{"id":160546,"date":"1999-01-27T00:00:00","date_gmt":"1999-01-26T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/saij-gram-panchayat-vs-state-of-gujarat-and-ors-on-27-january-1999"},"modified":"2017-10-03T13:11:54","modified_gmt":"2017-10-03T07:41:54","slug":"saij-gram-panchayat-vs-state-of-gujarat-and-ors-on-27-january-1999","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/saij-gram-panchayat-vs-state-of-gujarat-and-ors-on-27-january-1999","title":{"rendered":"Saij Gram Panchayat vs State Of Gujarat And Ors on 27 January, 1999"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Saij Gram Panchayat vs State Of Gujarat And Ors on 27 January, 1999<\/div>\n
Bench: Mrs. Sujata Manohar, G.B. Pattanaik<\/div>\n
           CASE NO.:\nAppeal (civil)  364 of 1999\n\nPETITIONER:\nSAIJ GRAM PANCHAYAT\n\nRESPONDENT:\nSTATE OF GUJARAT AND ORS.\n\nDATE OF JUDGMENT: 27\/01\/1999\n\nBENCH:\nMRS. SUJATA V. MANOHAR & G.B. PATTANAIK\n\nJUDGMENT:\n<\/pre>\n
JUDGMENT<\/p>\n
1999 (1) SCR 263<\/p>\n
The Judgment of the Court was delivered by MRS. SUJATA V. MANOHAR, J. Leave
\ngranted.\n<\/p>\n
All these appeals raise common questions of law. For the sake of
\nconvenience we are referring to the facts pertaining to Saij Gram Panchayat
\nin appeal arising from SLP(C) No. 3765 of 1998.\n<\/p>\n
The Gujarat Industrial Development Act, 1962 was enacted to make special
\nprovisions for securing the orderly establishment and organisation of
\nindustries in industrial areas and industrial estates in the State of
\nGujarat and for the purpose of establishing commercial centres in
\nconnection with the establishment and organisation of such industries; and
\nfor that purpose to establish an Industrial Development Corporation and,
\nfor purposes connected with these matters, This is the avowed purpose of
\nthe Act as set out in the preamble. Under Section 2(g) of the Gujarat
\nIndustrial Develop-ment Act, 1962, “industrial area” means “any area
\ndeclared to be an industrial area by the State Government by notification
\nin the Official Gazette, which is to be developed and where industries are
\nto be accom-modated”.\n<\/p>\n
On 29.9.1972 a notification was issued by the State Government under
\nSection 2(g) of the Gujarat Industrial Development Act, 1962, declaring
\ncertain lands of village Saij, Kalol Taluka, District Mehsana as Kalol
\nIndustrial Area. By a subsequent notification of 24.8.1978 issued by the
\nState Government under Section 2(g), the survey numbers described in the
\nearlier notification pertaining to Kalol Industrial Area were modified.\n<\/p>\n
Under Section 16 of the Gujarat Industrial Development Act, 1962 which was
\nin force at all material times it is provided as follows :-\n<\/p>\n
“Section 16: Notwithstanding anything contained in the provisions for the
\ntime being in force relating to notified area in the Gujarat Municipalities
\nAct, 1963, the State Government may, by notifica-tion, in the official
\ngazette, (a) declare that the provisions relating to notified areas and any
\nother provisions of that Act shall extend to and be brought into force in
\nany industrial area, and thereupon such area shall be deemed to be a
\nnotified area under that Act;\n<\/p>\n
………..”\n<\/p>\n
Section 16 gives power to the State Government to issue a notifica-tion
\nunder which it can declare that an industrial area as defined in the
\nGujarat Industrial Development Act, 1962 would also be a deemed notified
\narea under the Gujarat Municipalities Act, 1963. This can be done simply by
\na notification issued by the State Government and it does not require the
\nformalities prescribed under the Gujarat Municipalities Act, 1963 for
\ncreating a notified area, because the section begins with the words “not-
\nwithstanding anything contained in the provisions for the time being in
\nforce relating to notified areas in the Gujarat Municipalities Act, 1963”.
\nTherefore, there are two important aspects of Section 16 of the Gujarat
\nIndustrial Development Act, 1962. First, it enables the State Government to
\nequate an industrial area under the Gujarat Industrial Development Act,
\n1962 with a notified area under the Gujarat Municipalities Act, 1963 by a
\nfiction. This fiction can be brought into existence by a notification.
\nThere-fore, the provisions of the Gujarat Municipalities Act, 1963 for the
\ncreation of a notified area will not apply to a notified area created under
\nSection 16. Also, a notified area, so created, would be governed by all the
\nprovisions of the Gujarat Municipalities Act, 1963, applicable to notified
\nareas under that Act. Section 264-A(l) of the Gujarat Municipalities Act,
\n1963 as it stood prior to its amendment on 20.8.1993, dealt with the
\ncreation of a notified area. It provided that the State Government could,
\nby notification declare that with respect to some or all of the matters
\nupon which a municipal fund may be expended, improved arrangements are
\nrequired within a specified area, which, nevertheless, it is not expedient
\nto constitute as a municipal borough under Section 4. On such declaration
\nby a notification, under sub-section (2), an area in regard to which such a
\nnotification has been issued would be called a notified area. An industrial
\narea notified under Section 16 of the Gujarat Industrial Development Act
\nwould also be such a notified area.\n<\/p>\n
In 1988 the State Government made a proposal for declaring certain
\nindustrial areas of different panchayats in the Kalol Industrial Area as
\nnotified areas under Section 16 of the Gujarat Industrial Development Act,
\n1962. In 1990 a committee was appointed to submit a report as to whether it
\nwas in the interest of the local inhabitants to declare these areas as
\nnotified areas. The committee submitted a report in August, 1991. After
\nnegotiations with different panchayats, it came to a conclusion that decla-
\nration of a notified area may not serve any purpose. Instead a provision
\ncould be made for a lump sum contribution from industrial units in lieu of
\ntaxes levied by the panchayats in question.\n<\/p>\n
With effect from 1.6.1993 the Constitution 73rd and 74th Amend-ments came
\ninto effect. As a result, Parts IX and IXA were introduced in the
\nConstitution. Part IX of the Constitution which dealt with the panchayats
\nprovided under Article 243B, for constitution in every State of panchayats
\nat the village, intermediate and district levels in accordance with the
\nprovisions of that part. Under Article 243N, any provision of law relating
\nto panchayats in force in a State immediately before the commen-cement of
\nthe 73rd Amendment which is inconsistent with the provisions of this Part
\nshall continue to be in force until amended or repealed or until the
\nexpiration of one year from such commencement, whichever is earlier. Part
\nIXA which came into force under the Constitution 74th Amendment Act of 1992
\ndeals with municipalities. Under Article 243Q which deals with the
\nconstitution of municipalities, it is provided as follows:-\n<\/p>\n
“243Q. Constitution of Municipalities-\n<\/p>\n
(1) There shall be constituted in every State –\n<\/p>\n
(a)  a Nagar Panchayat (by whatever name called) for a transitional area,
\nthat is to say, an area in transition from a rural area to an urban area;\n<\/p>\n
(b)  a Municipal Council for a smaller urban area; and<\/p>\n
(c)  a Municipal Corporation for a larger urban area, in accordance with
\nthe provisions of this Part :\n<\/p>\n
Provided that a Municipality under this clause may not be constituted in
\nsuch urban area or part thereof as the Governor may, having regard to the
\nsize of the area and the municipal services being provided or proposed to
\nbe provided by an industrial establishment in that area and such other
\nfactors as he may deem fit, by public notification, specify to be an
\nindustrial township.\n<\/p>\n
(2)  In this article, “a transitional area”, “a smaller urban area” or “a
\nlarger urban area” means such area as the Governor may, having regard to
\nthe population of the area, the density of the population therein, the
\nrevenue generated for local administration, the per-centage of employment
\nin non-agricultural activities, the economic importance or such other
\nfactors as he may deem fit, specify by public notification for the purposes
\nof this Part.”\n<\/p>\n
Under Article 243ZF, any provision of any law relating to Municipalities in
\nforce in a State immediately before the commencement of the Constitu-tion
\n(Seventy-fourth Amendment) Act, 1992, which is inconsistent with the
\nprovisions of this Part, shall continue to be in force until amended or
\nrepealed or until the expiration of one year from such commencement,
\nwhichever is earlier. The Gujarat Municipalities Act, therefore, continued
\nto operate and would do so until 1.6.1994 unless earlier repealed or
\namended.\n<\/p>\n
The Gujarat Municipalities Act, 1962 was amended on 20.8.1993 in view of
\nthe insertion of Part IXA in the Constitution. Section 264A was
\nsubstantially amended. It now provided that “for the purpose of this chap-
\nter notified area means an urban area or part thereof specified to be an
\nindustrial township area under the proviso to clause (1) to Article 243Q of
\nthe Constitution of India”. Thus, as a result of this amendment in the
\nGujarat Municipalities Act, an industrial area under the Gujarat Industrial
\nDevelopment Act, which is notified under Section 16 of the Gujarat
\nIndustrial Development Act would become a notified area under the new
\nsection 264A of the Gujarat Municipalities Act and would mean an in-
\ndustrial township area under the proviso to Clause (1) of Article 243Q of
\nthe Constitution of India.\n<\/p>\n
On 7.9.1993 the Government of Gujarat issued a notification under Section
\n16 of the Gujarat Industrial Development Act declaring Kalol Industrial
\nArea as notified area under Section 264A of the Gujarat Municipalities Act.
\nBy another notification of the same date 7.9.1993 the Government of Gujarat
\nexcluded the notified area from Saij Gram Panchayat under Section 9(2) of
\nthe Gujarat Panchayat Act, 1961.\n<\/p>\n
Earlier the State Government had also issued a Government resolu-tion dated
\n30.8.1993 whereby l\/3rd of the amount recovered as con-solidated tax by the
\nproposed notified area authority shall be used for the benefit of the gram
\npanchayats.\n<\/p>\n
By another subsequent notification dated 14th of April, 1994 issued by the
\nGujarat Government in exercise of powers conferred by Clause (2) of Article
\n243Q of the Constitution the Gujarat Government specified certain local
\nareas comprised in a Gram or a Nagar as the case may be, declared as such
\nunder Section 9 of the Gujarat Gram Panchayats Act, 1961 to be a
\ntransitional area mentioned against it in column 3 of the schedule attached
\nto that notification. The areas which are the impugned notified areas in
\nthese appeals are covered by that notification.\n<\/p>\n
The appellants filed a writ petition in the High Court for quashing the
\nimpugned notifications of 7.9.1993 as well as the Government resolution
\ndated 30.8.1993. The writ petition has been dismissed by the High Court and
\nhence these appeals have come before us.\n<\/p>\n
The Gram Panchayats affected have contended that the notification of
\n7.9.1993 issued under Section 16 of the Gujarat Industrial Development Act
\nis contrary to Parts IX and IXA of the Constitution brought into force by
\nthe 73rd and 74th Amendments. Hence the notification is illegal and void.
\nThe said Gram Panchayats also contend that the notification of 7.9.1993
\nissued under Section 9(2) of the Gujarat Panchayat Act, 1961 excluding the
\nnotified area from the gram panchayat is also contrary to Parts IX and IXA
\nof the Constitution. The contention appears to be that if any area forms a
\npart of a panchayat under Part IX of the Constitution it cannot be treated
\nas an industrial township under Part IXA of the Constitution.\n<\/p>\n
The contention is based on a misconception about the relationship of the
\nprovisions of Parts IX and IXA of the Constitution with any legislation
\npertaining to industrial development. The Gujarat Industrial Development
\nAct operates in a totally different sphere from Parts IX and IXA of the
\nConstitution as well as the Gujarat Panchayats Act, 1961 and the Gujarat
\nMunicipalities Act, 1962 – the latter being provisions dealing with local
\nself Government while the former being an Act for industrial development,
\nand orderly establishment and organisation of industries in a State. The
\nindustrial areas which have been notified under Section 16 of the Gujarat
\nIndustrial Development Act on 7.9.1993 were notified as industrial areas
\nunder the Gujarat Industrial Development Act long back in the year 1972.
\nThese industrial areas have been developed by the Gujarat Industrial
\nDevelopment Corporation and they can hardly be looked upon as rural areas
\ncovered by Part IX of the Constitution. It is only such industrial areas
\nwhich can be notified under Section 16 of the Gujarat Industrial
\nDevelopment Act, 1963. If by a notification issued under Section 16, these
\nindustrial areas are deemed to be notified areas under the Gujarat
\nMunicipalities Act and are equated with industrial townships under the
\nproviso to Clause (1) of Article 243Q, the constitutional scheme is not
\nviolated. In fact, under Chapter 3 of the Gujarat Industrial Development
\nAct, 1962, the Gujarat Industrial Development Corporation, has been given
\npower, inter alia, to develop land for the purpose of facilitating the
\nlocation of industries and commercial centres. It has also been given the
\npower to provide amenities and common facilities in such areas including
\nprovision of roads, lighting, water supply, drainage facilities and so on.
\nIt may do this either jointly with Government or local authorities or on an
\nagency basis in furtherance of the purposes for which the corporation is
\nestablished. The industrial area thus has separate provision for municipal
\nservices being provided by the Industrial Development Corporation. Once
\nsuch an area is a deemed notified area under the Gujarat Municipalities
\nAct, 1964, it is equated with an industrial township under Part IXA of the
\nConstitution, where municipal services may be provided by industries. We do
\nnot see any violation of a constitutional provision in this scheme. As held
\nby this Court in Solapur MIDC Industries Association Etc. v. State of
\nMaharashtra & Ors., JT<\/a> (1996) 7 SC 14, a Municipal Corporation Act and an
\nIndustrial Development Act have distinct fields of operation and there is
\nno inter se conflict between the two. By reason of the notifica-tions of
\n7.9.1993, the industrial area developed under the Gujarat Industrial
\nDevelopment Act is also deemed to be an industrial township for the
\npurposes of local self Government. Any possible conflict is also removed by
\nthe second notification of 7.9.1993 removing this area from the ambit of
\nthe Gujarat Panchayats Act, 1961. The contention, therefore, that an area
\nforming a part of a panchayat under the Gujarat Panchayats Act, 1961 cannot
\nbe a notified area under the Gujarat Municipalities Act loses all force.\n<\/p>\n
It is next contended that the proviso to Clause (1) of Article 243Q applies
\nonly to urban areas. It does not apply to a transitional area. Since the
\nindustrial areas in question have been subsequently notified as transi-
\ntional areas they cannot be equated with industrial townships. This conten-
\ntion also cannot be accepted. Article 243Q deals with constitution of
\nmunicipalities. Municipality is defined under Article 243P(e) to mean “an
\ninstitution of self-government constituted under Article 243Q. Article 243Q
\nconstitutes three types of municipalities – (a) a Nagar Panchayat (b) a
\nMunicipal Council and (c) a Municipal Corporation. The proviso to Article
\n243Q deals with all three types of municipalities constituted under Clause
\n(1). It provides that a municipality under Clause (1) may not be
\nconstituted in certain circumstances. This would refer to any of the three
\ntypes of municipalities. Although the proviso refers to such urban area or
\npart thereof, this “urban” area also covers a transitional area, in
\ntransition from rural to urban. It is because this area is also in the
\nprocess of turning into an urban area that it is put under Part IXA which
\ndeals with municipalities in urban areas. Therefore, in respect of any of
\nthese three types of areas set out in Clause (1) of Article 243Q, having
\nregard to the size of the area, the municipal services being provided or
\nproposed to be provided by an industrial establishment in that area, and
\nsuch other factors as the Gover-nor will deem fit to consider, he may, by
\npublic notification specify such area to be an industrial township. All
\nthese relevant factors would be in operation in an industrial area already
\nnotified many years back under an Industrial Development Corporation Act as
\nin the present case. Therefore, there is no breach of Article 243Q if such
\nan area is, under the provisions of an Industrial Development Act, equated
\nwith an industrial township under Article 243Q.\n<\/p>\n
It was also contended that in order to be a notified area under the Gujarat
\nMunicipalities Act, certain procedure is required to be followed.
\nTherefore, unless this procedure is followed an industrial area cannot
\nbecome a notified area simply by issuing a notification under Section 16 of
\nthe Gujarat Industrial Development Act, 1962. This contention was earlier
\nraised before the Gujarat High Court in the case of Naroda Nagar-panchayat
\nAhmedabad v. State of Gujarat & Ors., (1977) GLR 814). The High Court
\nrepelled this contention by pointing out that on a proper construction of
\nSection 16 it is not necessary for the State Government to follow the
\nprocedure prescribed in Section 4 of the Gujarat Municipalities Act before
\nenforcing the provisions relating to notified areas contained in the
\nGujarat Municipalities Act in the industrial areas in question. It,
\ntherefore, held that the requirements of Section 264A and 264D as then in
\nforce, were not required to be complied with before a notification is
\nissued under Section 16.\n<\/p>\n
Explaining the purpose behind Section 16 the High Court has rightly held
\nthat having regard to the power conferred upon the Gujarat Industrial
\nDevelopment Corporation in the matter of provision of amenities and common
\nfacilities in industrial estates and industrial areas, on levy of certain
\ncharges upon those who set up industries therein, an industrial area would
\nordinarily be a self-sufficient township in itself which provides its own
\namenities and recovers charges therefor. A local authority having
\njurisdiction over such area will have to perform very few of its statutory
\nor discretionary duties in respect of such area. Yet it may levy and
\ncollect taxes from those who set up industries in the area. It is to avoid
\nthis virtual dual control and administration which might impede the growth
\nand development of industries that provision has, presumably, been made in
\nSection 16 for constituting an industrial area into a notified area and
\nthereby converting it into a separate administrative unit. As we have
\nstated earlier, creation of such a separate administrative unit is not
\ncontrary to the scheme of Parts IX and IXA of the Constitution when Article
\n243Q provides for the creation of such a separate administrative unit in
\nthe form of an industrial township. It has also been pointed out by the
\nrespondents that neither Article 243N nor 243ZF invalidates any Industrial
\nDevelop-ment Act. It was also contended by the appellants that under
\nSection 9(2) of the Gujarat Panchayats Act, 1961 the Gram Panchayats have
\nto be con-sulted before issuing a notification under Section 9(2). The
\nrespondents have, however, pointed out that in the present case there has
\nbeen extensive consultation with the panchayats before the notifications of
\n7.9.1993 were issued. The appellants-Panchayats as well as the Taluka and
\nDistrict Panchayats were consulted through the District Development
\nOfficer. He had also asked for resolutions from the appellant-Panchayats,
\nthe Taluka Panchayats and District Panchayats for being forwarded to the
\nDevelop-ment Commissioner. All these have been taken into account before
\nissuing the notifications in question. The respondents have also pointed
\nout that the Government has taken care to issue a resolution dated 30th
\nAugust, 1993 by which l\/3rd of the revenue recovered as consolidated tax by
\nthe notified area committee would be given for the benefit of the concerned
\nGram Panchayats, thus avoiding any financial prejudice to them.\n<\/p>\n
It was also contended by the appellants that before any notification could
\nbe issued under Section 16 of the Gujarat Industrial Development Act, 1962,
\na hearing should have been given to the residents. Because notifying an
\narea under Section 16 of the said Act has civil consequences. If the
\nresidents had any objections, they should have been considered. Reliance
\nwas placed upon a decision of this Court in Baldev Singh and Ors. v. State
\nof Himachal Pradesh and Ors., AIR<\/a> (1987) SC 1239. In that case under the
\nHimachal Pradesh Municipal Act, a notified area had been declared under
\nSection 256. This Court said that the inclusion of an area governed by a
\nGram Panchayat within a notified area would certainly involve civil
\nconsequences. In such circumstances it is necessary that people who will be
\naffected by the change should be given an opportunity of being heard
\notherwise they would be visited with serious consequences like loss of
\noffice in Gram Panchayats, an imposition of a way of life, higher incidence
\nof tax and the like. Although the section did not, in clear terms, provide
\na right of hearing, the Court held that denial of such an opportunity was
\nnot in consonance with the scheme of the Rule of Law governing our society.
\nA similar view has been taken in State of U.P. and Ors. v. Pradhan Sangh
\nKshettra Samiti and Ors.,<\/a> [1995] Supp. 2 SCC 305 at page 334. In this case
\ndelimitation of panchayat areas and Gram Sabhas under the U.P. Panchayat
\nRaj Act of 1947 was considered by this Court. It said that an opportunity
\nof being heard should have been given to the people of the areas concerned.
\nIn that case, action having already been taken without giving an
\nopportunity of hearing, in view of the urgency, post-decisional hearing was
\nconsidered as sufficient compliance with the principle of audi alteram
\npartem. In the present case, however, there has been a long drawn out
\nexchange of views, consultations as well as consideration of objections
\nover the issuing of a notification under Section 16 of the Gujarat
\nIndustrial Development Act, 1962 which was also linked with the exclusion
\nof this area from the panchayat area under Section 9(2) of the Gujarat
\nPanchayats Act, 1961. It was precisely because of these consultations that
\nGR of 30.8.1993 was also issued to provide revenue to the gram panchayats
\nfrom out of taxes collected from notified areas which were removed from the
\njurisdiction of gram panchayats, therefore, the appellants cannot complain
\nof any violation of the principles of natural justice in the present case.\n<\/p>\n
In the premises, we do not see any reason to take a view different from the
\nview taken by the High Court The appeals are, therefore, dismissed. There
\nwill, however, be no order as to costs.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Saij Gram Panchayat vs State Of Gujarat And Ors on 27 January, 1999 Bench: Mrs. Sujata Manohar, G.B. Pattanaik CASE NO.: Appeal (civil) 364 of 1999 PETITIONER: SAIJ GRAM PANCHAYAT RESPONDENT: STATE OF GUJARAT AND ORS. DATE OF JUDGMENT: 27\/01\/1999 BENCH: MRS. SUJATA V. MANOHAR & G.B. PATTANAIK JUDGMENT: JUDGMENT 1999 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-160546","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nSaij Gram Panchayat vs State Of Gujarat And Ors on 27 January, 1999 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/saij-gram-panchayat-vs-state-of-gujarat-and-ors-on-27-january-1999\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Saij Gram Panchayat vs State Of Gujarat And Ors on 27 January, 1999 - 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