ivil Appeal Nos
172469 and 1732 of 1971
Appeals by Special Leave from the Judgment and Order dated 12 5 69 of the Allahabad High Court in Special Appeal Nos 492 and 437 of 1968
Naunit Lal and Faqir Chand for the Appellant in CA Nos
172469
G N Dikshit O P Rana for Respondent No1 in CA 172469 J P Goyal section M Jain and section K Jain for Respondent No2 in CA Nos
172469 Miss Meera Bali for the Appellant in CA 173271 G N Dikshit and OP Rana for the Respondents in CA 173271 The Judgment of the Court was delivered by SEN J
These two appeals by special leave directed against the judgment of the Allahabad High Court dated May 12 1969 raise common questions and therefore are disposed of by this common judgment
By separate notifications issued under section 3 of the UP Mahapalika Adhiniyam 1959 the State Government constituted Municipal Corporations in five cities in the State namely Kanpur Agra Varanasi Allahabad and Lucknow wef February 1 1960
The appellant in the present appeal Mohd Rashid Ahmad was a permanent Assistant Engineer in the Development Board Kanpur constituted under the Cawnpore Urban Area Development Act 1945
In 1953 an Administrator was appointed of both the Development Board and the Municipal Board Kanpur constituted under the UP Municipalities Act 1916 under the UP Local Bodies Appointment of Administrators Act 1953
The two local bodies however continued to have separate legal existence and their officers and servants continued as the employees of the respective bodies
The appellant Mohd Rashid Ahmad was appointed as Offg
Executive Engineer by the Administrator of the Municipal Corporation Kanpur for a period of one year on September 12 1960
He has since then continued to function in the same capacity on a purely temporary arrangement under s577ee that is for so long as no substantive appointment could be made to that post under s106
The Uttar Pradesh Public Service Commission however considered that he was not fit for appointment for the post of the Executive Engineer Municipal Corporation Kanpur
831 The appellant in the connected appeal Ashfaq Hussain was a permanent Sanitary Inspector in the Municipal Board Kanpur
After the constitution of the Municipal Corporation Kanpur he continued to hold that post under section 577e
On July 24 1967 he was transferred in the same capacity to the Municipal Corporation Allahabad where he was promoted temporarily as an Assistant Engineer
He therefore stood provisionally absorbed under s577e
Both the UP Nagar Mahapalika Adhiniyam 1959 and the UP Municipalities Act 1916 empowered these local bodies to appoint their employees subject to certain regulatory control by the State Government
By section 12 of the UP Nagar Mahapalika Sanshodhan Adhiniyam 1964 the State Legislature added section 112A to the UP NagarMahapalika Adhiniyam 1959
Similarly by s37 of the UP Municipalities Amendment Act 1964 s698 was added to the UP Municipalities Act 1916 which was identical in terms to s112A Section 112A of the Adhiniyam empowered the State Government to provide by rules for the creation of one or more services to be known as Centralised Palika Services as it may deem fit and proper common to all the Municipal Corporations and Municipal Boards and prescribe the method for recruitment and conditions of service of persons appointed to any such service
Section 112A of the UP Nagar Mahapalika Adhiniyam 1959 enacts 112A Centralization of services 1 Notwithstanding anything contained in section 106 to 110 the State Government may at any time by rules provide for the creation of one or more services of such officers and servants as the State Government may deem fit common to the Mahapalikas or to the Mahapalikas and Municipal Boards of the State and prescribe the method of recruitment and conditions of service of persons appointed to any such service
2 When any such service is created officers and servants serving on the posts included in the service as well as officers and servants performing the duties and functions of those posts under sub clause 1 of clause ee of section 577 may if found suitable be absorbed in the service provisionally or finally and the services of others shall stand determined in the prescribed manner
3 Without prejudice to the generality of the provisions of sub sections 1 and 2 such rules may also provide for 832 consultation with the State Public Service Commission in respect of any of the matters referred to in the said sub sections The State Government in exercise of the powers conferred by section 112A of the UP Nagar Mahapalika Adhiniyam 1959 and s69B of the UP Municipalities Act 1916 made the UP Palika Centralised Services Rules 1966 which came into force on July 9 1966
Rule 3 created 19 Palika Centralised Services covering 76 posts common to all the Municipal Corporations and Municipal Boards
The rules provided for regulating the recruitment and conditions of service of the persons appointed to these newly created services
Rule 6 dealt with recruitment to the Centralised Palika Services
Due to inadvertence r6 was not drafted in conformity with the requirements of s112A and s69B That was because cl1 provided for automatic final absorption of officers and servants provisionally absorbed under s577e contrary to the provisions of s112A of the Adhiniyam and s69B of the Municipalities Act
On September 5 1966 the Governor promulgated the UP Local Self Government Amendment Ordinance 1966 which was replaced by the UP Local Self Government Laws Amendment Act 1966
Section 19 of the Act reads as follows 19
Deeming validation etc
The Uttar Pradesh Palika Centralised Services Rules 1966 shall be deemed to have been made under the provisions of the Uttar Pradesh Nagar Mahapalika Adhiniyam 1959 and the UP Municipalities Act 1916 as if the amendments made by this Act to the said Acts were always in force and be deemed to be and always to have been valid and shall subject to any amendments made thereto continue in force and notwithstanding anything contained in the said Acts the power to make amendments to the said rules may during the period ending on September 4 1967 be exercised retrospectively
 It in effect amended section 112A of the Adhiniyam and s69B of the Municipalities Act
Section 4 of the Act provided that the UP Palika Centralised Services Rules 1966 shall be deemed to be valid
The Act further provided that the amendments made to the rules may be given retrospective effect
The power of making retrospective rules was however limited to a period of one year from the commencement of the ordinance
833 On October 10 1966 the State Government passed the UP Palika Centralised Services Amendment Rules 1966
These rules repealed and re enacted r6 with retrospective effect from July 9 1966
Under cl
ii of r62 the State Government had to pass a final order of absorption in respect of particular officers and servants of the erstwhile Municipal Boards if they were found suitable in accordance with s112A of the Adhiniyam
Clause iii provided that such orders had to be made on or before March 31 1967
By cliv if no orders of final absorption were passed till then the officer or servant concerned was to be deemed to have been finally absorbed
The State Government was however constrained to make the UP Palika Centralised Services Amendment Rules 1967 on March 30 1967 and amend cl
iii of r62 as the work of final absorption could not be completed by March 31 1967
The date of passing the necessary orders in that behalf was sought to be shifted to June 30 1967
A new cl
iii was accordingly substituted by this amendment effected on March 30 1967
But unfortunately the amendment was made to come into effect from April 1 1967
This created a serious legal infirmity as on the expiry of March 31 1967 the legal fiction embodied in cl
iv was brought into play
Thereafter the State Government made the last amendment to the UP Palika Centralised Services Amendment Rules 1967 on June 26 1967 in supersession of the UP Palika Centralised Services Amendment Rules 1967 made on March 30 1967
This amendment introduced a new cliii to r62 in place of the existing cliii of UP Palika Centralised Services Rules 1966 by which the date of passing the order was shifted from March 31 1967 to August 31 1967 with retrospective effect from July 9 1966
Having provided for the creation of Centralised Palika Services the State Government had in the meanwhile laid down the procedure by which an office or servant provisionally absorbed under section 577 e of temporarily appointed under s577ee were to be finally absorbed if found suitable under s112A By its three circulars dated January 11 1967 January 31 1967 and February 23 1967 addressed to the Divisional Commissioners it intimated the constitution of Divisional Committees for making necessary recommendations to the State Government in this behalf
The first circular embodied the Government policy in these terms Government desire that all officers and servants whose services are proposed to be determined on grounds of unsuita 834 bility may be given an opportunity of personal interview by the Committee After such interviews the Committees were to finalise their recommendations and furnish the same to the Government
In view of the limited time available to the Government for finalising action in the matter it was desired that the first meeting of the Committees should be held in the last week of January or in the first week of February 1967
The Divisional Commissioner were required to intimate the date to the Secretary to the Government Local Self Government Department so that all necessary arrangements could be made to forward the character rolls and service records of the Centralised Services officers and servants
By the second circular the State Government re constituted the Committees so far as the five Municipal Corporations were concerned and directed that these Divisional Committees were to make selections for all Centralised Services except those whose starting salary was Rs 500 and above
Selection for the posts in the latter category were to be made by the State Selection Committee
Thus the Government divided the officers and servants into two categories and their cases were to be dealt with at two different levels for purposes of final absorption under r62iii read with s112A By its third circular the State Government without disturbing the earlier categorisation of officers and servants into two classes laid down certain broad criteria with a view to secure a reasonable uniformity in the standards to be applied by the Divisional Committees in making the selection
It may however be observed that the Government reiterated its declared policy that all such officers and servants whose services were proposed to be determined on the ground of unsuitability be given an opportunity of personal interview by the Committees stating  the committee should interview the official concerned to judge his suitability or otherwise for absorption in the centralised services
When it is proposed to declare an official to be unsuitable for absorption on the basis of adverse entries the divisional committee should afford an opportunity to the official concerned to appear before it and clear up his position
 It was also desired that only those adverse remarks may be considered against the official concerned which were found to have been duly communicated to him
835 It must at once be stated that though the State Government had by its circular dated January 31 1967 entrusted the task of determining the suitability or otherwise of officers and servants holding Centralised Services posts drawing less than Rs 500  to Divisional Committees and reserved such function in respect of officers and servants drawing Rs 500 or more to the State Selection Committee and by its subsequent circular dated February 23 1967 maintained the classification of such officers and servants for purposes of judging their suitability for absorption in the Centralised Palika Services the final orders of absorption in each case under s112A were passed by the State Government
In the former class the recommendations of Divisional Committees were scrutinised by the State Government in the Local Self Government Department in the light of the service records of the officials concerned and the necessary orders thereon were passed
In respect of the latter category the Secretary to the Government Local Self Government Department prepared a note and put it up for the Minister for passing the final orders
It is also worthy of mention that the delay in completing the work of final absorption by the State Government was mainly due to three factors namely 1 due to shortness of the time available at its disposal 2 the number of officers and servants holding the Centralised Services posts under s577e and ee was quite large and 3 because of delay on the part of the erstwhile Municipal Boards to forward the character rolls and service records of the officers and servants concerned
On account of this the task of absorption under s112A could not be completed before March 31 1967 ie the date originally fixed by cliii of r62 of the UP Palika Centralised Services Rules 1966
The period was therefore subsequently extended from March 31 1967 to June 30 1967 and thereafter from March 31 1967 to August 31 1967
Eventually the State Government in exercise of its powers under cliii of r62 of the UP Palika Centralised Services Rules 1966 determined the services of the appellant Mohd Rashid Ahmad on July 18 1967 and that of Ashfaq Hussain on August 27 1967 on the ground that they were not found fit for absorption under s112A of the Adhiniyam
The two appellants and several other employees of the erstwhile Municipal Boards and District Boards challenged the validity of the various orders passed by the State Government terminating their services before the Allahabad High Court on several grounds
Amongst others they challenged the validity of r62 iii framed under section 112A 836 of the Adhiniyam on the ground that it was ultra vires the State Government as it brings about extinction of the relationship of employer and employees between them and the erstwhile Municipal Boards
It was also urged that the impugned orders were violative of Articles 14 and 16 of the Constitution because the classification made by the State Government by its circular dated January 31 1967 entrusting the task of determination of the suitability or otherwise of officers and servants holding Centralised Services posts drawing less than Rs 500 to Divisional Committees which were enjoined to give them the right of a personal hearing to have their say in the matter of final absorption and entrusting of such function in respect of officers and servants drawing Rs 500 and above to the State Selection Committee without a corresponding right of hearing was without any rational basis
It was also urged that the impugned orders were vitiated being in breach of the rules of natural justice
A Division Bench of the Allahabad High Court however rejected all these contentions
In view of the language of Entry 5 List II of the Seventh Schedule the objection regarding the validity of r62 iii was rightly not pressed before us
On the view that we take of the various circulars issued by the State Government laying down the procedure for dealing with the question of suitability or otherwise of officers and servants of the erstwhile Municipal Boards for absorption in the Centralised Services under r62iii the contention based on Articles 14 and 16 of the Constitution also does not arise
Learned counsel appearing for the appellants assailed the impugned orders of the State Government on two grounds namely 1
By reason of the legal fiction contained in cliii of r62 the services of the appellants stood finally absorbed in the UP Palika Centralised Services on March 31 1967 due to the failure of the State Government to pass the necessary orders in that behalf before that date
Under the legal fiction contained in cliv thereof and the subsequent amendment made by the UP Palika Centralised Services Amendment Rules 1967 which came into force on April 1 1967 the vested rights acquired by them to hold their respective posts could not be affected to their detriment and 2
The orders of termination of services passed by the State Government were vitiated due to its failure to give to the appellants an opportunity of hearing
837 With respect to the first contention it is urged that the appellants stood provisionally absorbed under section 577e read with cli of r62
It is said that they would be deemed to have been finally absorbed on March 31 1967 if no orders contemplated by clii thereof were made with respect to them on or before that date
The argument is that the two subsequent amendments made on March 30 1967 and June 26 1967 by which the State Government purported to shift the date first from March 31 1967 to June 30 1967 and then from March 31 1967 to August 31 1967 were legally ineffective as the first amendment made to cliii of r62 came into force on April 1 1967 by which date the appellants already stood finally absorbed
There was therefore no power in the State Government to re open the question of final absorption under section 112A2 of the Adhiniyam
There is a fallacy in the argument
The validity of the two amendments made by the State Government in r62 from time to time cannot be questioned
While it is true that a rule cannot be made with retrospective effect the legislature by enacting s19 of the UP Local Self Government Amendment Act 1966 expressly conferred powers on the State Government to make retrospective rules
Indeed the validity of the amendments was not questioned before us
Even if the first amendment of March 30 1967 was ineffective because it was brought into force from April 1 1967 the second amendment of June 26 1967 which introduced a new clause iii to r62 with retrospective effect from July 9 1966 was fully effective
It shifted the date for passing of the order of final absorption from March 31 1967 to August 31 1967
Till the expiry of the date now fixed ie August 31 1967 the legal fiction contained in cl
iv of r62 would not be brought into play
That is the inevitable legal consequence of the subsequent amendment made on June 26 1967
It would be clear that cl
iii of r 62 as amended on October 10 1966 gave power to the State Government to pass an order of absorption under section 112A of the Adhiniyam of an officer or servant of the Municipal Corporations provisionally absorbed under section 577e if found suitable on or before March 31 1967
If there was a failure on the part of the State Government to pass such an order in respect of a particular officer or servant by that date it would unless there was a provision to the contrary bring into play the legal fiction contained therein and he would by its force be deemed to be finally absorbed in the post held by him
838 The State Government in their return have candidly stated that due to inadvertence the subsequent amendment effected on March 30 1967 was made to take effect on April 1 1967 by which date the legal fiction under cl
iv had already taken effect
It therefore became necessary to correct the serious legal infirmity
It was for that reason that the subsequent amendment was made on June 26 1967 by which a new cl
iii was substituted in place of the existing cl
iii to r62
The amendment substituted new cl
iii to r 62 with effect from July 9 1966 ie from the very inception
It was legitimately within the powers of the State Government to give to the amended rule a retrospective effect
As a result of the amendment the original cl
iii was substituted by a new cl
iii by which the date for passing an order of absorption by the State Government was shifted to August 31 1967 which again introduced another legal fiction
It provided that if there was a failure on the part of the State Government to pass an order of absorption by August 31 1967 the officer or servant concerned shall be deemed to be finally absorbed
This legal fiction was brought into force with effect from July 9 1966
It is needless for us to stress that both the legal fictions one created by the original cl
iii fixing the fictional date of absorption as March 31 1967 and the subsequent legal fiction providing for the fictional date of absorption as August 31 1967 could not co exist
With the subsequent amendment effected on June 26 1967 the earlier legal fiction was never brought into play as by reason of the amendment the State Government had the power to pass the necessary orders till August 31 1967
The introduction of the second fictional date ie August 31 1967 was to eclipse the earlier fictional date of absorption
Perhaps no rule of construction is more firmly established than this that retrospective operation is not to be given to a statute so as to impair an existing right or obligation other than as regards the matter of procedure unless that effect cannot be avoided without doing violence to the language of the enactment
If the enactment is expressed in a language which is fairly capable of either interpretation it ought to be construed as prospective only
But where as here it is expressly stated that an enactment shall be retrospective the courts will give it such an operation
It is obviously competent for the legislature in its wisdom to make the provisions of an Act of Parliament retrospective
That is precisely the case here
In Quinn vs Prairiedale where a subsequent enactment provided that the relevant section should be 839 deemed never to have been contained in the earlier statute it was held to be sufficient to rebut the presumption against retrospectivity
In State of Punjab vs Mohar Singh and in Inder Sohan Lal vs Custodian of Evacuee Property Delhi  Ors3 this Court had to consider the effect of repeal of an enactment followed by re enactment in the light of s6 of the 
The line of enquiry as observed in Mohar Singh s case would be not whether the new Act expressly keeps alive old rights and liabilities but whether it manifests an intention to destroy them 
It was held that section 6 of the was not entirely ruled out when there was a repeal of the enactment followed by a fresh legislation unless the new legislation manifested an intention to the contrary
Such incompatibility had to be ascertained from a consideration of all the relevant provisions of the new law and the mere absence of a saving clause was by itself not conclusive
In the present case however there can be no doubt that by the introduction of the new fictional date of absorption as August 31 1967 there was a clear intention to destroy the earlier fictional date of March 31 1967
It would clearly be incompatible on consideration of subsequent amendment for both the provisions ie the original cl
iii fixing March 31 1967 and the new cl
iii fixing August 31 1967 to be the fictional date to operate simultaneously
The effect of introduction of the new fictional date was to annihilate the earlier fictional date
The appellants therefore did not stand automatically absorbed by the failure of the State Government to pass the necessary orders by March 31 1967 as its powers stood extended by the subsequent amendment to August 31 1967
Before that date expired the State Government in both these cases passed the necessary orders terminating the services of the appellants as they were not found fit for absorption under section 112A 2 of the Act
The first contention therefore fails
That takes us to the second contention namely whether the impugned orders are vitiated on account of the failure of the State Government to afford to the appellants an opportunity of a hearing
With the establishment of Municipal Corporations in five cities in the State namely Kanpur Agra Varanasi Allahabad and Lucknow wef
February 1 1960 the Municipal Boards Improvement Trusts Development Boards etc
in these cities ceased to exist with the 840 repeal by s581 of the UP Nagar Mahapalika Adhiniyam 1959 of the UP Municipalities Act 1916 the UP Town Improvement Act 1919 the UP District Boards Act 1922 the Cawnpore Urban Area Development Act 1945 the UP Local Bodies Appointment of Administrator Act 1953 with effect from that date in relation to these cities
In consequence thereof the existing posts held by the officers and servants of these bodies stood abolished
Consequent upon the abolition of the posts all officers and servants of the erstwhile local bodies lost their right to hold their posts
The Adhiniyam however provided by s577e notwithstanding anything contained in ss106 and 107 for the provisional absorption of these officers and servants in the Municipal Corporations till they were finally absorbed in any Centralised Services created by rules made under s112A or their services did not stand determined in accordance with such rules
By s577ee the Administrator was authorised to make temporary appointments of officers and servants against the posts mentioned in s106 till substantive appointments were not made thereto as provided in the Adhiniyam and they were to be treated as on deputation with the Municipal Corporations
This was not doubt an ad interim arrangement until the State Government by rules framed under s112A1 provided for the creation of the Centralised Palika Services common to all the Municipal Corporations and Municipal Boards and made final absorption of officers and servants serving on the posts included in such Centralised Services under s112A2
In the very nature of things the officers and servants provisionally absorbed under s577e or temporarily appointed under s577ee could not be automatically absorbed in the newly created Centralised Services
There had to be a screening of all such officers and servants with a view to determine their suitability or otherwise for final absorption in Centralised Services
It was particularly necessary to weed out the dead wood to bring about an overall improvement in the municipal administration in these cities
The very nature of the functions entrusted to the State Government under r62 iii of the UP Palika Centralised Services Rules 1966 for purposes of final absorption under s112A of the Adhiniyam implies a duty to act in a quasi judicial manner
It cannot be denied that an officer or servant provisionally absorbed under s577e or temporarily appointed under s577ee had the right to be considered for purposes of final absorption
Such officers or servants particularly those in permanent employment who had put in 20 to 25 years of service in the erstwhile Municipal Boards or Development Boards were vitally affected in the matter of final absorption
841 By s112A of the Act the legislature created a machinery for determining the suitability or otherwise of such officers or servants for absorption in the newly created Centralised Services
The entrustment of this work to the State Government under s112A imposed a corresponding duty or obligation on the Government to hear the officers and servants concerned
In view of this it is rightly urged that the impugned orders unless they conform to the rules of natural justice were liable to be struck down as invalid
It is a fundamental rule of law that no decision must be taken which will affect the rights of any person without first giving him an opportunity of putting forward his case
In Local Government Board vs Arlidge Lord Haldane L C tried to reconcile the procedure of a Government department with the legal standards of natural justice
In Ridge vs Baldwin  Ors
Lord Reid stated It is not suggested that he holds the position of a judge or that the appellant is entitled to insist on the forms used in ordinary judicial procedure but he had a duty of giving to any person against whom the complaint is made a fair opportunity to make any relevant statement which he may desire to bring forward and a fair opportunity to correct or controvert any relevant statement brought forward to his prejudice These decisions rest on the classical formulation of the duty to hear evolved by Lord Loreburn in Board of Education vs Rice
The main requirements of a fair hearing are two 1 a person must know the case he is to meet and 2 he must have an adequate opportunity of meeting that case
There has ever since the judgment of Lord Reid in Ridge vs Baldwin supra been considerable fluctuation of judicial opinion in England as to the degree of strictness with which the rules of natural justice should be extended and there is growing awareness of the problems created by the extended application of natural justice or the duty to act fairly which tends to sacrifice the administrative efficiency and despatch or frustrates the object of the law in question
Since this Court has held Lord Reid s judgment in Ridge vs Baldwin would be of assistance in deciding questions relating to natural justice there is always the duty to act judicially
There is therefore the insistence upon the requirement of a fair hearing 842 In A K Kraipak vs Union of India there was a reiteration of the principles albeit in a different form laid down by this Court in Dr Miss Binapani Devi vs State of Orissa and by the House of Lords in Padfield vs Minister of Agriculture Fisheries  Food that the executive should not arbitrarily or capriciously act and that the myth of executive discretion is no longer there
Indeed in Kraipak s case supra it was observed The dividing line between an administrative power and a quasi judicial power is quite thin and is being gradually obliterated
Under our Constitution the rule of law pervades over the entire field of administration
Every organ of the State under our Constitution is regulated and controlled by the rule of law
In a welfare State like ours it is inevitable that the jurisdiction of the administrative bodies is increasing at a rapid rate
The concept of the rule of law would lose its vitality if the instrumentalities of the State are not charged with the duty of discharging their function in a fair and just manner
The requirement of acting judicially in essence is nothing but a requirement to act justly and fairly and not arbitrarily or capriciously
The procedures which are considered inherent in the exercise of a judicial power are merely those which facilitate if not ensure a just and fair decision
In recent years the concept of quasi judicial power has been undergoing a radical change
What was considered as an administrative power some years back is now being considered as a quasi judicial power
 This Court pertinently drew attention to the basic concept of natural justice vis a vis administrative and quasi judicial enquiries and stated that any decision whether executive administrative or judicial or quasi judicial is no decision if it cannot be just ie an impartial and objective assessment of all the pros and cons of a case after due hearing of the parties concerned
In the light of these principles we have to see whether the State Government acted in breach of the rules of natural justice in passing the impugned orders
It is however strenuously urged on behalf of the State Government that on a true construction of the two circulars in question while it was incumbent on the Divisional Committees to give all officers 843 and servants whose services were proposed to be determined on the ground of unsuitability an opportunity of a personal hearing no such duty was cast on the State Government
We are unable to agree with this line of reasoning
The first circular dated January 11 1967 was all pervasive and it covered all categories of officers and servants either provisionally absorbed under s577e or temporarily appointed under s577ee irrespective of their salary
The Government policy was made quite clear in that circular which we have quoted earlier
At this stage the functions of the Divisional Committees were to be purely recommendatory in nature
The Committees had to make their selection of officers and servants suitable for absorption after an interview of all such officers and servants and forward their recommendations to the Government for finalising action in the matter of final absorption under s112A
The subsequent circular dated January 31 1967 making a categorisation of the officers and servants concerned into two groups reserving the power of selection for final absorption to the State Selection Committee in case of all Centralised Services whose starting salary was Rs 500 and more and entrusting the function to the Divisional Committees in case of those whose starting salary was less than Rs500  was still subject to the Government policy already laid down
It is therefore not right to suggest that the State Government was absolved of the duty to hear the officers and servants of the erstwhile Municipal Boards and other local authorities drawing Rs 500 and above All the officers and servants of the erstwhile Municipal Boards and other local authorities provisionally absorbed under s577e or temporarily appointed under s577 ee were therefore entitled to be heard in the matter of their final absorption under s112A read with r62 iii irrespective of their salary
The requirements of a fair hearing are fulfilled in the case of officers and servants of the erstwhile Municipal Boards and other local authorities drawing a salary of less than Rs 500 but not in the case of those drawing Rs 500 or more
It is accepted before us that the appellant Ashfaq Hussain was called for an interview by the Divisional Committee
The State Government in its return has placed material showing that he had a uniformly bad record and there were adverse entries in his character rolls for several years
It is not disputed that Ashfaq Hussain had been called for an interview by the Divisional Committee
We are not impressed by the submission that the adverse remarks were not put to him when he appeared before the Divisional Committee
It is clear 844 from the two circulars of the State Government dated January 11 1967 and February 23 1967 that in all cases in which the services of an officer or servant were to be determined on the ground of his unsuitability they were to be given an opportunity of personal interview by the Committee
The whole purpose of the personal interview was that when it was proposed to declare such an official unsuitable for absorption the Committee had to afford an opportunity to appear before it and clear up his position
It is reasonable to presume that when the appellant Ashfaq Hussain was called for that purpose the adverse remarks in his character rolls must have been put to him
On an overall view of the record of service of Ashfaq Hussain the Divisional Committee was not wrong in recommending to the Government to terminate his services and the Government was within its rights in passing the impugned order of termination in regard to him
In the case of the appellant Mohd Rashid Ahmad it however appears from the return filed by the State Government that no such opportunity was afforded to him before the State Government passed the impugned order dated July 18 1967 terminating his services
It is evident no doubt from the return filed by the State Government that the service record of the appellant was before the Government on the basis whereof it was decided that he was unsuitable for being finally absorbed and also that the Secretary for Local Self Government in his note of July 10 1967 recommended that he was not suitable for final absorption in the Centralised Services but it is clear that the Minister for Local Self Government before passing the impugned order of termination dated July 11 1967 did not give to the appellant an opportunity of a hearing
The order of termination of his services passed by the State Government therefore suffers from a serious legal infirmity
It was said however on behalf of the State Government that under s1071 of the Adhiniyam no appointment to a post carrying an initial salary of not less than Rs 500 per mensem could be made except after consultation with the Public Service Commission and that the Commission did not find the appellant fit for appointment as Executive Engineer Municipal Corporation Kanpur
It was also pointed out that under section 108 the appellant could not hold the post beyond the period of one year
It was therefore urged that the State Government was justified in terminating the services of the appellant as he could not be finally absorbed in the post of an Executive Engineer in the Centralised Services
It was said that the post had to be advertised for filling up the vacancy as required under section 107 of the Adhiniyam
We are afraid the contention cannot be accepted
845 Under section 112A 1 of the Adhiniyam the State Government having by UP Palika Centralised Services Rules 1966 constituted the Centralised Palika Services the appellant Mohd Rashid Ahmad who was performing the duties and functions of the post of Executive Engineer under section 577ee was entitled to be considered if found suitable for absorption under s112A2
Admittedly the appellant was not heard in the matter of his final absorption
It is also not in dispute that the procedure laid down in the UP Palika Centralised Services Rules 1966 was not followed
If the appellant was at all found fit for absorption it was for the State Government next to decide the suitable post on which he could be absorbed
The method of recruitment provided by r 20 had to be followed
Evidently this has not been done
In view of the fore going reasons Civil Appeal No 1724 of 1969 succeeds and is allowed while Civil Appeal No 1732 of 1971 fails and is dismissed
There shall be no order as to costs
PBR CA 172469 allowed
CA 173271 dismissed


Summary:
Rule 62iii If imposed a duty on State Government to act in a quasi judicial manner
Rules of natural justice Applicability of
The UP Nagar Mahapalika Adhiniyam 1959 as well as the UP Municipalities Act 1916 empowered local bodies in the State to appoint their employees subject to certain regulatory control by the State Government
In 1964 section 112A was added to the 1959 Adhiniyam empowering the State Government to make rules for the creation of one or more services to be known as Centralised Palika Services common to all the municipal corporations and municipal boards and prescribe the method for recruitment and conditions of service of persons appointed to any such service
Section 69B which was added to the UP Municipalities Act 1916 was in identical terms as section 112A Section 577e of the Adhiniyam provided for provisional absorption of officers and servants of the erstwhile municipalities till they were finally absorbed in any centralised services created under the Act
By section 577ee the Administrators of Boards etc were authorised to make temporary appointments of officers and servants till substantive appointments were made and such officers and servants were treated as on deputation with the municipal corporations
In exercise of the powers conferred under section 112A the State Government made the UP Palika Centralised Service Rules 1966 which came into force on July 9 1966
Since r 6 of the Rules was found to be contrary to the provisions of section 112A and section 69B the UP Local Self Government Amendment Ordinance 1966 which later became an Act was promulgated to validate the 1966 Rules
Section 19 of the Act provided that the amendments made to the Rules might be given retrospective effect limited to a period of one year from the commencement of the Ordinance
Thereafter the UP Palika Centralised Services Amendment Rules 1966 were passed by which r 6 was repealed and re enacted with retrospective effect from July 9 1966
Clause ii of r 62 empowered the State Government to pass a final order of absorption in respect of particular officers and servants of the erstwhile municipal boards if they were found suitable
Clause iii provided that such orders had to be made on or before March 31 1967
827 Since the work of final absorption could not be completed by March 31 1967 r 62 iii was amended shifting the date to June 30 1967
But this amendment having been made to come into effect from April 1 1967 the legal fiction created by cl
iv of r 6 that if no orders of final absorption were passed till March 31 1967 the officer or servant concerned was to be deemed to have been finally absorbed came into play
Clause iii was therefore again amended shifting the date of passing the order from March 31 1967 to August 31 1967
The rule was made with retrospective effect from July 9 1966
For the purpose of final absorption of all officers and servants who were found suitable in the two categories viz those appointed under section 577e and section 577ee of the Adhiniyam the State Government laid down a procedure
It constituted Divisional Committees for making necessary recommendations to the State Government
On January 11 1967 the State Government issued the first Circular stating that all officers and servants whose services were proposed to be determined on the ground of unsuitability might be given an opportunity of personal interview by the Divisional Committees
The Government divided the officers and servants into two categories those getting salary above Rs 500_ and those getting salary below Rs 500 and provided that cases of each category were to be dealt with at different levels
By this circular the Government re constituted the composition of the divisional Committees so far as the five municipal corporations which were created under the 1959 Adhiniyam were concerned and directed that these Divisional Committees should make selections for all Centralised Services except those whose starting salary was Rs 500 and above
The selection for this category was to be made by the State Selection Committee
With a view to secure a reasonable uniformity in the standards to be applied by the Divisional Committees in making the selection the third Circular dated February 23 1967 provided that the Committees should interview the official concerned to judge his suitability for absorption in the Centralised Services and that if it was proposed to declare an official to be unsuitable for absorption on the basis of adverse entries the Divisional Committees should afford an opportunity to the official concerned to appear before it and clear up his position
It was further provided that only those adverse remarks which were found to have been duly communicated to the official concerned might be considered against him
Thus the procedure laid down was this The recommendations of the Divisional Committees in respect of persons drawing salary less than Rs 500 would be scrutinised by the State Government in the Local Self Government Department and the necessary orders passed thereon while in respect of the second category officers drawing a salary above Rs 500 pm the Secretary to the Government Local Self Government Department would obtain the orders of the Minister concerned in passing the final orders
The appellant RA was a permanent Assistant Engineer in the Development Board Kanpur
Before the coming into force of the Adhiniyam he was appointed as officiating Executive Engineer and since then he continued to function in that capacity on a purely temporary arrangement under section 577ee
The appellant AH was a Sanitary Inspector in the Municipal Board Kanpur and 828 continued to hold that post
He was later promoted temporarily as Assistant Engineer and he stood provisionally absorbed under section 577e
Writ Petitions filed by the appellants and others challenging the vires of the Rules were dismissed by the High Court
On appeal to this Court it was contended that the appellants must be deemed to have been absorbed on March 31 1967 by virtue of the fiction contained in Cl
iv of r 62 as originally enacted because the amendment made to the Rule shifting the date of final absorption first from March 31 1967 to June 30 1967 and subsequently to August 31 1967 were legally ineffective and 2 that the impugned orders were vitiated on account of the failure of the State Government to afford to the appellants an opportunity of being heard
 HELD 1
a The validity of the two amendments made by the State Government in r 62 cannot be questioned
Although a rule cannot be made with retrospective effect the Legislature by enacting section 19 of the UP Local Self Government Amendment Act 1966 expressly conferred powers on the State Government to make retrospective rules
837 D
b It is well established that retrospective operation is not to be given to a statute so as to impain that existing right or obligation other than as regards matter of procedure
If the enactment is expressed in a language which is fairly capable of either interpretation it ought to be construed as prospective only
But where it is expressly stated that an enactment shall be retrospective courts will give it such operation
It is competent for the Legislature by retrospective legislation to make the provision contained in an carrier enactment ineffective
838 F G Quinn vs Prairiedate  referred to
c In considering the effect of repeal of an enactment followed by reenactment in the light of section 6 of the the line of enquiry would be not whether the new Act expressly keeps alive old rights and liabilities but whether it manifests an intention to destroy them
Any incompatibility in the provision has to be ascertained from a consideration of all the relevant provisions of the new law and the mere absence of a saving clause is by itself not conclusive
839 B C In the instant case by the introduction of the new fictional date of absorption as August 31 1967 there was a clear intention to destroy the earlier fictional date of March 31 1967
It would clearly be incompatible on consideration of subsequent amendments for both the provisions ie the original clause iii fixing March 31 1967 and the new clause iii fixing August 31 1967 to operate simultaneously
The effect of introduction of the new fictional date was to annihilate the earlier fictional date
The appellants therefore did not stand automatically absorbed by the failure of the State Government to pass the necessary orders by March 31 1967 as its powers stood extended by the subsequent amendment to August 31 1967
Before that date expired the State Government in both cases passed the necessary orders terminating the services of the appellants as they were not found fit for absorption
839 D F
829 2
a The entrustment to the State Government of the work of determining the suitability or otherwise of officers and servants of the erstwhile Municipal Boards and other local authorities for absorption in the newly created Centralised Services under section 112A imposed a corresponding duty or obligation on the Government to hear the officers and servants concerned
All such officers were therefore entitled to be heard in the matter of final absorption irrespective of their salary
841 A 843 F
b By virtue of the repealing provision contained in section 581 of the Adhiniyam 1959 the various Municipal Boards and other local authorities constituted under the relevant Acts ceased to exist as a result of which the existing posts held by the officers and servants in these bodies stood abolished
Consequent upon the abolition of the posts all the officers and servants of the erstwhile local bodies lost their right to hold their posts
The Adhiniyam however provided by section 577e and ee for provisional absorption or temporary appointment of these officers and servants till substantive appointments were made and these officers and servants were treated as on deputation with the Municipal Corporations
Therefore in the very nature of things the officers and servants provisionally absorbed under these sections could not be automatically absorbed in the newly created Centralised Services
There had to be screening of all of them for determining their suitability for final absorption in the Centralised Services
840 A B F c The very nature of the functions entrusted to the State Government under r 62 iii of the Rules implies a duty to act in a quasi judicial manner
Unless the State Government s orders conformed to the rules of natural justice the orders were liable to be struck down as invalid
840 G 841 B
d It is not correct to say that it is incumbent only on the Divisional Committees to give an opportunity of personal hearing and that the State Government was absolved of the duty to hear in respect of officers drawing Rs 500 and above
The first Circular dated January 11 1967 was all pervasive and the Government s policy was made quite clear in it
The second Circular dated January 31 1967 was equally subject to the Government policy
All the officers and servants of the erstwhile Municipal Boards and other local authorities were therefore entitled to be heard in the matter of final absorption irrespective of their salary
843 E A D
In the case of AH on an overall view of the records it cannot be said that the Divisional Committee was wrong in recommending to the Government to terminate his services
The Government was within its right in passing the impugned order of termination in regard to him
844 C In regard to RA before passing the impugned order of termination of services the Minister for Local Self Government did not give him an opportunity of a hearing
The procedure laid down in the Centralised Services Rules was not followed
The State Government could decide on the question of his absorption only after he was found fit but that has not been done
The order passed by the State Government therefore suffers from a serious legal infirmity
844 D F