SCA/15782/2007 1/19 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 15782 of 2007 For Approval and Signature: HONOURABLE MR.JUSTICE JAYANT PATEL ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= MAHENDRABHAI .H. PATEL & 26 - Petitioner(s) Versus STATE OF GUJARAT THRO' GAURANG SHAH & 2 - Respondent(s) ========================================================= Appearance : MR BM MANGUKIYA for Petitioner(s) : 1 - 27. MR JOSHI Additional Advocate General with Mr. Dabhi AGP for Respondent(s) : 1, NOTICE SERVED for Respondent(s) : 1, RULE SERVED for Respondent(s) : 2, MR SHAILESH C SHARMA for Respondent(s) : 3, ========================================================= CORAM : HONOURABLE MR.JUSTICE JAYANT PATEL Date : 18/12/2007 ORAL JUDGMENT 1. With the consent of the learned Counsel SCA/15782/2007 2/19 JUDGMENT appearing for both the sides the matter is finally heard today. 2. The short facts of the case appear to be that the petitioners are employees of respondent No. 3 Municipality, and as per the petitioners formerly it was Vadnagar Nagar Panchayat, and now Vadnagar Municipality since 1994. As per the Director of Municipalities, since establishment expenses exceeded 45 percent in comparison to the revenue of the municipality in the accounting year 2004-2005 and 2006-2007, the show-cause notice was issued on 13.09.2006 by the respondent No. 2 Director of Municipalities as to why direction should not be given under Section 260 of the Act for dis-continuation of the benefits of the fifth pay commission. The municipality was heard and after considering the report of the municipality the respondent No. 2 passed an order on 27.12.2006 whereby exercise of power under Section 260 of the Act, the benefit of fifth pay commission is suspended/stayed. It is also observed that whenever financial condition of the municipality SCA/15782/2007 3/19 JUDGMENT is improved and the establishment expenses are within 45 percent, the matter shall be re- considered upon the proposal by the municipality for continuation of the benefits of the fifth pay commission. It may also be stated that as per the petitioners they had moved an application for being joined as party. However, they were not heard before the respondent No. 2. On 5.1.2007, the petitioners preferred an appeal against the order passed by respondent No. 2, before the State Government with the application for leave to prefer an appeal. As per the petitioners, on 6.1.2007, as the petitioners had the apprehension that the order passed by respondent No. 2 may be implemented, the matter was pursued for interim order. However, respondent No. 1 refused to grant stay, and since there was no decision in writing, the petitioners had to prefer writ petition being SCA No. 5624 of 2007 and in the said petition this Court (Coram: A.S. Dave,J.) vide order dated 9.3.2007, directed respondent No. 1 to decide the case within stipulated time limit. SCA/15782/2007 4/19 JUDGMENT But no action was taken and the petitioners had to move contempt petition being MCA No. 996 of 2007, in which the notice was issued by the Division Bench of this Court taking up the contempt matters. As per the petitioners in view of the initiation of the contempt proceedings, the revision/appeal which was preferred by the petitioners before the State Government, came to be decided ex-parte, and it is under these circumstances the petitioners have approached this Court. 3. I have heard Mr. Mangukiya learned Counsel for the petitioners and Mr. Joshi learned Additional Advocate General with Mr. Dabhi learned AGP for the State Authority. 4. As such on the aspect as to whether it is competent for the Director of the Municipalities to issue the direction under Section 260 of the Gujarat Municipalities Act (hereinafter referred as the 'act') to dis-continue the benefit of fifth pay commission to the employees/staff of the municipality in a given case, if the establishment expenses exceed 45 percent in SCA/15782/2007 5/19 JUDGMENT comparison to the revenue of the municipality, the matter is covered by the decision of this Court dated 27.11.2007, in case of V.N. Shah and others v. Director of Municipalities and others in SCA No. 13512 of 2007 and allied matters. In the said decision it was observed by this Court at paras 4, 5 and 6 as under: “4. It appears that the municipality had resolved for the conferment of the benefit of the fifth pay commission, and had continued the benefits for the year 2004-2005, and for the year 2005-2006, such benefit upon the staff of the municipality. However, since expenses of the establishment had gone above 45 percent and was not maintained up to 45 percent, the show-cause notice was issued by the Director of Municipalities, as to why the benefits conferred of the fifth pay commission should not be cancelled. The Director of Municipalities ultimately after hearing the municipality as well as concerned municipal employees- petitioners herein, passed an order dated 16.05.2007, whereby in view of the government resolution dated 9.11.1999, the action of the municipality is stayed with the retrospective effect for the year 2004-2005 and for the year 2005-2006, and it was also observed that if there is improvement in the financial condition SCA/15782/2007 6/19 JUDGMENT of the municipality, and the establishment expenses falls within the limit of 45 percent, the matter can be considered for reconferment of the benefit of fifth pay commission. It is the said order of the Director of the Municipality, which is under challenged in the present petitions. 5. It appears that the government has taken the policy decision for enabling powers of the municipality to confer the benefits in the cases where in comparison to the revenue of the municipality, the expenses are not exceeding 45 percent, and in case where the expenses are exceeding 45 percent, such benefits are to be discontinued. Essentially such is the policy of the State Government, and it appears that the object to be achieved is to maintain expenses of a particular limit in comparison to revenue of the municipality, and it may also add to the improvement of the efficiency amongst the staff for increasing the revenue of the municipality so as to maintain particular level of expenses in the municipality. In any case the said policy is not under challenged in the present proceedings. 6. It appears that the respondent No. 1 after taking in to consideration the record of the municipality has passed the order, and it is an admitted position that for the accounting year of 2004-2005, and 2005-2006 for the respondent No. 2 municipality the expenses did exceed 45 SCA/15782/2007 7/19 JUDGMENT percent, and they were 46.79 percent and 54.01 percent respectively. Therefore, if the Director of Municipality has taken decision based on the policy decision of the State Government, it cannot be said that any error is committed by the Director of the Municipality nor such error can be said as error apparent on the face of record. Even otherwise also conferment of the benefits of fifth pay commission as of right can not be asserted and it essentially is in the domain of the policy matter of the State or body concerned, for which the decision is to be taken objectively after taking into consideration the revenue available, the expenses to be incurred over amenities to be provided and day to day expenses etc., keeping in view of such public interest of the concerned citizens. But in any case the principle of natural justice are required to be followed, if any benefits are to be discontinued or to be withdrawn, which has been followed and the hearing has been given to the municipality as well as to the concerned employees.” 5. Therefore, in view of the aforesaid observation of this Court, when it is an admitted position that the establishment expenses, even in the present case have exceeded 45 percent, the direction by the Director of Municipalities under Section 260 of the Act, for the dis- SCA/15782/2007 8/19 JUDGMENT continuation of the benefit of fifth pay commission to the staff of the municipality cannot be said as arbitrary or unreasonable, since the same is in accordance with the policy decision of the State. 6. However, Mr. Mangukiya learned Counsel for the petitioners contended that the fact situation of the said case was different, and he attempted to distinguish by contending that the petitioners were formerly employees of the then Nagar Panchayat and in capacity of the municipal employees, in view of the Government Resolution, they were entitled to be at par with the other government employees for whom benefit of fifth pay commission is granted. Therefore, he submitted that merely because subsequently they were absorbed by the municipality, would not alter the status of the petitioners for continuation of the benefit at par with the government servant. Therefore, he submitted that the petitioners would be entitled to have the benefits of fifth pay commission continuously. He further submitted that when the petitioners SCA/15782/2007 9/19 JUDGMENT were absorbed in the municipality their pay and services were protected and therefore, now they cannot be altered by the Director of Municipalities. 7. The examination of the said contention shows that the petitioners were absorbed in the municipality on 15.04.1994, on account of the amendment in the Gujarat municipalities Act, so as to make in conformity with the constitutional amendment, and such Nagar Panchayats were converted into municipalities. As per the petitioners on 15.4.1994 they were absorbed in the municipality. It is not the case of the petitioners that the benefits of the fifth pay commission was conferred in the year 1994. Further such benefit was not in operation in the year 1994. Moreover all the petitioners for all purposes were absorbed in the municipality and they were treated as employees of the municipality. Not only that but it has been recorded by the Director of Municipalities in the impugned order that when the proposal was moved for conferring benefits of fifth pay SCA/15782/2007 10/19 JUDGMENT commission to the municipal employees, the undertaking was given by the representative of the municipalities that establishment expenses shall not exceed 45 percent. The said aspect is apparent from para 2 of the impugned order passed by Director of Municipalities. It is on account of the said undertaking given by the municipality the benefits of fifth pay commission were conferred on the municipal employees. In any case after absorption of the petitioners in the municipality, when the benefit is conferred upon the petitioners in capacity of the municipal employees, they would be governed by provision of the Gujarat Municipalities Act for all purposes including direction if any under Section 260 of the Act by respondent No. 2. Therefore, merely because they were formerly employees of the Nagar panchayat prior to 1994, and are absorbed by such municipality in the year 1994 would not be a valid ground to take different view than the view taken by this Court in the above referred decision, more particularly when the consistent SCA/15782/2007 11/19 JUDGMENT policy prevails for all municipal employees in the State. Therefore, the contention cannot be accepted. 8. Mr. Mangukiya learned Counsel for the petitioners next contended that no hearing whatsoever has been given by the Director of Municipalities-respondent No. 2 herein before passing impugned order dated 27.12.2006, which is adverse to the petitioners. He submitted that the petitioners who were municipal employees were directly affected by the direction under Section 260 of the Act and therefore, the order is in breach of the principles of natural justice and therefore void. 9. The Division Bench of this Court had occasion to consider the aspect of observance of principles of natural justice in matter when the Director of Municipalities has to issue the direction under Section 260 of the Act, to the municipality pertaining to the employment of the establishment. In the said case of Meman Aslam Hussain & Ors v. Director of Municipalities and Ors reported at 1994(1) GLR 446 the Director of SCA/15782/2007 12/19 JUDGMENT Municipalities had issued direction under Section 260 of the Act, for reduction of the staff and consequently the municipality had retrenched certain employees by following the direction under section 260 of the Act, and the decision of the Director of Municipalities and also of the Municipality for termination were under challenge. One of the contention was raised that opportunity of hearing was not given to the employees concerned before issuing direction under Section 260 of the Act. The Division Bench of this Court in the above referred decision observed at para 4 as under. “4. As far as the argument regarding principles of natural justice is concerned, it is to be noted that the Director is not empowered to issue directions in respect of a particular employee or employees and therefore, there is no question of giving any hearing to any individual employee. The Director merely takes an administrative or management decision which ordinarily should be taken by the Municipality itself, as to what should be the strength of the staff and what measures should be taken to reduce the excessive staff or prevent extravagant employment. When the Municipality SCA/15782/2007 13/19 JUDGMENT has failed to act in prudent manner, the Director is enabled to issue directions to the Municipality to achieve these purposes which are purely management functions and policy decisions. In taking such decisions, the Municipality is not required to give any hearing nor the Director is required to give hearing to any employee. The decision of the Director does not directly affect any particular employee. Therefore, there is no question of giving any hearing to such person and there is no violation of principles of natural justice. As far as the Municipality is concerned, it has been given a right of appeal against the direction of the Director, to the State Government.” 10.As per the view taken by the Division Bench of this Court, there is no question of giving any hearing to such person. Therefore, it cannot be said that there is any violation of principles of natural justice. This Court is bound by the decision of the Division Bench as per the principle of judicial discipline and therefore, the contention cannot be accepted. 11.Mr. Mangukiya learned Counsel for the petitioners attempted to submit that the decision is per incurium and the facts were different before the Division Bench, inasmuch as SCA/15782/2007 14/19 JUDGMENT it was the case of irregularly appointed person. Therefore, decision may not be applicable to the facts of the present case, and the instruction issued by the Director of Municipalities were general in nature. 12.As per the principles of judicial discipline and decorum the single Judge of this Court cannot rule over the decision of the Division Bench of this Court as per incurium and the same can rather be said only by equivalent bench of this Court. Further, the attempt made to distinguish the decision on the facts cannot be countenanced. In the said decision before the Division Bench the direction was issued by the Director of Municipalities for reduction of the staff to the municipality, which resulted in to termination and the retrenchment of the staff of the municipality, and while considering the challenge to termination order of the municipality based on the direction under Section 260 of the Act, of the Director of Municipalities, the matter came to be considered. Therefore, in view of the SCA/15782/2007 15/19 JUDGMENT observation made by the Division Bench at para 4 of of the said decision reproduced hereinabove, I cannot take a different view. 13.Mr. Mangukiya learned Counsel for the petitioners next contended that whether to raise revenue of municipality or not is essentially in the domain of the elected body, who is in power. Therefore, if municipality has not taken any action for raising the income by revision of the taxes or otherwise, the employee cannot be put at fault or cannot be made to suffer. Therefore, he submitted that the direction issued by respondent No. 2 under Section 260 of the Act cannot be sustained in the eye of law. 14.It deserves to be recorded that whether to confer the benefit upon the employee by way of revision of the pay scale or not is essentially policy decision of concerned institution or the body which is to be taken up objectively, keeping in view the revenue sources of fund, expenses to be incurred, the other facilities to be discharged by the municipality etc. When the policy decision was taken by the municipality SCA/15782/2007 16/19 JUDGMENT and the proposal was forwarded to the State Government/Director of Municipalities for permitting increase of pay scale by conferring benefit of fifth pay commission with the undertaking that the establishment expenses shall not exceed 45 percent, such policy decision can be said as conditional and dependent upon the financial position of the expenses not exceeding 45 percent of the establishment. Such proposal was sanctioned and pursuant thereto the benefit came to be conferred. Thereafter, as the establishment expenses have exceeded 45 percent undertaking is breached and in view of the said contingency, direction under Section 260 of the Act has been issued. Therefore, it is not the case where the employees are made to suffer on account of any lapse on the part of the elected body of the municipality, but is a case where the municipality moved the proposal and the sanction was granted by the competent authority upon particular condition of the undertaking and there is the breach of such condition. Therefore SCA/15782/2007 17/19 JUDGMENT the contention based on no income raised by the elected body is on mis-conception and therefore, cannot be accepted. 15.Mr. Mangukiya learned Counsel for the petitioner lastly contended that even before the revisional authority/appellate authority namely State Government, no opportunity of hearing has been given and the matter is decided ex-parte and therefore, he submitted that the said order in any case would result in to breach of natural justice. Therefore, this Court may consider the matter for rehearing and the decision afresh. He further submitted that the State Government has passed order in revision upon the document supplied by the Director of Municipalities respondent No. 2 herein, and the copy whereof was not supplied to the petitioners and therefore, he submitted that order of the State Government would be in breach of the principle of natural justice. 16.In view of the observation made by this Court in the earlier paragraph based on the Division Bench judgement of this Court, when the SCA/15782/2007 18/19 JUDGMENT petitioner in capacity as the municipal employee had no right to be heard, in case the direction was issued under Section 260 of the Act to respondent No. 2 municipality and when on facts it is an admitted position that the expenses have gone above 45 percent of the establishment in the accounting year of 2004-2005 and 2005- 2006, and when the decision of respondent No. 2, is in accordance with the policy of the Government, which has been not interfered by this Court in its above referred decision dated 27.11.2007 in case of V.N. Shah and others (supra), no useful purpose would be served in entertaining contention of no hearing given by the revision authority and to remand the matter to the State Government for hearing. Since the ultimate result has not prejudiced legal right of the petitioners, it would result into useless formality. Therefore, the said contention is not required to be examined. Further this Court on merits has found that the order passed by the Director of Municipalities dated 27.6.2006 is in accordance with and the said order dated SCA/15782/2007 19/19 JUDGMENT 27.06.2006 is also challenged in this petition. The very order was challenged in the revision/appeal before the State Government. Therefore, when the subject matter of appeal/revision before State Government is found legal and valid by this Court, no useful purpose would be served in remanding the matter to the State Government for decision afresh after giving opportunity to the petitioners. Hence, the contention of the petitioner is not entertained. 17.In view of the above, the petition is meritless and therefore, dismissed. Rule is discharged. (JAYANT PATEL,J.) Suresh*