IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.14120 of 2008 NAGAR PARISHAD, NARKATIAGANJ, WEST CHAMPARAN, THROUGH ITS CHAIRPERSON(NAGAR SABHAPATI), MRS. RASHMI VARMA, WIFE OF MR. ALOK PRASAD VARMA, RESIDENT OF ALOKVIHAR, WARD NO.22, NARKATIAGANJ, P.S. SHIKARPUR, DISTRICTS WEST CHAMPARAN. Versus 1. THE UNION OF INDIA THROUGH ITS SECRETARY, URBAN DEVELOPMENT GOVT. OF INDIA, NEW DELHI. 2. THE SECRETARY, URBAN DEVELOPMENT, GOVT. OF INDIA, NEW DELHI. 3. THE SECRETARY, MINISTRY OF FINANCE, DEPARTMENT OF EXPENDITURE, PLAN FINANCE-1 DIVISION, GOVT. OF INDIA, NEW DELHI. 4. THE JOINT SECRETARY, MINISTRY OF URBAN DEVELOPMENT, GOVT. OF INDIA, NEW DELHI. 5. THE CHIEF TOWN PLANNER, TOWN AND COUNTRY PLANNING, GOVT. OF INDIA, NEW DELHI. 6. THE DIRECTOR URBAN POVERTY ALLEVIATION, GOVT OF INDIA, NEW DELHI. …… RESPONDENT 1STSET. 7. THE STATE OF BIHAR, THROUGH THE CHIEF SECRETARY, GOVT. OF BIHAR, PATNA. 8. THE COMMISSIONER AND THE SECRETARY, DEPARTMENT OF URBAN DEVELOPMENT, GOVT. OF BIHAR, PATNA. 9. THE PRINCIPAL SECRETARY, DEPARTMENT OF URBAN DEVELOPMENT AND HOUSING, GOVT. OF BIHAR, PATNA. 10. THE ADDITIONAL SECRETARY-CUM-DIRECTOR, DEPARTMENT OF URBAN DEVELOPMENT AND HOUSING, GOVT. OF BIHAR, PATNA. 11. THE JOINT SECRETARY, DEPARTMENT OF URBAN DEVELOPMENT AND HOUSING, GOVT. OF BIHAR, PATNA. 12. THE DEPUTY DIRECTOR, URBAN POVERTY ALLEVIATION DIRECTORATE, DEPARTMENT OF URBAN DEVELOPMENT AND HOUSING, GOVT. OF BIHAR, PATNA. 13. THE CHAIRMAN, DISTRICT URBAN DEVELOPMENT AGENCY, BETTIAH, WEST CHAMPARAN. … RESPONDENT 2ND SET. 14. HINDUSTAN PREFAB LTD., THROUGH IT’S CHAIRMAN-CUM- MANAGING DIRECTOR, JANGPURA, NEW DELHI- 110014. 15. THE CHAIRMAN-CUM-MANAGING DIRECTOR, HINDUSTAN PREFAB LTD., JANGPURA, NEW DELHI- 110014. .. RESPONDENT 3RD SET. 16. THE PROJECT CO-ORDINATOR (BIHAR) HINDUSTAN PREFAB LTD., GRAND SHERE, FLAT NO. 303 (IST FLOOR, EXHIBITION ROAD, (XING), PATNA- 8000001. .. RESPONDENTS. With CWJC No. 14076 of 2008 2 NAGAR PANCHAYAT, ROSERA, SAMASTIPUR, THROUGH ITS MUKHYA PARSHAD, MRS. RENU DEVI, WIFE OF SRI ARVIND KUMAR SAHANI, RESIDENT OF WARD NO.14, MOHALLA- MAHABIR ASTHAN, P.S.- ROSERA, DISTRICTS- SAMASTIPUR. … PETITIONER. Versus 1. THE UNION OF INDIA THROUGH ITS SECRETARY, URBAN DEVELOPMENT GOVT. OF INDIA, NEW DELHI. 2. THE SECRETARY, URBAN DEVELOPMENT, GOVT. OF INDIA, NEW DELHI. 3. THE SECRETARY, MINISTRY OF FINANCE, DEPARTMENT OF EXPENDITURE, PLAN FINANCE-1 DIVISION, GOVT. OF INDIA, NEW DELHI. 4. THE JOINT SECRETARY, MINISTRY OF URBAN DEVELOPMENT, GOVT. OF INDIA, NEW DELHI. 5. THE CHIEF TOWN PLANNER, TOWN AND COUNTRY PLANNING, GOVT. OF INDIA, NEW DELHI. 6. THE DIRECTOR URBAN POVERTY ALLEVIATION, GOVT OF INDIA, NEW DELHI. …… RESPONDENT 1STSET. 7. THE STATE OF BIHAR, THROUGH THE CHIEF SECRETARY, GOVT. OF BIHAR, PATNA. 8. THE COMMISSIONER AND THE SECRETARY, DEPARTMENT OF URBAN DEVELOPMENT, GOVT. OF BIHAR, PATNA. 9. THE PRINCIPAL SECRETARY, DEPARTMENT OF URBAN DEVELOPMENT AND HOUSING, GOVT. OF BIHAR, PATNA. 10. THE ADDITIONAL SECRETARY-CUM-DIRECTOR, DEPARTMENT OF URBAN DEVELOPMENT AND HOUSING, GOVT. OF BIHAR, PATNA. 11. THE JOINT SECRETARY, DEPARTMENT OF URBAN DEVELOPMENT AND HOUSING, GOVT. OF BIHAR, PATNA. 12. THE DEPUTY DIRECTOR, URBAN POVERTY ALLEVIATION DIRECTORATE, DEPARTMENT OF URBAN DEVELOPMENT AND HOUSING, GOVT. OF BIHAR, PATNA. 13. THE CHAIRMAN, DISTRICT URBAN DEVELOPMENT AGENCY, BETTIAH, WEST CHAMPARAN. … RESPONDENT 2ND SET. 14. HINDUSTAN PREFAB LTD., THROUGH IT’S CHAIRMAN-CUM- MANAGING DIRECTOR, JANGPURA, NEW DELHI- 110014. 15. THE CHAIRMAN-CUM-MANAGING DIRECTOR, HINDUSTAN PREFAB LTD., JANGPURA, NEW DELHI- 110014. .. RESPONDENT 3RD SET. 16. THE PROJECT CO-ORDINATOR (BIHAR) HINDUSTAN PREFAB LTD., GROUND SHERE, FLAT NO. 303 (IST FLOOR, EXHIBITION ROAD, (XING), PATNA- 8000001. .. RESPONDENTS. With CWJC No. 8547 of 2008 1. RESHAM LAL PASWAN, SON OF KUSUM LAL PASWAN, RESIDENT OF MOHALLA WARD NO. 15, ARARIA, POLICE STATION AND DISTRICT ARARIA. 3 2. SANJAY KUMAR AKELA, SON OF JHULANAND JHA, RESIDENT OF VILLAGE WARD NO. 15, ARARIA, POLICE STATION AND DISTRICT ARARIA. 3. HASINA KHATOON WIFE OF MD. QURBAN ALI, RESIDENT OF MOHALLA GACHHI TOLA WARD NO. 24 ARARIA, POLICE STATION AND DISTRICT ARARIA. 4. MD. YASIN, SON OF HAKIMUDDIN, RESIDENT OF GACHHI TOLA WARD NO. 24, ARARIA, POLICE STATION AND DISTRICT ARARIA. … PETITIONERS. VERSUS 1. THE STATE OF BIHAR. 2. THE JOINT SECRETARY, URBAN DEVELOPMENT AND HOUSING, GOVERNMENT OF BIHAR, PATNA. 3. THE DISTRICT MAGISTRATE, ARARIA. 4. THE EXECUTIVE OFFICER NAGAR PARISHAD, ARARIA. .. RESPONDENTS. For the petitioners : M/s Y.V. Giri, Sr. Adv., Rajani Kant Mishra, Satya Vrat Verma, Advocates. For the State : M/s Lalit Kishore, AAG-I, Sr. Adv., Sanjay Kumar No.1, SC-12., Binay Kumar, AC to GP-13. For respondent nos.14 to 16(H.P.L) : Mr. Prabhat Ranjan Singh, Advocate. (In C.W.J.C. Nos.14120 of 2008 & 14076 of 2008) ----------- 22. 15.03.2011 These writ petitions were initially filed questioning the validity of paragraph-4 of letter No.603 dated 28.7.2008, Annexure-24 in C.W.J.C. No.14120 of 2008, whereunder the State Government directed the concerned Nagar Panchayat to transfer the grant received by the Nagar Panchayat for execution of Urban Infrastructure Development Scheme for Small and Medium Towns(hereinafter referred to as the UIDSSMT) to the District Urban Development 4 Agency. By filing I.A. No.587 of 2011 petitioners have further prayed to quash the contents of paragraph-2 of letter No.934 dated 22.12.2009, Annexure-1 of I.A. No.587 of 2011 filed in C.W.J.C. No.14120 of 2008, whereunder the State Government directed the concerned Nagar Parishad to transfer the grant received by the Nagar Parishad for execution of UIDSSMT to the Bihar Urban Infrastructure Development Corporation(hereinafter referred to as the BUIDCO). Petitioners are also aggrieved by the contents of paragraphs-1, 2 of letter No.1543 dated 25.3.2008, Annexure-17 in C.W.J.C. No.14120 of 2008, whereunder the State Government directed the Executive Officer of the different Nagar Parishad of the State to sink the hand pump through the contractors registered with the Public Health And Engineering Department of the State Government at site(s) chosen by the members of the Legislative Assembly/Council. Petitioners are also aggrieved by the agreement dated 24.9.2007, Annexure-10 executed by and 5 between respondent nos.9 and 14 of C.W.J.C. No.14120 of 2008, whereunder respondent no.14 was appointed as Executive Agency for implementation of the scheme under Integrated House and Slum Development Programme(hereinafter referred to as the IHSDP). Petitioners are also aggrieved by the contents of letters dated 22.1.2008, 17.4.2008, Annexures-13, 14 in C.W.J.C. No.14120 of 2008, whereunder they have been directed to execute the different schemes by inviting tenders. 2. In support of the aforesaid prayer learned counsel for the petitioners relied on the contents of the subsidiary agreement made between Bihar Urban Development Agency and the different petitioners as the said subsidiary agreement became part of the memorandum of agreement dated 6.3.2007, Annexure-7 in C.W.J.C. No.14120 of 2008 executed by and between Ministry of Urban Development, Government of India and the Department of Urban Development, Government of 6 Bihar and Bihar Urban Development Agency. Reference in this connection is made to the statement made in paragraph-19 of the writ petition. Perusal of the subsidiary, memorandum of agreement would indicate that the two agreements were executed for executing UIDSSMT through the municipality established in the light of the provisions of Article-243-W of the Constitution of India, which inter alia require municipality to function as institution of self Government for ensuring integrated development of the urban populace. In this connection, learned counsel for the petitioners further referred to the guidelines issued by the Government of India for execution of UIDSSMT, Annexure-5 in C.W.J.C. No.14120 of 2008 and submitted that perusal of paragraphs-13, 13.1.1 and Clause-(i), (vii) of paragraph-13.1.2 of the guidelines, Annexure-5 that the thrust of UIDSSMT is to ensure improvement in urban governance so that urban local bodies become financially sound with enhanced credit rating and 7 ability to access market capital for undertaking new programmes and expansion of services. It is further submitted that the memorandum, subsidiary agreement was entered into for achieving the objectives of the guidelines, Annexure-5. In terms of the memorandum, subsidiary agreement the grant was to be made available to the petitioners urban local body. In this connection, reference is made to Clause-1 of the memorandum of agreement, which provides that Department Of Urban Development, Government of Bihar shall release the first instalment of the grant to the petitioners through State Level Nodal Agency. With reference to Clause- 4 of the said agreement, it is submitted that having utilized the grant petitioners urban local body are required to submit quarterly report to the Ministry of Urban Development, Government of India through the State Level Nodal Agency. In case, urban local body fail to submit such report further instalment of grant may be withheld until such submission by the urban local body. Clause-4 of 8 the agreement requires the urban local body to submit audited account in respect of execution of UIDSSMT. Clause-VII of the agreement provides that State Level Nodal Agency shall institute mechanism to ensure timely completion of the project undertaken for execution of UIDSSMT. With reference to Clause-III of the subsidiary agreement, it is submitted that petitioners Urban Local body are enjoined to follow all rules, guidelines and notifications made by Bihar Urban Development Agency and State Level Sanctioning Committee in regard to grant of financial assistance, which is in accordance with the guidelines of UIDSSMT. 3. With reference to the aforediscussed clauses of the memorandum, subsidiary agreement learned counsel for the petitioners submitted that in terms of the two agreements petitioners urban local body are to follow the rules, guidelines and notifications issued by the Department Of Urban Development, Govt. of Bihar and Bihar Urban Development Agency, which is in consonance with 9 the guidelines of UIDSSMT, Annexure-5. It is submitted that impugned direction contained in paragraph-4 of letter No.603 dated 28.7.2008, Annexure-24, paragraph-2 of letter dated 22.12.2009, Annexure-1 to the interlocutory application to transfer the grant to the District Urban Development Agency/ Bihar Urban Infrastructure Development Corporation and the instructions contained in paragraphs-1, 2 of letter dated 25.3.2008, Annexure-17 to sink the hand pump at site(s) chosen by the members of the Legislative Assembly/Council is contrary to the aforediscussed clauses of the memorandum, subsidiary agreement, Annexure-7. 4. It is further submitted that the impugned direction of the State Government is contrary to the scheme of the Bihar Municipal Act, 2007(hereinafter referred to as the Act), whereunder municipality is to function as per the resolution of the Empowered Standing Committee of the municipality constituted under Section-21 of 10 the Act through the officers of the municipality or the officers of the State Government appointed for municipality. Execution of UIDSSMT is discharge of core municipal function provided under Section-45 of the Act. Grant received by the petitioners urban local body from the Central Government in terms of the memorandum, subsidiary agreement, Annexure-7 for execution of UIDSSMT is required to be spent as per the provisions of part-III, Chapters-IX, X of the Act. With reference to the provisions of Chapter-VIII of the Act, it is submitted that the impugned direction of the State Government to transfer the grant received by the petitioners urban local body for execution of UIDSSMT to the District Urban Development Agency/ BIUDC as also to sink hand pump at the site(s) suggested by the members of the Legislative Assembly/ Council is beyond the powers of the State Government to issue directions controlling the affairs of the urban local body provided under Chapter-VIII of the Act. In this connection, it is 11 pointed out with reference to Section-69 of the Act that if the State Government is of the view that the petitioners urban local body has shown incompetence or has persistently made default in performance of the duties and functions imposed on the municipality by or under the Act or any other law for the time being in force or has acceded or abused its powers or is unable to function under the provisions of the Act, the State Government may dissolve the municipality. In these matters the State Government has issued the impugned orders without acting under Chapter-VIII of the Act. 5. Learned AAG-I appearing for the State has opposed the submission. According to him the grant received by the urban local body from the Central Government under memorandum, subsidiary agreement, Annexure-7 is the financial assistance to the urban local body from the State Government. In terms of Sub-Section-(2) of Section- 72 of the Act, the State Government is empowered to formulate the scheme for availing of the grant by 12 the petitioners urban local body. The scheme framed under Sub-Section-(2) of Section-72 of the Act may also provide for conditions for release of the grant. The impugned direction to release the grant in favour of District Urban Development Agency/ Urban Infrastructure Development Corporation has been issued in terms of Sub- Section-(2) of Section-72 of the Act. In this connection, he also referred to Clause-III of the subsidiary agreement, whereunder petitioners urban local body has undertaken to follow all rules, guidelines and notifications made by the Bihar Urban Development Agency and submitted that the impugned direction to transfer the grant to the District Urban Development Agency/Urban Infrastructure Development Corporation has been issued with reference to the said clause and petitioners urban local body having accepted the grant are stopped from challenging the same. He also pointed out that during the pendency of these matters, the State Government amended the 13 provisions of the Act by enacting Bihar Municipal (Amendment) Act, 2009 and inserted following proviso after Sub-Section-(2) of Section-79 of the Act with effect from the date of enactment of the Act i.e. 5.4.2007, which is quoted hereinbelow for ready reference :- “Provided further that the State Government shall be competent to issue appropriate direction to urban local self-bodies for undertaking any scheme or project or any other work including identifying any agency for overall development of the urban area within the jurisdiction of such urban bodies irrespective of the source of the fund in respect of any item included in the twelfth schedule to the constitution of India. Proviso to Sub-Section-(2) of Section-79 shall be deemed to be included in Bihar Municipal Act, 2007(Bihar Act No.11 of 2007) with effect from the date of its enforcement and any action taken by the State Government shall be deemed to have been taken in exercise of power conferred under above proviso”. 6. Learned AAG-I further submitted that in terms of the newly added proviso, the State 14 Government is empowered to choose the agency for execution of UIDSSMT and this Court in appreciation of the legislative intendment of the newly inserted proviso should restrain itself from striking down the impugned direction to transfer the grant received by the municipality for execution of UIDSSMT to the agency chosen by the State Government i.e. District Urban Development Agency/Urban Infrastructure Development Corporation. 7. Having considered the submissions made on behalf of the parties, it is evident that memorandum of agreement dated 6.3.2007 was executed by and between Ministry of Urban Development, Govt. of India and Department of Urban Development, Govt. of Bihar. Bihar Urban Development Agency also joined the said memorandum of agreement along with department of Urban Development, Govt. of Bihar as State Level Nodal Agency for execution of UIDSSMT. Aforesaid memorandum of agreement is for development of 15 Urban Infrastructure of Narkatiaganj and other small and medium town(s) of the State. In terms of Clause-I of memorandum of agreement, Ministry of Urban Development, Govt. of India undertook to release the first instalment of the grant (50% of the central assistance) through State Level Nodal Agency to the urban local body i.e. the petitioners. Clause-IV of the memorandum of agreement require the urban local body i.e. the petitioners to spend the grant, corresponding matching state, share of urban local body and to submit quarterly report to the part-I i.e. Ministry of Urban Development, Govt. of India through the State Level Nodal Agency. In the event, urban local body failed to submit report further instalment of the grant may be withheld until submission of the report. Clause-III of the subsidiary agreement executed by and between Bihar Urban Development Agency and the petitioners require the petitioners to follow all rules guidelines and notifications issued by Bihar Urban Development Agency from time to 16 time, which is in accordance with the guidelines of UIDSSMT. Paragraph-13, 13.1.1 and Clauses-I, VII of paragraph-13.1.2. of the guidelines issued for execution of UIDSSMT provide that the main thrust of the revised strategy of urban renewal is to ensure improvement in urban governance so that urban local bodies become financially sound with enhanced credit rating and ability to access market capital for undertaking new programmes and expansion of services for the urban populace. Clause-IV of the subsidiary agreement require the petitioners urban local body to open a separate Bank account for each project in a commercial Bank for receipt and expenditure of the grant by the local body including its matching share for the project. Perusal of paragraph-4 of letter dated 28.7.2008, Annexure-24 and paragraph-2 of letter dated 22.12.2009, Annexure-1 to the Interlocutory Application indicate that thereunder the State Government directed the petitioners urban local body to transfer the grant received for execution of 17 UIDSSMT to the District Urban Development Agency/Bihar Urban Infrastructure Development Corporation, which is contrary to the contents of Clauses-I and IV of the memorandum of agreement and Clauses-III, IV of the subsidiary agreement, which inter alia provide for release of 50% of the grant(central assistance) to the urban local body with further responsibility on the urban local body to keep the grant and its matching share in a separate Bank account and to spend the grant, corresponding matching state, share of the urban local body and thereafter to submit quarterly report to the Ministry of Urban Development, Govt. of India through State Level Nodal Agency for release of the further instalment of the grant. In case, urban local body failed to submit such report further instalment of the grant may be withheld until such submission. It is thus quite evident that the impugned direction of the State Government to transfer the grant to the District Urban Development Agency/ BUIDC is contrary to the 18 aforediscussed clauses of the memorandum, subsidiary agreement. During the pendency of these matters before this Court, the State respondents amended the provisions of the Act by enacting Bihar Municipal (Amendment) Act, 2009, in terms whereof a proviso was inserted after Sub- Section-(2) of Section-79 of the Act with effect from the date of enactment of the Act, i.e. 5.4.2007. By inserting proviso after Sub-Section-(2) of Section-79 of the Act, the State Government became competent to direct urban local body to undertake any scheme, project or any other work including identification of the agency for execution of the scheme/work irrespective of the source of the fund. Aforesaid proviso inserted after Sub-Section-(2) of Section-79 of the Act empowering the State Government to issue direction to the urban local body for execution of the scheme including identification of the agency may be an assault on the autonomous functioning of the urban local body but such aspect of the matter cannot be 19 considered and examined in these proceedings as vires of the proviso inserted after sub-Section-(2) of Section 79 of the Act is not the subject matter of challenge in these writ petitions. The impugned direction of the State Government for execution of scheme framed under UIDSSMT by District Urban Development Agency/BUIDC is upheld with modification in the contents of paragraph-4, 2 of letter(s) dated 28.7.2008, Annexure-24 and 22.12.2009, Annexure-1 of I.A. No.587 of 2011 that the fund/ grant allocated to petitioners urban local body shall remain in the separate Bank account of the concerned urban local body as per Clause-IV of the subsidiary agreement. The urban local body shall release payment to the executing agency, BUIDC and submit quarterly report of the spending of the grant, corresponding matching state and share of the urban local body to the Ministry of Urban Development, Government of India through State Level Nodal Agency for obtaining further instalment of grant, as is envisaged under Clause- 20 IV of the memorandum of agreement dated 6.3.2007, Annexure-7. 8. So far direction of the State Government contained in letter dated 25.3.2008, Annexure-17 to sink hand pump from the funds of the State Government at sites recommended by the members of the Legislative Assembly/Council through the contractors registered with the Public Health and Engineering Department of the State Government is concerned, funds being released by the State Government, the State Government in terms of Section-72 of the Act is competent to issue direction about the manner in which the funds released by the State Government is to be spent. While directing the hand pump to be sunk at site(s) chosen by the members of the Legislative Assembly/Council the State Government is to appreciate that the members of the Legislative Assembly/Council are to discharge onerous functions of a Legislature and if they are involved in selecting the site(s) for sinking the hand pump, 21 they may not be able to do justice to the legislative functions for which they are primarily elected. Ward Commissioners are also elected representatives of the urban population and are better suited for discharging the municipal functions of choosing the site(s) for sinking the hand pump. The requirement that the contractors who are to be entrusted with the job to sink the hand pump should be registered with the Public Health and Engineering Department of the State Government is for maintaining the quality of the work executed by the contractors in sinking the hand pump. The contractors registered with the Public Health and Engineering Department of the State Government are expected to have necessary experience and expertise in sinking the hand pump and to ensure better quality of work by the contractor if the hand pump sinking work is entrusted to only such contractors who are registered with the Public Health and Engineering Department of the State Government, I do not see 22 any illegality in such direction. 9. Direction of the State Government issued to the urban local body contained in letter dated 22.1.2008, 17.4.2008, Annexures-13, 14 to execute the different schemes by calling for the tenders is also not required to be interfered with as execution of different schemes by the urban local body is to be made after providing all concerned adequate opportunity to participate in the selection process for choosing the executing agency, tender process for awarding the works contract for execution of the scheme subserves the requirement of providing adequate opportunity and fair play in selection of the agency. 10. With the observations aforesaid, the writ petition(s) are, accordingly, disposed of. AFR Rajesh/ ( V. N. Sinha, J.)