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PETITIONER: STATE OF GUJARAT & ANOTHER

       Vs.

RESPONDENT: RAMAN LAL KESHAV LAL SONI & OTHERS

DATE OF JUDGMENT27/01/1983

BENCH: REDDY, O. CHINNAPPA (J) BENCH: REDDY, O. CHINNAPPA (J) VARADARAJAN, A. (J) CHANDRACHUD, Y.V. ((CJ) FAZALALI, SYED MURTAZA TULZAPURKAR, V.D.

CITATION:  1984 AIR  161            1983 SCR  (2) 287  1983 SCC  (2)  33        1983 SCALE  (1)66  CITATOR INFO :  F          1984 SC 385  (11,20)  MR         1985 SC 421  (79)  E&R        1987 SC 415  (16,17)  R          1987 SC1858  (22)  RF         1991 SC1047  (8)

ACT:      Gujarat Panchayat  Act, 1961-As  amended by the Gujarat Panchayat (Third  Amendment) Act, 1978-officers and servants of the panchayats - Whether Government servants.      Master   and    servant   relations-Tests    for    the determination of.      Constitution of India, 1950, Articles 14 and 311-Status of    Government     servant-If    could    be    determined retrospectively.      Interpretation-Legislature, if  has power  to take away or impair a constitutional right retrospectively.

HEADNOTE:      The  Gujarat   Panchayats  Act,  1961  was  enacted  to consolidate and amend the law relating to village panchayats and district  local boards  with a  view to  reorganise  the administration pertaining to local Government in furtherance of the  object of  democratic decentralisation  of powers in favour of  different classes  of panchayats. It was provided that the  state  Government  should  exercise  control  over panchayats  either  directly  or  through  such  officer  or officers as  it may  appoint for that purpose. The Panchayat organisation consisted of Gram Panchayats, Taluqa Panchayats and District  Panchayats which  are  bodies  corporate  with perpetual succession  and common  seal. Notwithstanding that they were  separate bodies  corporate, the panchayats formed part of  the panchayat  organisation set  up for  securing a greater measure  of participation by the people in the local governmental  functions.   They  were  enjoined  to  perform functions and  duties assigned  by or under the Act so as to conform to  the State  plans, National  plans and  the State policy in  general. The  State Government  was empowered  to cause inspection  to be made and to call for and examine the

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record of the proceedings of any panchayat. On the enactment of  the   1961  Act,  the  District  Local  Boards,  village panchayats and municipalities constituted under earlier Acts stood transformed  as District  Panchayats,  gram  or  nagar panchayats, depending  on population.  Officers and servants of the  District Local  Boards were deemed to be transferred to the  service of  the  district  panchayats,  Secretaries, Officers and  servants in  the employ  of  the  old  village panchayats became  Secretaries, Officers and servants of the new gram  panchayats and  h officers  and  servants  in  the employ of municipalities became Officers and servants of the interim panchayats. 288      The gram  panchayats were  entrusted with  the work  of looking after sanitation and health, public works, community development, agriculture,  preservation  of  forests  and  a number of  other subjects. They were entrusted with the work of collection  of  land  revenue  and  do  any  or  all  the functions and duties of village accountant or Patel or other similar functions  of any  other person  in relation  to the collection of  land revenue  and dues recoverable as arrears of land  revenue. Provision had been made in the Act for the transfer  to   the  District   Panchayats  of  such  powers, functions  and   duties  relating  to  any  matters  as  are exercised or  performed  by  the  State  Government  or  any officer of  the Government  under any  enactment  which  the State Legislature  is competent to enact or otherwise in the executive power of the State. The Act also provided that any functions  and   duties  relating  to  any  of  the  matters specified in  the panchayat functions list, previously being performed by  the State  Government, shall be transferred to the District Panchayats together with the funds provided and the staff  employed therefor. On such transfer, the District Panchayat may delegate, with the approval of tho Government, to any  panchayat subordinate to it any of the functions and duties so  transferred. A fund called the Gram Fund or Nagar Fund was  created and the proceeds of any tax or fee imposed by  or  assigned  to  the  Panchayat  under  the  Act,  sums contributed to  the fund  by the  State Government  and  all other sums  received by the Panchayat were to be credited in the fund.  The Act  provided for  appointment of a Secretary and such  other servants as may be determined for every Gram Panchayat and  Nagar  Panchayat  in  accordance  with  rules prescribed by  the Government.  Depending on  the facts  and circumstances of  a case,  the State  Government may  direct that a  group of  Panchayats shall  have one Secretary only. The Secretary and other servants were required to do all the administrative functions  as may be conferred on them by the Panchayat. The  Act provided that there shall be a Secretary for every  Taluqa Panchayat  and that the Taluqa Development officer who  shall be  an officer  belonging  to  the  State service and  posted under the panchayat, shall be ex-officio Secretary of the panchayat. The District Development officer posted under the District Panchayat was to be the ex-officio Secretary of the District Panchayat.      For the purpose of bringing about uniform scales of pay and uniform  conditions of  service-for persons  employed in the panchayats,  the Act  provided for the constitution of a panchayat service which was declared to be distinct from the State service.  Power was  given to  the State Government to determine from  time to  time classes,  cadres and  posts of officers and  their strength A servant belonging to district cadre was  liable to  be  posted  whether  by  promotion  or transfer, to  any post in any other cadre as provided in the rules. The  State Government  was empowered  to  make  rules

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regulating  the   mode  of  recruitment  either  by  holding examinations or  otherwise and  their conditions of service. Appointments to  posts in  the panchayat  service were to be made by direct recruitment or by promotion or by transfer of a member  of the State service to the Panchayat service. The Stale Government  was empowered to allocate to the Panchayat service the  requisite number  of officers  and servants who shall be  taken over  by the  panchayat in such cadre and on such tenure, remuneration and other conditions of service as the State Government may determine and the it expenditure on account of pay and allowances of officer and servants of the Panchayat was to be met from the funds of The panchayat. The Act enabled 289 the State  Government to  direct the  posting of officers of the Indian  Administrative Service  and of Class-ll services of the State Government in panchayat institutions. Provision was  made  for  the  constitution  of  a  Panchayat  Service Selection Board  and District  Panchayat  Service  Selection Committees for  selection of  officers and  other members of staff.      After the  coming into  force of the 1961 Act the State Government made  several sets of rules, one of which was the Gujarat Panchayat  Service (Absorption,  Seniority, Pay  and Allowances) Rules, 1965. The Rules provided for the equation of  posts,   fixation  of   seniority,  scales  of  pay  and allowances of "allocated employees". An "allocated employee" meant a person allocated to the panchayats service Under the rules every  allocated employee holding a corresponding post immediately before  the appointed  day shall be appointed to the equivalent  post, that  is,  a  post  in  the  Panchayat service, which the State Government may, by order, determine to be generally corresponding to a post held by an allocated employee  immediately   before  the  appointed  day  (called corresponding post) having regard to the pay scales, minimum educational and  other  qualifications  prescribed  for  the equivalent post  and the  corresponding post  and the nature and magnitude  of responsibilities  attached to  such posts. Therefore, unless  equivalence of posts was first determined by order  of the  State Government, the 1965 Rules could not be applied  The State  Government did  not  make  any  order regarding the  equation of  posts of  the staff in the local cadre and the fixation of their scales of pay, although such orders were  made in  respect of  posts of other cadres. The Government did  not extend  to the  staff borne on the local cadre, the  benefit of revision of scales of pay made on the basis of  the recommendations  of the  two Pay  Commissions, though such  benefit was extended to the District and Taluqa Cadres; nor  did the Government make any order providing for promotional avenues to employees of the local cadre.      Aggrieved  by  the  inaction  of  the  Government,  the employees of  the local cadre of the panchayat service filed a writ  petition in  the High Court seeking various reliefs. ’The Government  contended that  members  of  the  panchayat service  were  not  Government  servants  and  so  were  not entitled to claim the reliefs asked for by them.      Allowing the  petitions the  High Court  held that  the employees belonging  to  the  local  cadre  were  Government servants and  directed the State Government to make suitable orders under  the 1965 Rules to initially fix the pay scales and other conditions of service, lo revise the scales of pay in  accordance   with  the   recommendations  of   the   Pay Commission. Certain other reliefs were also given.      The State  Government filed  in this  Court  an  appeal against the,  judgment of  the High  Court. In the meantime,

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the Governor  promulgated the  Gujarat Panchayats  Amendment ordinance, 1978  which later  became the  Gujarat Panchayats (Third Amendment) Act, 1978.      The amending  Act of  1978 was  enacted to get over the effect of  the judgment  of the  High Court.  It denied  the status of  Government  servants  to  certain  categories  of employees and  their allocation to the Panchayat service was cancelled with retrospective effect. 290      In their  writ petitions  the employees  of  the  local cadre contended that the provisions of the Amendment, Act of 1978 were violative of Article 311 of the Constitution, that the Act was discriminatory and that the benefits acquired by them could not be taken away with retrospective effect.      In the  appeal it  was contended  that having regard to the various  provisions  of  the  Act  the  members  of  the panchayat service were Government servants.      Dismissing the appeal and allowing the petitions, ^      HELD: The  panchayat service  constituted under the Act is a  civil service  of The  State and  the members  of  the service are Government servants.                                                     [309 C]      It is  not possible to lay down any distinctive test to determine when  a person  may be  said to  hold a civil post under the  Government. The  presence of  all or  some of the factors such  as the  right to  select for  appointment, the right to appoint, the right to terminate the employment, the right to  take disciplinary action or determine the service, (he source from which wages or salary are paid and a host of such circumstances  may have  to be  considered to determine the existence of the relationship of master and servant.                                                   [ 306 B-D]      Gurugobinda Basu v. Sankari Prasad Ghosal, [1964] 4 SCR 311; State  of Uttar  Pradesh v. Audh Narain Singh, [1964] 7 SCR 89;  State of Assam v. Shri Kamakchandra Dutta, [1967] 1 SCR 679;  Gurushantappa v.  Abdul Khuddus, [1959] 3 SCR 425; S.L. Aggarwal  v. Hindustan  Steel Ltd.,  [1970] 3  SCR 363; Jalgaon Zilla  Parishad v. Duman Gobind and others, C.A. No. 24 & 25 of 1968 decided on December 20, 1968, referred to.      In  the  instant  case,  members  of  the  service  are required to  perform  functions  in  connection  with  those affairs of  the State  entrusted to the panchayats either by the Act  itself or  by transfer  by the Government-under the Act. It  may be  that the  pay and  other allowances  of the officers were  paid out of the panchayats’ own funds but the sums consisted  of funds  contributed or  lent by  the State Government and  of the proceeds of any tax or fee imposed by or assigned to the panchayats under the Act. This imposition of a  tax or  fee J  in the nature of a tax is essentially a function of  the State.  So the  salary  and  allowances  of servants and  officers are paid out of the funds contributed or lent  by Government  or raised  by the  discharge  of  an essential governmental  function. Officers  and staff are to be appointed  by an  authority prescribed  by the Government and  their   conditions  of  service  shall  be  as  may  be prescribed by  the  Government.  The  Act  contemplates  the constitution of  a single centralised panchayat service, the classes, cadres  and posts of which have to be determined by the Government  from time  lo time.  Such other  topics like recruitment, conditions  of . service, transfer, promotions, disciplinary action  to be  taken against  the officers  and servants  are   to  be   regulated  by  rules  made  by  the Government. There cannot be any question of a rule providing for promotion  from  the  panchayat  service  to  the  State

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service unless the panchayat service is also a service under the State. The provisions 291 relating to  inter district  transfers of  servants  of  the panchayat service and provisions which provide for promotion and transfer  of servants  belonging to the different cadres within the  District, Taluqa  and Gram  or  Nagar  panchayat clearly show that these servants are not the servants of the individual panchayat  but belong  to a  centralised service. The provision relating to transfer and allocation of members of the  State service  to the  panchayat service necessarily implies that  the panchayat  service is also a service under the State  and such  transfers would be impermissible unless the panchayat service is also a service under the State. The very idea  that there  can be an allocation to the Panchayat service from  a State  service and  a reallocation  from the panchayat service  to the  State service  is only consistent with the  panchayat service  also being  a service under the State.                                    [306 G-H, 307 A-H, 308 E]      The provision  under the Act that the panchayat service shall be distinct from the State service does not indicate a disclaimer by  the Legislature that the panchayat service is a service under the State; it is a distinct service from the state service  because the panchayat institutions constitute an  almost   parallel  but   subsidiary  Government.   Again Government servants  do not  cease to be Government servants merely because,  for the  time being,  they are allocated to different panchayat  institutions and  are paid  out of  the funds of  institutions  which  are  declared  to  be  bodies corporate. [308 F-H, 309 B-C]      G.L. Shukla v. State of Gujarat, 8 G.L.R. 833 approved.      The Gujarat  Panchayats (Third  Amendment) Act, 1978 is unconstitutional as  it offends  Articles 311  and 14 and is arbitrary  and   unreasonable.   The   provisions   are   so intertwined with  one  another  that  it  is  impossible  to separate the offending sections from the others. [320 E-G]      The  object   of   the   1961   Act   was   "democratic decentralisation of power and the consequent re-organisation of tho  administration of  local Government"  and even after the 1978  amendment this  object continued  to be  the same. Even so,  section 11  (1) which  declared that the different panchayats shall  constitute a  panchayat  organisation  was omitted. The  Statement of  objects and  reasons stated that the amendments were necessitated to get over the judgment of the High  Court that  the  panchayat  service  was  a  State service. That could not be a reason to go against the object of the  principal Act and to abandon the constitution of the State panchayat organisation [312 E-H]      The effect  of the  amending Act  was  that  non-Talati Secretaries and  other officers and servants of the Gram and Nagar panchayats were to be deemed to be the servants of the respective  panchayats   notwithstanding  the  judgments  of courts  declaring   them  to  be  Government  servants.  The District panchayats  were  barred  from  transferring  their staff  to  Gram  and  Nagar  panchayats  consequent  on  the delegation of functions, powers and duties to Gram and Nagar panchayats.  A   panchayat  service  consisting  of  persons employed in connection with the affairs of Taluqa panchayats and  District  panchayats  and  of  specified  servants  was constituted  notwithstanding   anything  contained   in  any judgment, decree  or order of any court and such persons and servants were  deemed to  have always  been the officers and servants of tho Taluqa panchayats or tho District panchayats for the ostensible reason

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292 of enabling  the respective  panchayats  to  exercise  their powers and  perform their functions efficiently. In so doing it omitted  the Gram  and nagar  panchayats which are at the very base  of democratic  decentralisation and  on which the superstructure stands. [314 C-H, 315 E-F]      Before  the  Amending  Act  of  1978  was  passed,  ex- municipal employees  who had been allocated to the panchayat service as  Secretaries, officers  and servants  of Gram and Nagar panchayats  had  achieved  the  status  of  Government servants. The  amending Act  hag done away with their status as members  of a service under the State without giving them an option. Retrospectivity is given in order that they could not claim that they were ever Government servants. But their status as  Government servants  could not be extinguished so long as the posts were not abolished and their services were not terminated  in accordance with the provisions of Article 311 of  the Constitution  nor was  it permissible  to single them out  for  differential  treatment  because  that  would offend Article 14 of the Constitution. [319 B-D]      There is  no force  in the  contention that some of the officers and  servants of the Gram and Nagar panchayats were Government servants  from the beginning while other officers and servants  of Gram and Nagar panchayats were not and that a classification  on the  basis of  source of their services was permissible.  Once they  had joined the common stream of service and performed the same duties, it is not permissible to make  any classification  on the  basis of  their origin. [319 D-E]      Undoubtedly, the  Legislature is competent to legislate with retrospective  effect to take away or impair any vested right but  since laws  are made under a written constitution and  have   to  conform  to  the  do’s  and  don’ts  of  the constitution neither  prospective nor retrospective laws can be made  so as  to  contravene  the  fundamental  rights.  A Legislature cannot  legislate  today  with  reference  to  a situation  that   obtained  20  years  ago  and  ignore  the constitutional rights  accured in  the course of 20 years. A law which,  if made  today,  would  be  plainly  invalid  as offending constitutional  provisions in  the context  of the existing,  situation  cannot  become  valid  by  being  made retrospective [319 G-H, 320 B, E]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal No. 359 of 1978.      Appeal by  Special leave  from the  Judgment and  order dated the  28th January,  1977 of  the Gujarat High Court in Special Civil Application No. 309 of 1975.                             AND      Writ Petition Nos. 4266-4270 of 1978.      (Under Article 32 of the Constitution of India)      V.M. Tarkunde,  Diranjan Mehta,  P.H. Parekh  and  Mrs. Manik Tarkunde  for the Petitioners in MPs. and R.R. 1-3 and in CA. 359.      D.V. Patel,  C.V. Subba  Rao, Dy.  Govt. Advocate, M.N. Shroff, G.N. Desai and R. N. Poddar for the Appellant in CA. 359 and RR 1 and 2 in WPs. 293      Vimal Dave and Miss Kailash Mehta for the Intervener in W.P.      Mukul Mudgal for Respondent No. 9 in CA. 359/79 and for Respondent No. 6 in WPs.

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    The Judgment of the Court was delivered by      CHINNAPPA REDDY,  J.  The  attitude  of  the  State  of Gujarat in  these cases  bas  indeed  left  us  puzzled  and wondering. On  the one  hand, there  are lakhs  of employees working under  various  Panchayat  Institutions,  call  them Government servants  or no,  to whom  the  benefits  of  the recommendations of  the two  Pay Commissions, the Sarela and the Desai Commissions, have been extended while on the other hand, there is a microscopic number (comparatively) of about six thousand  employees of the lowest category, also working under Panchayat Institutions, who are denied the benefits of those recommendations,  on the  sole ground of a birth-mark, if we  may so  call it,  since they  are denied the benefits because  before  they  came  to  work  under  the  Panchayat Institutions, they were employed in municipalities while the others  were   Government  servants   to  start   with.  The unfairness and  the injustice  of the distinction is patent, whatever legal justification may be put forward. Surely, the State,  dedicated  as  it  is  to  socialism,  equality  and economic justice and enjoined by the Directive Principles to secure the right to work, a living wage, equal pay for equal work and  so on  cannot make  such  a  distinction  But  the distinction has  been made;  it is sought to be sustained by those making  it and  we are  constrained to examine whether there is  any Constitutional  or other  legal sustenance for the distinction. We did request the Counsel for the State of Gujarat to  communicate with  his clients to find out if the benefits cannot  gracefully be  extended  to  the  erstwhile employees  of   municipalities   presently   working   under Panchayat Institutions  also. We are told that the answer of the State of Gujarat is in the negative.      The appeal  and the  Writ  Petitions  were  heard  once before by  a Constitution  Bench consisting  of Chandrachud, CJ, Sarkaria,  Untwalia, Kailasam and Venkataramiah, JJ. The opinion  of   the  Constitution   Bench  was  pronounced  by Venketaramiah,  J.,  on  July  13,  1980.  (The  opinion  is reported in [1981] 1 SCR 144), But on the application of the appellants, the opinion was set aside and the appeal and the Writ Petitions were directed to be set down for hearing once more by the Constitution Bench. That is how the matters have again come before us. 294      Pursuant to  the Constitutional mandate in Art. 40 that "the State  shall take  steps to  organise village panchayat and endow  them with  such powers  and authority  as may  be necessary to  function as  units  of  self-Government".  the State of  Gujarat enacted  the Gujarat  Panchayats Act  1961 (Act No.  VI of  1962) ’to  consolidate and  amend  the  law relating to  village Panchayats  and district  local  boards with a  view to  reorganise the administration pertaining to local  Government  in  furtherance  of  the  object  of  the democratic decentralisation of powers in favour of different classes of Panchayats’.      The  Gujarat  Panchayats  Act  1961  was  substantially amended in  1978 in  an attempt, as we shall presently point out, to  circumvent the  judgment of  the Gujarat High Court which is under appeal before us. The constitutional validity of the  Amending Act  is in  question in  the Writ Petitions which are before us.      We shall  first refer  to the provisions of the Gujarat Panchayats Act,  as they  stood before  they were amended in 1978. By  s. 11  (1) of  the Act,  as it originally stood, a Panchayat organisation  was constituted  for  the  State  of Gujarat, consisting  of Gram  Panchayats, Taluqa Panchayats, District  Panchayats,  Gram  Sabhas,  Nyaya  Panchayats  and

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Conciliation Panchas  lt is  provided by Section 11 (2) that the State  Government shall exercise control over Panchayats either directly  or through  such officer  or officers as it may appoint  for that  purpose. Local  areas  comprising  of revenue villages  or groups  of revenue  villages or hamlets forming parts  of revenue  villages or  other administrative units or  parts thereof  are to  be declared Grams under the Act, if  the population  of the  local areas does not exceed 10,000 and  Nagars if  the population  of  the  local  areas exceed 10,000  but does  not exceed 20,000. There is to be a Gram Panchayat  for each  Gram and  Nagar Panchayat for each Nagar. There  is also  to be  a Taluqa  Panchayat  for  each taluqa and  a  District  Panchayat  for  each  district,  as constituted from  time to  time under the Land Revenue Code. The  Gram   Panchayat,  the   Nagar  Panchayat,  the  Taluqa Panchayat and  the District  Panchayats  are  to  be  bodies corporate with  perpetual succession and common seal. Sec. 8 prescribes the  hierarchy and  provides that, subject to the control of  the  Government,  a  Gram  Panchayat  is  to  be subordinate  to   the  Taluqa  Panchayat  and  the  District Panchayat, while  a Nagar Panchayat and Taluqa Panchayat are to be  subordinate to the District Panchayat. While the Gram Panchayats, Nagar Panchayats, 295 Taluqa Panchayats  and District  Panchayats are to be bodies corporate, Sec.  287 makes it explicit that, notwithstanding that they  are separate  bodies  corporate  having  distinct territorial  jurisdiction   and  territorial   functions  to perform,  the  Gram  Panchayats,  Nagar  Panchayats,  Taluqa Panchayats and  District Panchayats  shall form  part of the panchayat organisation, set up for the purpose of securing a greater measure  of participation by the people of the State in  local   government  functions   and  shall  perform  the functions and duties assigned to them by or under the Act so as to  conform to  the State  plans, National  plans and the State policy  in general,  and also  so as to give effect to general or  special directions as may be issued by the State Government. Sec.  292 (A)  and Sec.  305 authorise the State Government to  cause inspection  to be  made and to call for and examine the record of the proceedings of any panchayat.      At this  juncture, we  may mention  that prior  to  the enactment of the Gujarat Panchayats Act, 1961, there were in force in  the State  of Gujarat the Bombay Village Panchayat Act, 1958,  the Bombay  Local Boards  Act, 1923,  the Bombay District  Municipal  Act,  1901  and  the  Bombay  Municipal Boroughs Act,  1925. The  Bombay Village  Panchayat Act 1958 and the  Bombay Local Boards Act, 1923 are repealed by Secs. 325 and  326 of  the Gujarat Village Panchayats Act, 1961. A local area declared to be a village under the Bombay Village Panchayats Act,  1958 and a Panchayat constituted under that Act, are  deemed to  be gram and panchayat under the Gujarat Gram Panchayats  Act. 1961. The Secretaries and all officers and  servants  under  the  employment  of  the  old  village Panchayats are  to be  Secretaries, officers and servants of the new  gram panchayats. A District Local Board constituted under the  Bombay Local  Boards Act  for a  local area is to stand dissolved.  All property  which stood  vested  in  the district local  board P immediately before the appointed day is to  be  deemed  transferred  to  the  district  panchayat constituted  for   the  local  area,  called  the  successor panchayat. All  officers and  servants in  the employment of the  District   Local  Board  are  similarly  to  be  deemed transferred to the service of the successor panchayat. Where local areas  are declared to be grams or nagars under Sec. 9 of the  Gujarat Gram  Panchayats Act,  1961 and  such  areas

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correspond  to   the  limits  of  a  municipal  district  or municipal borough under the Bombay District Municipal Act or Bombay Municipal  Borough Act, it is provided by Sec. 307 of the Gujarat  Panchayats Act that the municipality previously functioning in such local area shall cease to exist and that the councillors  of such  municipality shall  constitute  an interim 296 gram panchayat or interim nagar panchayat as the case may be for the gram or nagar. It is also provided that all officers and  servants   in  the   employment  of   the  municipality immediately before  the date  of declaration  of  the  local areas as  gram or  nagar, shall  be officers and Servants of the interim panchayat.      Thus broadly,  District Local  Boards under  the Bombay Local Boards  Act stand  transformed as District Panchayats, village panchayats  under the  Bombay Village Panchayats Act as gram  panchayats  and  municipalities  under  the  Bombay District Municipal  Act and Bombay Municipal Boroughs Act as gram or  nagar  panchayats,  depending  on  the  population. Officers and  servants in  the employ  of the District Local Boards are  deemed to  be transferred  to the service of the district panchayats;  Secretaries, officers  and servants in the employ  of the old village panchayat become Secretaries, officers and  servants of  new gram  panchayats and officers and servants in the employ of municipalities become officers and servants of interim panchayats.      To continue our tour of inspection (if one may use such an expression)  of the provisions of the Act, Sec. 88 of the Act empowers each gram panchayat to make, in the area within its jurisdiction,  and so  far as  the fund  at its disposal will allow,  reasonable provision in regard to all or any of the matters specified in Sch. I. Sch. I enumerates a host of matters under  the  heads  ’Sanitation  and  Health  ’Public works’, ’Education  and Culture’,  Self Defence  and Village Defence’,   ’Planning    and   Administration’,   ’Community Development,  Agriculture,   Preservation  of   forests  and Pasture Lands’, ’Animal Husbandry’, ’Village Industries’ and ’Collection of  Land P  Revenue’. Under  each of these heads innumerable  subjects   are  specified.  In  regard  to  the collection of land revenue express provision is further made by Sec.  149  that  the  Government  shall,  notwithstanding anything contained  in Land  Revenue Code  or any other law, entrust to  every Gram  Panchayat and every Nagar Panchayat, any or all of the functions and duties of village Accountant or Patel  or other  similar functions of any other person by whatever name  called, in relation to the collection of land revenue and  dues recoverable as arrears of land revenue and all other  functions and  duties of village Accountant under the Land  Revenue Code. Sec. 150 provides that the panchayat so entrusted  under Sec.  149 shall  be responsible  for the collection of  land revenue  and other  dues of  the gram or nagar as the case may be. 297      In addition to the functions enumerated in Sch. E. Sec. 89  imposes  certain  other  duties  and  functions  on  the panchayat. A  panchayat may,  for example,  carry out in the area within  the limits  of jurisdiction,  any other work or measure  which   is  likely   to  promote   health,  safety, education, comfort,  convenience or  social or  economic  or culture well-being  of the inhabitants of the area including secondary education.  A panchayat  is also required to carry out the  directions or  orders given  or issued from time to time by  the State  Government for  the amelioration  of the condition of  scheduled castes  and  scheduled  tribes,  and

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other backward classes.      Taluqa and  District Panchayats  are required  by secs. 117 and  137 respectively  to make  reasonable provision  in respect of  matters specified  in Schedules  II and  III. In Schedule II,  a number  of subjects are enumerated under the beads ’Sanitation  and Health’,  ’Communication’, ’Education and Culture’,  ’Social Education’,  ’Community Development’, ’Agriculture and  Irrigation’, ’Animal  Husbandry’, ’Village and  Small   Scale  Industries’,   ’Corporation’.   ’Women’s Welfare’,  ’Social   Welfare’,  ’Relief’,   ’Collection   of Statistics’,  ’Trusts’,   ’Forests’,  ’Rural  Housing,’  and ’Information’. ID  Schedule  III,  similarly,  a  number  of subjects are  enumerated under  the  heads  ’Sanitation  and Health’,  ’Public  Works’,  ’Education  and  other  Cultural Activities’,  ’Administration’,   ’Community   Development’, ’Agriculture’, ’Animal  Husbandry’, ’Village and Small Scale Industries’,   ’Social   Welfare’,   ’Relief’   and   ’Minor Irrigation Projects’.      Sec. 155  provides for  the transfer  of the  functions previously performed  by District  School Boards  under  the Bombay and  Saurashtra Primary  Education Act  to taluqa and district panchayats.      Sec. 156  provides for  the delegation  to district and taluqa panchayats  such powers  and functions  and duties of the Registrar  or  any  other  authority  under  the  Bombay Cooperative Societies Act, as may be specified.      Sec.  157   provides  for   the  transfer  to  District Panchayats of  such powers, functions and duties relating to any matters  as are  exercised or  performed  by  the  State Government or  any  officer  of  the  Government  under  any enactment which the State Legislature is competent to enact, or otherwise  in the  executive power  of the  State. On the transfer of  such functions, the Government is also required to allot to the District Panchayats such funds and personnel 297 as may  be necessary  to enable  the District  Panchayats to exercise the  powers and  discharge functions  and duties so transferred. Sec.  157 (2)  mentions the  subjects which  in particular may  be transferred  to the  District Panchayats. Sec. 157  (3) further  provides  that  on  the  transfer  of powers, functions and duties under sub-Sec. (I) and (2), the District Panchayat shall, if the State Government so directs and may  with  the  previous  approval  of  the  Government, delegate to  any panchayat  subordinate to  it  any  of  the functions, powers  and duties  so transferred  and allot  to such Panchayats  such funds and staff as may be-necessary to enable the  Panchayat to  discharge the functions and duties so delegated.      Sec. 158 provides that any function and duties relating to any  of the  matters specified in the Panchayat functions list, which  were previously  being performed  by the  State Government, shall  be transferred to the District Panchayats together with  the funds  provided and  the  staff  employed therefor. On  such  transfer,  the  District  Panchayat  may delegate, subject  to the approval of the Government, to any panchayat subordinate  to it any of the functions and duties so transferred.      Sec. 96  of the  Act authorises the State Government to vest in  a Panchayat  open sites,  waste, vacant  or grazing lands or  public roads, streets, bridges, ditches, dikes and fences, wells,  river banks, streams, lakes, nallas, canals, water courses,  trees or  any other  property in the gram or nagar.      Sec. 99  provides for  the creation  of gram  and nagar funds. Each gram and nagar is to have a fund called the Gram

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Fund or  the Nagar  Fund into  which are  to be paid, inter- alia, the  proceeds of any tax or fee imposed by or assigned to the panchayat under the Act, sums contributed to the fund by the  State Government  or the  Taluqa  Panchayat  or  the District Panchayat  and all  sums received  by way  of loans from the  State Government  or the  Taluqa Panchayat  or the District Panchayat  or out  of the District Development Fund or otherwise.      Sec. 119  vests in  the  Taluqa  Panchayat  every  road building and  other work constructed by the Taluqa Panchayat any land  or property transferred to the Taluqa Panchayat by the State Government and any land or property transferred by any  other   Panchayat.  Sec.  139  vests  in  the  District Panchayat every road 299 building or  other work  constructed by  the Panchayat,  any land or  property transferred to a District Panchayat by the State Government  and any land or other property transferred to the District Panchayat by any other Panchayat,      We may  now refer,  conveniently, at  this stage to the provisions relating  to services.  Sec.  102  provides  that there shall  be a  Secretary for  every gram  panchayat  and nagar panchayat,  who shall  be appointed in accordance with the rules.  Rules,  of  course,  have  to  be  made  by  the Government under  Sec. 323.  Sec. 102  also provides  that a gram panchayat  and nagar  panchayat  may  have  suck  other servants as  may be  determined under Sec. 203, who shall be appointed by  such authority  and with  such  conditions  of service, as  may be  prescribed.  ’Prescribed’  again  means ’prescribed by  rules’ and  rules have  to be  made  by  the Government. It is further provided that having regard to the population of  a gram  and its  income, the State Government may direct  that a  group of  gram panchayats shall have one Secretary only.  The Secretary  is required  to keep  in his custody all  records and  registers of the panchayats, issue receipts on behalf of the panchayats, prepare all statements and reports  required under  the Act  and perform such other functions and  duties, as  may be  prescribed under the Act. Other servants of the panchayat are required to perform such functions and  duties and  exercise such  powers as  may  be imposed or  conferred on  them by  the Panchayat, subject to any rules which may be made.      Sec. 122  provides that  there shall be a Secretary for every Taluqa  Panchayat  and  that  the  Taluqa  Development officer, who  shall be  an officer  belonging to  the  State service and  posted under  the panchayat,  shall be  the ex- officio  Secretary   of  the  panchayat.  Sec.  122  further provides that  the taluqa  panchayat shall  have such  other officers and  servants as  may be determined under Sec. 203, who may be appointed by such authority, with such conditions of service, as may be prescribed.      Similarly,  Sec.   142  provides   that  the   District Development officer  posted  under  the  District  Panchayat shall be the ex-officio Secretary of the District Panchayat. In addition, the District Panchayat shall have such officers and  servants,   as  may   be  determined  under  Sec.  203, performing such functions as may be prescribed and appointed by such authority with such conditions of service, as may be prescribed. We have earlier referred to Secs. 157 and 158 300 which provide for the allotment and transfer of staff to the District Panchayat  when functions  are transferred  by  the Government  to   the   District   Panchayats   under   those provisions. We  have already  referred  to  Sec.  326  which provides that all officers and servants in the employment of

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an existing  District Local  Board shall  be  deemed  to  be transferred  of   the  service  of  the  successor  District Panchayat.  We   have  also   referred  to  Sec.  325  which stipulates  that   the  Secretaries  and  all  officers  and servants in  the employ  of old village panchayats under the Bombay Village Panchayats Act shall be Secretaries, officers and servants  of the  new Gram  Panchayats. We  have further referred to  Sec. 307  which provides  that all officers and servants in  the employment  of municipalities  whose  local areas have  been declared as grams or nagars as the case may be, shall be officers and servants of the interim panchayats of such grams or nagars.      Sec. 203,  as it  stood before  it was amended in 1978, provided for the constitution of a Panchayat Service for the purpose of  bringing about uniform scales of may and uniform conditions of  service for persons employed in the discharge of functions  and duties of Panchayats. Such service, it was declared, shall  be distinct  from the  State  Service.  The panchayat service was to consist of such classes, cadres and posts and  the initial  strength of officers and strength of such classes  cadres and  posts was  to be such as the State Government might  determine  from  time  to  time.  District Panchayats  were  empowered  to  alter,  with  the  previous approval of the State Government, any class, cadre or number of posts  determined by  the Government.  The cadres were to consist of  district cadres, taluqa cadres and local cadres. A servant  belonging to  a district  cadre was  liable to be posted, whether by promotion or transfer, to any post in any taluqa or of the district. A servant belonging to the taluqa cadre was  liable to  be  posted  whether  by  promotion  or transfer to  any post  in any  gram or  nagar  in  the  same taluqa. A  servant belonging  to a local cadre was liable to be posted  whether by  promotion or  transfer to any post in the same  gram or  nagar. In  addition to  the posts  in the district taluqa  and local  cadres, a  panchayat might  have such other  posts of  such classes  as the  State Government may, by general or special order, determine such posts being called  ’deputation  posts’.  They  were  to  be  filled  in accordance with  the  provisions  of  Sec.  207.  The  State Government was  empowered to  make rules regulating the mode of recruitment  either by  holding examinations or otherwise and conditions 301 of service of persons appointed to the panchayat service and powers of  appointment, transfer  and promotion  of officers and servants  in  the  panchayat  service  and  disciplinary action against  such officers  and servants.  The rules were required to make provision entitling servants of such cadres in the  Panchayat Service to promotion to such cadres in the State service  as may  be prescribed.  The rules  were  also required to  provide for inter-district transfer of servants belonging to the panchayat service.      Subject to  the rules  made under Sec. 203, appointment to posts  in the panchayat service, Sec. 205 provides, shall be made by direct recruitment by promotion or by transfer of a member of the State service to the panchayat service. Sec. 206 obliges the State Government by general or special order to allocate  to the  panchayat service:  "(i) such number of officers  ar  d  servants  out  of  the  staff  allotted  or transferred to a panchayat under sections (157, 158 and 325) as it  may deem  fit, (ia)  all officers and servants of the municipalities dissolved  under Sec.  307, (ii) all officers and servants  in the  service of  district local  boards and district school  boards immediately before their dissolution under this Act and transferred to the panchayats under secs.

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155 and  326". It  is further  provided  that  officers  and servants so allocated shall be taken over by such panchayats in such  cadre and  on such  tenure, remuneration  and other conditions  of   service,  as   the  State   Government  may determine. Sec.  204 provides  that, subject  to  the  rules which the State Government may make, the expenditure towards the pay, allowances and other benefits allowed to an officer or servant  of the  panchayat service  serving for  the time being under  any panchayat  shall be  met by  that panchayat from its  own fund. Sec. 207 enables the State Government to direct  the   posting  of   officers   of   the   Indian   P administrative service and of Class II services of the State under panchayat  institutions. Sec.  208 enables a panchayat to obtain the services of any officer of Government on loan. Sec. 210  provides  for  the  constitution  of  a  Panchayat Services Selection  Board and  Sec.  211  provides  for  the constitution  of   District  Panchayat   Service   Selection Committees and  District Primary  Education Staff  Selection Committees.      The broad and general picture that we have on a perusal of the relevant provisions of the Act, as it stood before it was amended  in 1978,  is that the Gujarat Legislature aimed at the democratic decentralization of important governmental functions by vesting 302 such  functions   in  gram,   nagar,  taluqa   and  district panchayats (see Sec. 88 read with Sch. I, Sec. 117 read with Sch. II  and Sec.  137 read  with Sch. III) and, besides, by enabling the  State Government  to  transfer  other  powers, functions and  duties to  the  Panchayat  institutions  (see Secs. 89, 149, 150, 155, 156, 157 and 158). A perusal of the lists of  subjects entrusted  to the  Panchayat Institutions shows that  they are not merely the ordinary run of subjects entrusted to  municipal  bodies,  such  as,  public  health, sanitation,  etc,  but  they  include  a  great  variety  of subjects intimately  connected with all aspects of community life and  vital to  it, except  functions, such  as, law and order, administration  of justice and the like. Even part of the  revenue   administration  is   entrusted  to  panchayat institutions, as  evident from  the fact  that collection of land revenue  is one  of the  duties of  the gram panchayats under the  Act. Since  decentralisation was not to mean mere chaotic fission and confusion, a three-tier organisation was set up, subject to the overall control of the Government and it was  as if  a  parallel  but  subsidiary  or  subordinate Government was  set up by the Government itself to discharge some  of  its  functions.  Not  merely  were  the  panchayat institutions required  to discharge  governmental functions, the organisation  and its three-tier units were to have very close links  with the Government at every twist and turn, as it were.  The property  of the  panchayats  was  that  which previously belonged  to the Government but came to be vested in them  or  transferred  to  them  and  the  funds  of  the panchayats were  those to  be provided  substantially by way of. contribution  or loan  by the Government. The Government was not  only empowered  to make  the rules to carry out the objects of  the Act.  but also to issue directions from time to time  to all or any of the panchayats. The Government was also, empowered to cause inspection to be made and, further, to call  for the  proceedings of  the panchayat,  to satisfy itself as  to the legality or propriety of any order made by the Panchayat.  For the  purpose of  efficiently discharging the  functions   and  duties   of  the   various   panchayat institutions and  havining regard  to the  three-tier system which  had  been  established,  it  was  apparently  thought

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necessary to  constitute a panchayat service, the members of which  would   have  uniform   scales  of  pay  and  uniform conditions of  service. So  a single  centralised  Panchayat Service was  constituted which  was to be ’distinct from the State Service’. The distinction lay in that it was a service parallel to the State Service and not in that the members of the service were not Government servants. The question 303 whether the  members of the panchayat service are Government servants or  not is the principal question to be answered in the appeal and we will come bark to it again later.      After the  coming into  force of  the 1961 Act, several sets of  rules were  promulgated and  orders were made which concerned the  Gujarat Panchayat Service. One such order was that made  on January  2, 1967  under Sec. 203 (2) directing that the  Panchayat service shall consist of district cadre, taluqa cadre  and local  cadre and  further  specifying  the posts which  belonged to  each of  the cadres.  Amongst  the rules made  were the  Gujarat Panchayat Service (Absorption, Seniority, Pay.  and Allowances) Rules, 1965, which provided for the  equation of posts, fixation of seniority, scales of pay and  allowances  of  "allocated  employees".  "Allocated employees’  were  defined  in  the  rules  to  mean  persons allocated to  the panchayat  service under the provisions of Sec.  206  (i).  The  rules  provide  that  every  allocated employee holding  a corresponding  post, immediately  before the appointed  day, shall  be appointed  to  the  equivalent post. Equivalent  post is  defined to  mean a  post  in  the panchayat service, which the State Government may, by order, determine to be generally corresponding to a post held by an allocated employee  immediately  before  the  appointed  day (called corresponding post) having regard to the pay scales, the minimum  educational and other qualifications prescribed for the  equivalent post  and the corresponding post and the nature and  magnitude of  responsibilities attached  to such posts. Therefore,  unless  equivalence  of  posts  is  first determined,  by   order,  by   the  Government  the  Gujarat Panchayat Service  Absorption Seniority  Pay and  Allowances Rules, 1965  cannot be  effectively applied.  Even  so,  the State Government  did not  make any order regarding equation of posts of the staff in the local cadre and the fixation of their scale  of pay,  although  such  orders  were  made  in respect of  posts of  other cadres. The State Government did not also extend to the staff borne on the local cadre of the panchayat service  the benefit of revision of scales of pay, etc. which  were made on the basis of the recommendations of the two Pay Commissions, though such benefit was extended to the District  and Taluqa cadres; nor did the Government make any order  providing for promotional avenues to employees of the local  cadre. Aggrieved  by the deaf ear turned to their representations, certain ex-municipal employees now included in the  local cadre of the Panchayat Service, for themselves and on behalf 304 of other  ex-municipal employees  now in  the local cadre of the Panchayat  Service, filed  a Writ  Petition in  the High Court of  Gujarat seeking various reliefs. The Writ Petition was resisted  by the  State of  Gujarat and  the Development Commissioner on the principal ground that the members of the Panchayat  Service   were  not   Government   servants   and therefore, they were not entitled to claim the reliefs asked by them. The High Court of Gujarat allowed the Writ Petition holding that  the members of the panchayat service belonging to the local cadre were Government servants and directed the State Government .

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         "(1) To  make suitable  orders under  the  Gujarat      Panchayat  Service   (Absorption,  Seniority,  Pay  and      Allowances) Rules,  1965 as  regards the equivalence of      posts, fixation  of pay scales for such posts, fixation      of  the   petitioners  and  the  person  to  whom  they      represented an appropriate stage in such pay scales and      other incidental  matters covered by the said rules and      to  give  effect  to  such  orders  from  the  date  of      allocation of the petitioners and the persons whom they      represent to  the Panchayat  Service, that  is to  say,      from February 11, 1969.           (2) To initially fix the pay scales and allowances      and other conditions of service, including the grant of      house rent  allowance,  compensatory  local  allowance,      leave benefits,  medical benefits, retirement benefits,      etc. Of  the petitioners  and  the  persons  whom  they      represent in  the equivalent  posts  in  the  Panchayat      Service in  accordance p  with the  provisions  of  the      Gujarat Panchayats  Service (Absorption, Seniority, Pay      and Allowances)  Rules, 1965 and simultaneously give to      them   the    benefit   of   such   of   the   accepted      recommendations of  the First  Pay  Commission  (Sarala      Commission) in the said matters as were extended to the      other officers  and servants  of the Panchayat Service;      alternatively, having  initially fixed  the pay scales,      allowances and  other  conditions  of  service  in  the      equivalent post  in accordance  with the said rules, to      revise  subsequently   such  pay   scales   and   other      conditions   of    service   as    per   the   accepted      recommendations of  the First  Pay  Commission  (Sarala      Commission)  in  the  said  matters  with  effect  from      February 11, 1969. 305           (3)  To   further  revise   the  pay   scales  and      allowances and  other conditions  of service, including      the grant  of house  rent allowance, compensatory local      allowance, leave benefits, medical benefits, retirement      benefits, etc.  of the  Second  Pay  Commission  (Desai      Commission) in  the said  matters and to give effect to      such revision on and with effect from January 1, 1975.           (4) To  extend to  the petitioners and the persons      whom they  represent the  benefit of  interim relief in      the same  manner in  which such benefit was extended to      the  other  officers  and  servants  of  the  Panchayat      Service.           (5) To pay to the petitioners and the persons whom      they  represent   the  amount  payable  to  them  as  a      consequence of  the rationalisation  or revision of pay      scale and allowances and other conditions of service in      pursuance of the directions contained in clauses (I) to      (4) hereinabove.           (6) To  consider the  question of  making suitable      provisions in the Gujarat Panchayats Service (Promotion      to Cadres  in State  Service) Rules, 1974 or by framing      appropriate Rules  for promotion  of  the  ex-municipal      staff of the Panchayat Service to consider the question      of providing  to such  staff,  by  framing  appropriate      rules, pro  motional avenues to the other two cadres in      the Panchayat Service, namely, the taluka cadre and the      district cadre".      The State  Government and  the Development Commissioner have filed the appeal which is now before us. But during the pendency of  the appeal,  in an  effort to undo the basis of the decision  of the  High Court,  the Governor  of  Gujarat promulgated  the  Gujarat  Panchayats  Amendment  ordinance,

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1978,  later  replaced  by  the  Gujarat  Panchayats  (Third Amendment) Act,  1978. The  constitutional validity  of  the Amending Act  is questioned in the Writ Petitions by the ex- municipal employees now included in the local cadre.      The appeal  was argued first as if the Amending Act had not been  passed and  the main question argued in the appeal was whether  the  members  of  the  Panchayat  service  were Government servants. The Writ Petitions were argued next and the question  argued in  the Writ  Petitions was  about  the constitutional validity of the Amending Act. 306      We have  to first  consider the  question  whether  the members of  the Gnjarat  Panchayat  Service  are  Government Servants. Earlier  we have  already said  enough to indicate our view  that they  are  Government  Servants.  We  do  not propose and indeed it is neither politic nor possible to lay down any  definitive test  to determine when a person may be said to  hold a  civil post  under the  Government.  Several factors may indicate the relationship of master and servant. None may  be conclusive. On the other hand, no single factor may be  considered absolutely essential. The presence of all or some  of the  factors, such  as, the  right to select for appointment, the  right to  appoint, the  right to terminate the employment, the right to take other disciplinary action, the right to prescribe the conditions of service, the nature of the  duties performed  by  the  employee,  the  right  to control the  employee’s manner  and method  of the work, the right to issue directions and the right to determine and the source from  which wages  or salary  are paid  and a host of such circumstances,  may have  to be considered to determine the existence  of the relationship of master and servant. In each case,  it is  a question  of fact whether a person is a servant of  the State or not. Amongst the cases cited before us were  Guru Govinda Babu v. Sankar Prasad Ghosal(1), State of Uttar Pradesh v. Audh Narasin Singh(2), State of Assam v. Shri Kanakchandra Dutt(3), Gurushantappa v. Abdul Khuddus(4) S.L. Aggarwal  v. Hindustan  Steel Ltd.(5)  and Jalgaon Zila Parishad v.  Duman Gobind  and others(6). We have considered all of  them and  do not  consider it  necessary to refer to each of them.      We may  now revert  to the question whether the members of the  Gujarat Panchayat  Service are  Government servants. First, we  see that  the duties  which they  are required to perform are  in connection  with those  affairs of the State which are  entrusted to  the Panchayat  Institutions, by the statute itself  or by  transfer by  the Government under the statute. Next, the expenditure towards the pay and allowance of officers  and servants  of the panchayat service, serving for the  time being under any panchayat has, no doubt, to be met by  the panchayat  from its  own fund,  but, as  we have seen, the 307 fund consists  substantially of  sums contributed or lent by the State  Government and  of the proceeds of any tax or fee imposed by  or assigned  to the panchayat under the Act. The imposition of  a tax  or a fee in the nature of a tax, as we know, is  essentially a function of the State. So the salary and allowances of the servants and officers of the panchayat service are  paid out  of funds  contributed or  lent by the Government or  raised  by  the  discharge  of  an  essential governmental  function.   Secretaries  of   Gram  and  Nagar Panchayats are  to be appointed in accordance with the rules made by the Government, while the Taluqa Development officer is to  be the  Secretary of  the Taluqa  Panchayat  and  the District Development  officer is  to be the Secretary of the

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District Panchayat. Taluqa and District Development officers are, of  course, officers  of the  State service.  Gram  and Nagar  panchayats   may  have  other  servants,  as  may  be determined under  Sec. 203, but they have to be appointed by such authority  as may  be prescribed  by the Government and their  conditions  of  service  shall  be  such  as  may  be prescribed by  the Government.  Sec. 203, as already noticed by us, contemplates the constitution of a single centralised Panchayat Service,  the classes,  cadres and  posts of which have to  be determined  by the Government from time to time. The  mode   of  recruitment,   whether  by   examination  or otherwise, the  conditions of  service the powers in respect of appointments,  transfers and  promotions of  officers and servants and  disciplinary action which may be taken against them,  are  to  be  regulated  by  the  rules  made  by  the Government. The  rules so  made are particularly required to contain "a  provision entitling  servants of  such cadres in the panchayat  service to  promotion to  such cadres  in the State service, as may be prescribed: vide Sec. 207 (4) (a). this is an important provision. There cannot be any question of a rule providing for promotion from the panchayat service to the 17 State service unless the Panchayat Service is also a service  under the State. Again Sec. 203 (5) requires that rules may  provide for  inter-district transfers of servants belonging to  the panchayat service and the circumstances in which and the conditions subject to which such transfers may be made This provision along with the provisions of Sec. 203 which provide  for the  promotion and  transfer of  servants belonging to  the district,  taluqa and  local cadres within the district  taluqa and gram or nagar clearly show that the servants are  not the  servants of the individual panchayats but belong  to a centralised service. Sec. 205 provides that appointments to posts in the Panchayat service shall be made (i) by  direct recruitment,  (ii) by  promotion or  (iii) by transfer of  a member  of the State service to the Panchayat service. This provision which enables an appointment to be 308 made to  a post  in the  Panchayat Service  by transfer of a member of  the State  service necessarily  implies that  the panchayat service  is also  a service under the State. Secs. 157 and  158 provide  for the  transfer of certain functions performed  by   the  Government  to  Panchayat  Institutions together with  funds and staff. Sec. 325, as we have already seen, provides  that secretaries,  all officers and servants in  the   employ  of   old  village   panchayats  shall   be secretaries,  officers   and  servants   of  the   new  gram panchayats. It  is not  disputed that  Talaties and Kotwals, who were  Government  Servants,  were  the  Secretaries  and officers of  old village  panchayats. Now,  Sec. 206 (1) (i) provides for the allocation to the Panchayat service of such number of officers and servants out of the staff transferred to the  panchayat under  Sec.  157,  158  and  325,  as  the Government may deem fit. Sec. 206 (1) (iii) further provides for the  allocation to  the Panchayat  service of such other officers and  servants employed  in the state service as may be  necessary   to  enable   the  panchayats   to  discharge efficiently  their  functions  and  duties  under  the  Act. Obviously this  transfer and  allocation of members of State services to  the Panchayat  service under Sections 157, 158, 325, 206  (1) (i)  and 206  (l) (iii)  will be impermissible unless the  Panchayat service  is also  a service  under the State. Otherwise,  there would  be a patent violation of the provisions of  Art.  311  of  the  Constitution.  Sec.  206A authorises a  review of  allocation within  a period of four years  and  reallocation  to  the  State  service  of  these

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transfers under  Sections 157  and 158.  The very  idea that there can  be an  allocation to the Panchayat Service from a State service  and a reallocation from the Panchayat Service to the  State Service  is only consistent with the Panchayat Service also being a service under the State.      Considerable stress  was laid  by the  Counsel for  the State of  Gujarat on  the statement  in Sec.  203 that  such service (Panchayat Service) shall be distinct from the State service. We  do not  think this  is to  be interpreted  as a disclaimer by  the Legislature that the Panchayat service is a service  under the State. All that it can possibly mean is that the  Panchayat service  is not  a service  which can be identified with  other State  Services for  the reason  that while  the  Panchayat  service  too  discharges  the  duties connected with  the affairs  of the  State, it  does so  not directly under  the State  but under  the various  Panchayat Institutions to  whom are  delegated or  transferred certain functions of  the State  Government.  Panchayat  Service  is distinct  from   a  State   Service  because  the  Panchayat institutions whom  it serves  together constitute  an almost parallel but subsidiary Government. It is only in that sense Panchayat Service is distinct from a 309 State Service  and not  in the  same  that  members  of  the service are not servants of the State.      It  is   also  argued   that  the   several   Panchayat Institutions are  declared to be bodies corporate by the Act and,  therefore,   their  servants   cannot  be   Government servants. We  are unable to see any force in the submission. Government servants  do not  cease to be Government servants merely because,  for the  time being,  they are  allotted to different Panchayat  Institutions and  are paid  out of  the funds of  those institutions.  We have already explained why the  servants   belonging  to  the  various  cadres  of  the Panchayat service  cannot be  considered to  be servants  of individual panchayats.  It  is  unnecessary  to  pursue  the matter further.      We are,  therefore, of  the  view  that  the  Panchayat Service constituted under Sec. 203 of the Gujarat Panchayats Act is  a civil service of the State and that the members of the service  are Government servants. This very question had been decided  by the  High D  Court of  Gujarat more than 15 years back in G.L. Shukla and Anr. v.    The     State    of Gujarat(1) and  there appears  no good reason to depart from the view  then taken  by the  High Court.  Bhagwati J.,  who spoke  for  the  Court  had  said,  "The  Panchayat  Service contemplated under the Act is as much a civil service of the State as  the State Service. The legislature by enacting the Act  provided   for  the   establishment  of  the  Panchayat organisation  of   the   State   and   for   the   efficient administration of  the Panchayat  organisation, particularly in view  of the  fact that  a  large  part  of  the  service personnel would  be drawn  from different sources and would, therefore,  be  heterogeneous  in  composition  with  widely differing scales  of pay  and  conditions  of  service,  the Legislature felt  l? that  it would  be desirable  to have a separate civil  service of persons employed in the discharge of functions and duties of panchayats with uniform scales of pay and  uniform conditions  of service and, therefore, with that end  in view  the Legislature provided for constitution of the  panchayat service.  All the  provisions of  the  Act relating to  the panchayat  service point  unmistakably  and inevitably to  one and only one conclusion, namely, that the panchayat service  is one  single service  with the State as the master.  The panchayat  service is  to be constituted by

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the  State  Government  and  its  strength  is  also  to  be determined by  the State  Government. Sec.  203 subsec.  (2) says that  the  panchayat  service  shall  consist  of  such classes, 310 cadres and  posts and  the initial  strength of officers and servants in  each such  class and cadre shall be such as the State Government  may be  order from  time to time determine ............................................................ ............................................................ "The provisions of different cadres in the panchayat service and the transferability of persons employed in the panchayat service from  a post  in the district cadre to a post in any taluka in  the district  and from a post in the taluka cadre to a  post in  any taluka in the district and from a post in the taluka  cadre to a post in any gram or nagar in the same taluka emphasize  that the  panchayat service  is one single service  with   one  master,  namely,  the  State  and  each panchayat is  not the  master of the servant employed in the discharge of  its functions  and duties.  It is difficult to imagine  that  the  Legislature  should  have  provided  for transfer of servants from one master to another ............ ............................................................ "The mode  of recruitment,  the conditions  of  service  and matters relating  to appointments,  transfers and promotions of  persons  employed  in  the  panchayat  service  as  also disciplinary action  against them  are all determined by the State Government  and that is consistent only with the State being the  master  in  the  entire  panchayat  service.  The mandatory provision  for promotion from panchayat service to State service which is required to be made in the rules also shows that  both the  services are  services of  the  State. There could  be no question of promotion from one service to another if  the masters  in the two services were different. Then it  would be  a case  of termination of one service and appointment to another ..................................... ............................................................ "Then comes  Sec. 206  which provides for making of an order of allocation to the panchayat service ..................... ............................................................ "This provision  relating  to  allocation  of  officers  and servants under  clauses (i)  and (iii)  does not contemplate any termination  of service of such officers and servants or any fresh  appointment to a new service. There is no concept of termination  of the existing service and reappointment to a new  service involved  in the  process of  allocation: the concept is only of transfer from one service of the State to another without  any break  in the continuity cf service and that clearly  postulates that  both services  are under  the same master,  namely, the  State. Sec.  206A also reinforces this conclusion. It makes the initial allocation provisional and Permits the State to 311 review the allocation within a period of four years from 1st April, 1963 ................................................ "It is  not possible  to believe that the officer or servant could have  been intended  by the  Legislature to be treated like a  chattel which can be tossed about from one master to another. The  only reasonable  way of  looking at the matter seems to  be  and  that  conclusion  is  inevitable  on  the language of  these provisions, that the panchayat service is a civil  service of  State like’ the State service and since both the  services are  civil services of the State with the State as  the master  an officer or servant can be allocated from  the   State  service  to  the  panchayat  service  and

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reallocated from  the panchayat service to the State service ........................................................... "The conclusion  which emerges  from this discussion is that the panchayat service is a distinct and separate service set up for  serving the  Panchayat organisation of the State and it is  as much  a civil  service of  the State  as the State service. The  State can  have many  services such  as  State Service,  police   service,  engineering  service  etc.  and panchayat service  as one of them. In the panchayat service, as in  the State  service, the State is the master and every officer or  servant employed in the panchayat service is the servant of the State and not of the panchayat under which he may be  serving for the time being. The panchayat service is one single service with the State as the master."      We entirely  agree with  the above  observations of the learned Judge.      It was  argued that the High Court was wrong in issuing directions for equation of posts, revision of pay scales and payment of  salaries. We  do not  think that  the High Court committed any  error in  issuing the  directions which  were consequential to  its findings.  The High Court had directed the State Government to discharge its statutory duty to make orders for  the equation of posts and to extend the benefits arising out of the reports of the two Pay Commissions, which benefits bad been denied to the local cadre only. The obligation to  make provision  for the  payment of salaries, allowances and other benefits to Government servants did not cease by  their being  allocated to  Panchayat Institutions, notwithstanding that  Sec. 204  places an  obligation on the Panchayat under  whom an officer or servant of the Panchayat service  may   service  for  the  time  being  to  meet  the expenditure  towards   the  pay,   allowances  and  benefits available to  such officer  or servant.  We do  not have any doubt that  the case was correctly decided by the High Court and 312 that the appeal deserves to be dismissed with costs which we quantify at Rs. 15,000.      We then  come to the Writ Petitions. As mentioned by us earlier the  Gujarat Panchayats  Act was  amended during the pendency of the appeal in an effort to nullify the effect of the  judgment   of  the   Gujarat  High  Court.  First,  the Government promulgated an ordinance and next the legislature enacted the Amending Act.      Sec. I  of the  Amending Act  stipulates the dates from which the various amending provisions must be deemed to have come into force. We shall refer to the dates from which some of the provisions are deemed to have come into force when we refer to those provisions.      By Sec.  2 of  the Amending  Act, original  Sec. 11 (1) which declared  that the Gram panchayats, Taluqa panchayats, District  panchayats,  Gram  sabbas,  Nagar  Panchayats  and Conciliation  Panchas   shall   constitute   the   Panchayat organisation  of  the  State  of  Gujarat  was  omitted  and original Sec.  11 (2)  which provided for the control of the State Government  over panchayats  directly or through their officers was  made Sec.  11. It  is extremely  difficult  to understand the omission of old Sec. 11 (1). The whole object of   the    Gujarat   Panchayats    Act    is    "democratic decentralisation of  power and the consequent reorganisation of the administration of Local Government". The object is to decentralise and  reorganise. So  it was  thought that  Gram Panchayats, Nagar  Panchayats, Taluqa  Panchayats,  District Panchayats,   etc.    should   constitute    the   panchayat organisation of  the State of Gujarat. The object of the Act

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is still  the same,  yet s.  11(1) has been omitted. Does it mean that there is a disbandment of organisation ? According to the Statement of objects and Reasons, the amendments were necessitated to  get over  the judgment  of the Gujarat High Court that  the Panchayat  Service is  a State  Service. But surely that  can’t be  a reason  to go against the object of the Principal Act and to abandon the constitution of a State Panchayat organisation. No wonder it was described as an act of cutting  the nose  to spite the face. We may mention here that s.  2 is deemed to have come into force on February 24, 1962, the date on which the origina s. 11 came into force. 313      Sec. 3  of  the  Amending  Act  introduced  substantial changes in s. 102. While the provision that there shall be a Secretary for  every Gram panchayat and Nagar panchayat, who shall  be  appointed  in  accordance  with  the  rules,  was retained, a  proviso  was  added  in  the  following  terms: "Provided  that   where  on   account   of   conversion   of municipality into  a Gram  panchayat or  a  Nagar  panchayat under. s.  307, an  officer  of  a  municipality  becomes  a Secretary of  such panchayat or where any person not being a Talati-cum-Panchayat Secretary  is appointed  as a Secretary to such  panchayat, such  Secretary shall not be governed by the rules  so made  and the rules for regulating recruitment and conditions of service of such Secretary shall be such as the Panchayat  may, subject  to general  or special order of the State  Government, by  its  resolution  determine".  The provision in  the original  s. 102 (1) (b) which enabled the Gram  panchayat  or  Nagar  panchayat  to  have  such  other servants as  may  be  determined  under  s.  203  and  which provided that  such  servant  shall  be  appointed  by  such authority and  their conditions  of service shall be such as may be  prescribed was omitted and in its place a new s. 102 (1) (b)  was substituted  enabling the Gram panchayat itself to appoint  such servants as may be necessary for the proper exercise of  its powers, discharge of duties and performance of functions  and  further  providing  that  the  rules  for regulating recruitment  and conditions  of service  of  such servants  shall   be  made   by  the  Punchayat  itself.  An explanation was  added to say that the expression ’servants’ included a  Secretary referred to in the proviso to cl. (a). A further  cl. (c)  was introduced after cls. (a) and (b) of s. 102  (1) and it is as follows: "Notwithstanding any thing contained in any judgment, decree or order of any court,-(i) the officers  and servants  of a  Gram Panchyat, as the case may be, bf a Nagar Panchayat shall be and shall be deemed to have always  been the  officers and  servants of  such  Gram Panchayat or  Nagar Panchayat;  (ii) the expenditure towards the pay  and allowances of, and other benefits available to, a servant  of the  Gram Panchayat  or, as  the case  may be, Nagar Panchayat, shall be met by that Panchayat from its own fund".      The mischief  of the  new proviso  to s. 102 (1) (a) is manifest. Amongst  persons to be appointed as Secretaries of Gram and  Nagar  Panchayats,  persons  who  were  previously Talati-cum-Panchayat Secretaries  were to  be  appointed  as Secretaries in accordance with the rules, but the rules were not to  apply to  officers  of  municipalities,  who  became Secretaries of Panchayats consequent on conversion 314 of municipalities  into Gram  and Nagar  Panchayats under s. 307. The  conditions of  service of the latter category were to be  regulated by the panchayat itself, by resolution. and not by  any rules  made by  the Government as in the case of the others. Other servants of Gram and Nagar Panchayats were

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also to  be appointed by the Panchayats and their conditions of service  were also  to be regulated by the Gram and Nagar Panchayats Notwithstanding  any judgment  of the  court, the officers and  servants of  Gram and Nagar Panchayats were to be deemed  to have always been officers and servants of such Nagar and  Gram Panchayats  The amended s. 102 (1) was to be given retrospective  effect from February 24, 1962. In other words, the  non-Talati Secretaries  and other  officers  and servants of  the Gram and Nagar Panchayats were to be deemed to  be   servants  of   the  Gram   and  Nagar   Panchayats, notwithstanding  the  judgments  of  the  courts  which  had declared them to be Government servants.      By Sec  4 of the Amending Act a proviso was added to s. 157 (3)  of the Principal Act barring the District Panchayat from transferring  its staff  to a  Gram or  Nagar Panchayat consequent on the delegation of functions, powers and duties to a Gram or a Nagar PanchaYat.      By sec.  6 of the Amending Act, s. 203 of the Principal Act was  substantially amended.  While s.  203  (1)  of  the Principal Act,  as it  stood originally,  provided  for  the constitution of  a Panchayat  Service  for  the  purpose  of bringing about  uniform scales of pay and uniform conditions of  service   for  persons  employed  in  the  discharge  of functions and  duties of  panchayats and  declared that such service shall  be distinct  from the  State Service, the new sub-sec. (1)  introduced by  cl. (l) of s. 6 of the Amending Act,  is   as  follows:  ’(1)  In  order  to  enable  taluka panchayats and district panchayats to exercise their powers, discharge  their   duties  and   perform   their   functions effectively and  efficiently, there  shall be  constituted a Panchayat  Service   consisting  of   persons  employed   in connection  with   the  affairs  of  taluka  panchayats  and district  panchayats   and  of   specified   servants,   and notwithstanding anything  contained in  any judgment, decree or order of any court such persons and Servants shall be and shall be  deemed  to  have  always  been  the  officers  and servants of  the taluka  panchayats or,  as the case may be, the district panchayats. 315      Explanation-In this sub-sec., the expression "specified servants" means-      (a) talatis-cum-Panchayat  secretaries discharging  the functions of gram Panchayat or of nagar panchayats, and      (b) kotwals."      See. 203  (2A) was  amended by  omitting  reference  to local cadres      Old Sec. 203 (4) (a) which obliged the making of a rule containing a  provision entitling servants of such cadres in the panchayat  service to  promotion to  such cadres  in the State service  as may  be prescribed  was omitted and in its place a  new cl.  (a) was  substituted by cl. (4) of s. 6 of the Amending Act and it is as follows :-      "(a) A  provision entitling  persons holding such class of posts  Din the  district cadre  to be  recruited to  such cadre in the State service as may be prescribed."      The opening  clause of  the new  s.  203  is  extremely curious  It  gives  the  reason  for  constituting  the  new Panchayat Service  of  the  Amending  Act.  The  reason,  it appears,  is   to  enable  taluka  panchayats  and  district panchayats to  exercise their powers, discharge their duties and preform their functions effectively and efficiently. But then what  about the  Gram and Nagar Panchayats which are at the  very  foundations  of  the  whole  idea  of  democratic decentralisation  of   powers   in   favour   of   panchayat institutions ?  The entire  Panchayats superstructure has to

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stand on  the base  of F  Gram and  Nagar  Panchayats    and obviously there  can be  no vigorous  and strong Local Self- Government institutions without efficient and effective Gram and  Nagar   Panchayats.  It  is,  therefore,  difficult  to discover  the   logic  behind   excluding  Gram   and  Nagar Panchayats from the benefits of a centralised, effective and efficient service.      The vice  of the  new provision is again obvious. Local cadre is  made to  appear to  be excluded from the Panchayat Service, but  not truly  so.  In  the  guise  of  ’specified servants’ are  brought in,  as if by the back door, talatis- cum-Panchayat  Secretaries  functioning  in  Gram  or  Nagar panchayats and Kotwals. What is done in 316 truth is  that employees  of gram or nagar panchayats, other than Talatis-cum-Panchayat  Secretaries and  Kotwals  alone, and this  primarily means,  the ex-Municipal  employees  are excluded from  the Panchayat Service and the judgment of the court that they form part of a centralised State Service, is sought to  be nullified, by giving effect to cls (1) and (4) of s. 6 of the Amending Act from February 24, 1962.      By s. 8 of the Amending Act, s. 206 (1) (i) was amended by substituting  the figures  and word ’157 and 158’ for the figures and  word ’157,  158 and 325’. In Sec. 206 (1) (la), the clause  ’All officers  and  servants  of  municipalities dissolved under  s. 307’  was substituted by the clause "all persons who  have  under  cl.  (x)  of  S.  325  become  the secretaries of new gram panchayats and kotwals". In the rest of S. 206 wherever the words ’the panchayats’ were used, the words ’the district and taluqa panchayats’ were substituted. The real  effect of  S. 8 of the Amending Act is to take out "all officers  and servants  of the municipalities dissolved under S. 307" from the applicability of S. 206 though S. 206 is made  otherwise applicable  to all  other  categories  of officers and servants allotted to a panchayat.      By S.  10 of  the Amending Act, two new sections S. 206 (AB) and  S. 206 (AC) are introduced, the object of which is really to  give options  to those  officers and servants who are allotted or transferred to panchayats, under the various provisions  of  the  Act.  These  provisions  are  obviously introduced to defeat an argument that allotment and transfer of  Government  servants  to  a  non-Government  service  is violative of Art. 311.      By Sec.  14 of  the Amending Act, a new Sec. 21 I(A) is introduced the  effect of  which is  that the  allocation of officers  and   servants  of  erstwhile  municipalities  and officers and servants of old village panchayats was to cease and those  officers and  servants were  to be deemed to have always been  officers and  servants of  the gram  and  nagar panchayats. It  was as  if these officers and servants never had to be allocated by any order of the Government, but they had automatically  became officers  and servants  of the new gram panchayats.  There was  no question of any option. They could take  it or  leave it.  They were not to be treated as having been Government servants at any time. 317      Other  provisions  of  the  Amending  Act  were  merely consequential to  the confining of the Panchayat Services to district or taluqa cadres.      From the  summary of the provisions of the Amending Act that has  been set  out above  it requires  no perception to recognise the  principal target  of the amending legislation as the  category of  ex-municipal employees’, who are, so to say, pushed  out of  the Panchayat  Service and  are  to  be denied  the   status  of   Government   servants   and   the

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consequential  benefits.   The  ex-municipal  employees  are virtually the  "poor relations",  the castle,  the Panchayat Service, is  not for  them  nor  the  attendant  advantages, privileges and  perquisites, which are all for the "pedigree descendants" only.  For them,  only  the  out-houses.  As  a result  of  the  amendments  they  cease  to  be  Government servants with retrospective effect. Their earlier allocation to the  Panchayat Service  is cancelled  with  retrospective effect. They  become servants  of Gram  and Nagar Panchayats with retrospective effect. They are treated differently from those working  in taluqa  and district panchayats as well as from the  talatis and  Kotwals working  in  Gram  and  Nagar Panchayats. Their conditions of service are to be prescribed by panchayats,  by resolution,  whereas  the  conditions  of service of  others are  to be  prescribed by the Government. Their promotional prospects are completely wiped out and all advantages which  they would  derive  as  a  result  of  the judgments of the courts are taken away.      Several grounds  were urged  before us  to  attack  the constitutional validity  of the  Amending Act.  It was  said that the  provisions of  the Act were violative of Art. 311. It was  said that  the Act  was discriminatory. It was urged that the  retrospectivity given  to the  provisions  of  the Amending Act could not cure the discrimination introduced by the Act  and sought  to be perpetuated by it. In any case it was said  that the benefits acquired could not be taken away with retrospective  effect. On the other band, it was argued that there  was good  reason for the classification and that in the  circumstances of  the case,  the classification  was legitimately made with retrospective effect.      It is  here necessary to recapitulate a few facts. When the Panchayat  Service was  initially constituted soon after the passing of 318 the Gujarat  Panchayats Act,  there were  three cadres,  the district cadre,  the  taluqa  cadre  and  the  local  cadre. Secretaries,  officers  and  servants  of  the  old  village panchayats under  the Bombay  Village Panchayats  Act,  1958 became Secretaries,  officers and  servants of  the new Gram Panchayats under  s. 325  (2)(x) of  the Gujarat  Panchayats Act, 1961. Talatis and Kotwals, who were Government servants were Secretaries  and officers of the old village panchayats under the  Bombay Village  Panchayats Act and so they became secretaries and  officers of  the new  gram panchayats under the  Gujarat   Panchayats  Act,  1961.  Some  municipalities constituted for  municipal districts  and municipal boroughs under the  Bombay District  Municipal  Act  and  the  Bombay Municipal Boroughs  Act as  applied to areas in the State of Gujarat, were converted into gram and nagar panchayats under s. 307  of the  Gujarat Panchayats  Act and all officers and servants  in   the  employ  of  such  municipalities  became officers and servants of interim panchayats and allocated to the Panchayat  Service. Thus,  Secretaries and  officers  of dissolved  municipalities   also  became   Secretaries   and officers of gram and nagar panchayats. District Local Boards constituted  under   the  Bombay   Local  Boards  Act  stood dissolved on  the passing  of the Gujarat Panchayats Act and all officers  and servants  in the  employment of  the Board were  deemed  to  be  transferred  to  the  service  of  the successor district  panchayat under  s. 326  of the  Gujarat Panchayats Act. Also allocated to the Panchayat Service were those  Government  servants  who  were  transferred  to  the Panchayats  under  s.  157  and  such  others  officers  and servants employed in the State Service as were necessary (s. 206 (iii)).  All these  Secretaries, officers  and  servants

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became members  of a service under the State as soon as they were allocated  the Panchayat  Service. Now, by the Amending Act, secretaries,  p officers and servants of Gram and Nagar Panchayats who  were allocated to the Panchayat service from the ranks  of the  ex-municipal employees  are sought  to be meted out  differential treatment  from the other members or the Panchayat  Service, more  particularly the  Secretaries, officers and  servants of Gram and Nagar Panchayats who were drawn from  the ranks  of secretaries, officers and servants of old  village panchayats,  that is the Talatis and Kotwals Their status  as members  of a service under the State is to go with  no option  to them. Retrospectivity is sought to be given to  the amending act so that they could not claim that they were  ever Government servants and so could not be made to cease  to be  Government servants  and so that they could not claim  that  they  were  singled  out  for  differential treatment, for, if they were never in the Panchayat 319 service, they  could not  complain of being taken out of the Panchayat Service.      Now, in 1978 before the Amending Act was passed, thanks to the  provisions of  the Principal  Act of  1961, the  ex- municipal employees  who had been allocated to the Panchayat Service as  Secretaries, officers  and servants  of Gram and Nagar Panchayats,  had achieved  the  status  of  government servants. Their  status as  Government servants could not be extinguished, so  long as  the posts  were not abolished and their services  were not  terminated in  accordance with the provisions of  Art. 311  of the  Constitution.  Nor  was  it permissible to  single them  out for differential treatment. That would  offend Art.  14 of  the Constitution. An attempt was made  to justify  the purported  differentiation on  the basis of  history and ancestry, as it were. It was said that Talatis and  Kotwals who  became Secretaries,  officers  and servants, of  Gram  and  Nagar  Panchayats  were  Government servants, even  to start with, while municipal employees who became such  secretaries, officers  and servants of Gram and Nagar Panchayats  were not.  Each carried  the mark  or  the ’brand’ of  his origin  and a classification on the basis of the source  from which  they came  into the  service, it was claimed, was  permissible. We are clear that it is not. Once they had  joined the common stream of service to perform the same duties,  it is  clearly not  permissible  to  make  any classification  on   the  basis  of  their  origin.  Such  a clarification would  be unreasonable and entirely irrelevant to the  object sought  to be  achieved. It  is  to  navigate around these  two obstacles of Art. 311 and Art. 14 that the Amending Act  is sought  to be made restrospective, to bring about an  artificial situation as if the erstwhile municipal employees never became members of a service under the State. Can  a   law  be   made  to   be  destroy   today’s  accured constitutional P  rights  by  artificially  reverting  to  a situation which existed seventeen years ago? No.      The legislation  is pure and simple, self-deceptive, if we  may   use  such   an  expression  with  reference  to  a legislature-made  law.   The  legislature   is   undoubtedly competent to  legislate with  retrospective effect  to  take away or impair any vested right acquired under existing laws but since  the laws  are made  under a written Constitution, and  have   to  conform  to  the  do’s  and  don’ts  of  the Constitution neither  prospective nor retrospective laws can be made so as to contravene Fundamental Rights. The law must satisfy the  requirements of  the Constitution  today taking onto account the accrued or 320

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acquired rights  of the  parties today.  The law cannot say, twenty years  ago the  parties had no rights, therefore, the requirements of  the Constitution  will be  satisfied if the law is  dated back  by twenty  years. We  are concerned with today’s rights  and not  yesterday’s. A  legislature  cannot legislate today  with reference to a situation that obtained twenty years  ago and  ignore the  march of  events and  the constitutional rights  accrued in  the course  of the twenty years. That  would be  most arbitrary,  unreasonable  and  a negation of  history. It  was pointed  out by a Constitution Bench of this Court in BS. Yadav and others etc. v. State of Haryana and others etc.(1) Chandrachud CJ., speaking for the Court, "Since  the Governor  exercises the legislative power under the  proviso to  Art. 309  of the  Constitution, it is open to  him to  give retrospective  operation to  the rules made under that provision. But the date from which the rules are made  to operate,  must be shown to bear either from the face of the rules or by extrinsic evidence, reasonable nexus with the  provisions contained in the rules, especially when the retrospective  effect extends  over a  long period as in this case".  Today’s equals cannot be made unequal by saying that they  were unequal twenty years ago and we will restore that  position   by  making   a  law  today  and  making  it retrospective.   Constitutional    rights,    constitutional obligations  and   constitutional  consequences   cannot  be tempered with  that way  law which  if made  today would  be plainly invalid  as offending  constitutional provisions  in the context  of the existing situation 3 cannot become valid by being  made restrospective.  Past virtue (constitutional) cannot be  made to wipe out present vice (constitutional) by making retrospective  laws. We are, therefore, firmly of the view that  the Gujarat Panchayats third Amendment) Act, 1978 is unconstitutional,  as it  offends Arts. 311 and 14 and is arbitrary and  unreasonable. We have considered the question whether any  provision  of  the  Gujarat  Panchayats  (Third Amendment) Act,  1978 might  be salvaged. We are afraid that the provisions are so interwined with one another that it is well-nigh impossible  to consider  any life  saving surgery. The whole  of the Third Amendment Act must go. In the result the  Writ  Petition  Nos  4266-70  are  allowed  with  costs quantified at  Rs. 15,000.  The directions given by the High Court, which  we have  cor firmed,  should be  complied with before June 30, 1983. In the meanwhile, the employees of the Panchayats covered by the appeal and the Writ Petitions will receive a sum of Rs. 200 321 per month  over and above the emoluments they were receiving before February  1, 1978.  This order will be effective from February 1, 1983 The interim order made on February 20, 1978 will be  effective upto  January 31,  1983. The amounts paid are to be adjusted later. P.B.R.                                    Appeal dismissed.                                           Petitions allowed. 322