Case: Municipal Committee, Amritsar &amp; Ors Vs. State Of Punjab &amp; Anr

"Power of local authorities to transfer management and control of aided schools to State Government - (1) A local authority may pass a resolution to transfer the management and control of aided school to the State Government and communicate the same to the State Government.(2) On receiving such a resolution, the State Government may direct that the aided schools shall be taken over under its management and control and thereafter all rights and interests including the right of maintenance, management and control shall be transferred to and vest in the State Government and the rights and interests of the local authority in respect of such schools shall cease."Power to take over aided schools where local authority neglects to perform duty. -(1) Wherever the State Government is satisfied that a local authority has neglected to perform its duties in respect of aided schools or that it is necessary in public interest to take over their management for a period not exceeding ten years, it may, after giving the local authority a reasonable opportunity for showing cause against the proposed action, make an order to take over the management:Provided that in cases of emergency, where the State Government is satisfied that such a course in necessary in the interests of the students, it may, without giving such notice, take over the management of such schools after publication of a notification to that effect in the Official Gazettee."(2) and"Amendment of Punjab Acts No. III of 1911 and No. XX of 1883. - Where a local authority has passed a resolution under Sec. 3 or the State Government has taken over management of aided schools of a local authority under Sec 5, the Punjab Municipal Act, 1911, and the Punjab District Boards Act, 1883, shall be deemed to have been amended in the manner specified in the Schedule appended to this Act with effect from the 1st October,52 (1) of the Punjab Municipal Act, relates to the setting apart of the municipal funds and apply the same for different purposes as mentioned in clauses (a) to (f). By means of the Schedule to the Act after clause (f) of sub-section (1), clause (g) was added which is in the followingseventhly, such sum to be paid annually by the committed to the State Government by way of contribution as is equivalent to :-(i) the total provision made in the budget for the year 1957-58 under the main head Education excluding educational grants and the provision made for original works relating to schools; and(ii) a sum representing one per centum of the total income from its own resources for the year 1957-58, in lieu of the deductions made for original works made under clause (i):Provided that in respect of the financial year 1957-58 the committee shall make a payment to the State Government of the sums which have remained unexpended on 31st March, 1958, out of the provisions under the head "Education" in the budget of 1957-58". Section 59 of the Punjab Municipal Act provides that the Committee may with the sanction of the State Government transfer to the Government any property vesting in the Committee under Section 56 or Section 57 but not so as to affect any trusts or public rights subject to which the property is held. A proviso was added to the section by the schedule which was as follows:-"Provided that where a committee has passed a resolution under Section 3 of the Punjab Local Authorities (Aided Schools) Act, 1959, or the State Government has taken over the management of aided schools of a committee under Section 5 of that Act, all rights and interests in the establishment, maintenance and management of the aforesaid schools immediately before the 1st October, 1957, including all interests in the lands, buildings, playgrounds, hostels of the said schools as also in the movable properties like furniture, books, apparatus, maps and equipment pertaining thereto shall be deemed to have been transferred to the State Government on that date, and all unspent balances in respect of grants and contributions received for the maintenance and promotion of there schools shall be deemed to have been surrendered to the Statethe promulgation of the above legislation the appellant Committee passed a resolution on February 24, 1960 reiterating the decision taken is the Local Bodies Conference held at Jullundur and its own decision to request the Punjab Government to restore the schools run by the local bodies to them. At another meeting held on June 9, 1960 the appellant Committee decided not to pass the resolution under Section 3 of the Act transferring its schools and property to the State Government. The Punjab Government, however, issued a notification dated September 26, 1960 saying that the Governor was satisfied that it was necessary in the interests of the students to take over for a period of ten years the management of the schools specified in the Schedule and administered by the Municipal Committee, Amritsar, and therefore in exercise of the powers conferred by exercise of the powers conferred by the proviso to Section 5 of the Act the Government took over for a period of ten years the management of the said schools. The schedule contained the list of 42 such schools. The question of the payment of the contribution which was being demanded by the Government came up for consideration at a meeting of the Appellant Committee on January 3, 1962. It was decided that the payment be made on the basis of formula laid down by State Government in that behalf with effect from October 1, 1957 but that the proprietary rights of the Committee in the school buildings be retained and the use of these buildings free of charge be allowed to the Government for the purpose of running the schools. At a subsequent meeting held on March 28, 1963, the appellant Committee, however, revised its previous decision in view of a resolution passed in the meeting of the Standing Committee of Urban Local Bodies Conference held on June 21, 1962. It was decided that the State Government was not entitled to charge contributions from the Municipal Committee. On April 10, 1964 the Deputy Commissioner, Amritsar, made an order in exercise of the powers vested in him under Section 234 (1) of the Punjab Municipal Act requiring the appellant committee to pay an amount of Rs. 53,66,146 on account of contribution for the maintenance of the provincialised schools for the period 1957-58 to 1963-64 failing which realization was to be made under sub-section (2) of that section. Thereupon the petition under Articles 226 and 227 of the Constitution was filed by the appellant Committee in which apart from other matters the validity and constitutionality of the Act were challenged. In the return filed on behalf of the State reliance was placed on the provisions of the Act, the resolution passed by the Committee itself on January 3, 1962 agreeing to pay the contribution and allow the use of school buildings to the Government free of charge and the notification which had been issued under Section 5 of the Act on September 26, 19 60 whereby the management of the schools of the Committee had been taken over for a period of 10 years.4. The High Court was of the view that since the Government had taken over the control and management of the aided schools it was considered necessary that the property in possession of these institutions should also be taken over and managed for a limited period of 10 years. Since no compensation was being paid for what may be called compulsory acquisition the legislation could be struck down as being in contravention of Article 31 (2) of the Constitution. In the present case, however, the management of the property in possession of the schools was being taken over for a period of 10 years in the public interest by virtue of the provisions of Article 31-A (1) (b) and the contravention of Article 31 (2) was of no consequence. The argument raised on behalf of the State that the resolution of the appellant Committee dated January 3, 1962 consenting to the payment of the contribution with effect from October 1, 1957 had been passed in terms of Section 3 of the Act was refuted. As regards the notification issued on September 26, 1960 under the Act the High Court was of the opinion that although it did not contain any provision for retrospective operation it should be considered that it had retrospective effect since the Act itself had been enforced from October 1, 1957. It was conceded before the High Court that the notification did not apply to those schools which did not receive any aid from the Government.

Court's reasoning:
7. Under the above Article it is only the management of any property which can be taken over for a limited period either in the public interest or in order to secure its properall deference to the High Court we have not been able to properly appreciate the decision on this point given in the paragraph extracted above. The High Court did not consider the true import and effect of the amendment made in Section 59 of the Punjab Municipal Act by virtue of which all rights and interests in the lands, buildings, playgrounds, hostels of the schools as also in the movable property like furniture, books, apparatus, maps and equipment pertaining thereto shall be deemed to have been transferred to the State Government with effect from October 1, 1957. We are, therefore, unable to uphold the view which leads to the result that property can be acquired while taking over management and control under Article 31-A (1) (b) in complete negation and contravention of Article 31 (2) of the Constitution.As regards the notification having retrospective operation we are unable to agree with the High Court that any such effect could be given to it. There is nothing to indicate in the notification that it was intended to operate retrospectively.The mere fact that the Act in terms was retrospective would not make the notification issued under the proviso to Section 5 retrospective in the absence of express words or appropriate language from which retrospectively would be implied. All that the notification says is that the Governor of Punjab is taking over for a period of 10 years the management of the schools of the Committee in exercise of the powers conferred by the proviso to Section 5 of the Act. This clearly means that the management is taken were from the date of the notification and not from any prior date. It would follow that whatever was done before the date of the notification regarding the assumption of management and vesting of the Committees properties was wholly void and illegal.11. Under Section 6 of the Act it is only after the local authority has passed a resolution under Section 3 or the State Government has taken over management of the aided schools under Section 5 that Sections 52 and 59 of the Punjab Municipal Act would be deemed to have been amended in the manner specified in the schedule with effect from October 1, 1957, or from the date aided schools are taken over as the case may be. If the notification dated September 26, 1960 could not be given retrospective operation, the amendments in the aforesaid provisions of the Punjab Municipal Act would be effective only after the date of the notification and not for the prior period. Thus even on the assumption that the provisions of the Act are valid the State could not ask for any contribution from the Committee for the period prior to the date of the notification.But the addition of Clause (g) after Clause (f) in sub-section (1) of Section 52 of the Punjab Municipal Act is void and wholly ineffective for the reasons which will be presently noticed.12. Chapter IV of the Punjab Municipal Act relates to municipal fund and property. Section 51 deals with the constitution of the municipal fund. Section 52 provides for the application of the fund. Before the amendment made by the Act sub-section (1) had six clauses containing the provisions for the application of the fund. It is noteworthy that although the State Government has been empowered to require the Committee to make contributions but in each case that is confined to an eventuality or a situation where certain cost has been incurred by the Government which had to be defrayed by the Committee, e.g, Clause (b), (d) and (f). According to Clause (e), however, the Committee may be required by the State Government to contribute towards the maintenance of pauper lunatics or lepers sent from any place in the State to mental has haspitals or public asylums whether in or outside the State. Sub-section (2) says that subject to the charges specified in sub-section (1) the municipal fund shall be applicable to the payable of the matters set out in Clauses (a) tothe context of Section 52 it is difficult to envisage that the municipal fund of a particular Committee could be diverted to such institutions which had no connection with the Committee. We are, however, not called upon to pronounce upon the true scope, ambit and validity of all the provisions in Section 52.Clause (g) which has now been inserted by means of Section 6 of the Act has to be tested by the guarantees in Part III of the Constitution. By asking the Committee to make contribution from its funds to the cost of the schools which have been taken over by the State part of its funds are being compulsorily acquired by the State.This is something which could not be done except in accordance with the provisions contained in Art. 31 (2) of the(g), therefore which has been inserted in Section 52 of the Punjab Municipal Act is void and illegal as it contravenes Article 31 (2) of the Constitution.Constitution.14. We may now determine the provisions of the Act which are unconstitutional and invalid. There is nothing in Section 3 (1), 4 and 5 of the Act per se which would bring them into conflict with the constitutional provisions, particularly,in view of Article 31-A (1) (b) under which the management of the schools could be taken over by the State for a limited period in public interest. But the difficulty arises about Sections 3 (2) and 6 which have to be read together. When the State Government makes a direction under Section 3 (2) that the aided schools shall be taken over all rights and interests of the Committee including the rights of maintenance, management and control shall be transferred to and vest in the State Government. This essentially has reference to proprietary and ownership rights apart from the rights pertaining to management and control. Section 6 comes into operation as soon as a local authority has passed a resolution under Section 3 or the State Government has taken over management under Section 5. Then the provisions relating to acquisition of property of the Committee as also of its funds by way of contribution come immediately into operation by virtue of the amendments effected in Section 52 (1) and 59 of Punjab Municipal Act. These provisions are clearly unconstitutional as they contravene Article 31 (2) of the Constitution.The next question iswhether there was due compliance with the provisions of the proviso to Section 5 of the Act.In the notification which was issued on September 26, 1960 there is no indication that the management of the schools was being taken over because of certain emergency having arisen. If any emergency existed it was the creation of the government itself which had proceeded to take over the management and control of the aided schools along with the properties pertaining to them without any authority of law prior to the enactment of the Act. That was the reason why the Act had to be given retrospective operation. According to the High Court the moment the State Government was satisfied that it was in the interest of the students to take over the management of the schools it became a case of emergency. It also relied on the principle that it was not necessary to mention the actual emergency which had arisen in the notification itself or to make a recital that an emergency had arisen.The State could not show by placing material before the Court that it was a case of emergency justifying the action under the proviso to Section 5 because no foundation in this behalf had been laid in the writ petition. The third point pressed by the learned Attorney General, therefore, cannot be acceded to.