
an
inherent danger in such delegation. As observed in Vasantlal
Maganbhai v. State of BombaY(3)-
"although the power of delegation is a constituent element of the legislative power, it is well settled that the legislature cannot delegate its essential legislative functions in any
case and before it can delegate any subsidiary or ancillary
power, to a delegate of its choice, it must lay down the legislative policy and principles so as to afford the delegate proper
guidance in implementing the same."
If, therefore. a statute is challenged on the ground of excessive
delegation it has to be established that the legislature has delegated
its essential legislative power or function and that it has not laid
down its policy or principle for the guidance of its delegate. Even
if a policy is declared it may, however, be couched in such vague
terms that it may not set down a definite standard or. criterion for
the guidance of the delegate. The consequence would be to confer
an arbitrary or uncanalised power to change or modify the declared
policy without reserving to itself any control over the subordinate
legislation. Such an effacement or abdication of power in favour
(I) {19SSJ 1 S.C.R. 290.
(2) {1951) s.c.R. 747.
(3) {1961J I s.c.R. 341 at 346.
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KHAMBALIA MUNICIPALITY v.