http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5  

PETITIONER: STATE OF HARYANA

       Vs.

RESPONDENT: MOHAN LAL & ORS.

DATE OF JUDGMENT: 30/10/1969

BENCH: SIKRI, S.M. BENCH: SIKRI, S.M. MITTER, G.K. REDDY, P. JAGANMOHAN

CITATION:  1970 AIR 1848            1970 SCR  (3) 202  1969 SCC  (3) 484

ACT: Punjab  Town Improvement Act (Punj. 4 of 1922), ss. 1(3)  3, 4,  4A  and 103(1) and Punjab Municipal Act, 1911,  s.  238- Supersession  of Municipality-Power of Government to set  up Improvement  Trust  under 1922.Act-Power  of  Government  to reconstitute   dissolved  Trust  after   reconstitution   of Municipal Committee.

HEADNOTE: The  Rohtak  Municipal Committee was  superseded  in  August 1954, and an Administrator was appointed under s. 238 of the Punjab Municipal Act, 1911.  In June 1958 the provisions  of the Punjab Town Improvement Act, 1922, were extended to  the Municipality  and  the Rohtak Improvement Trust was  set  up under  the  Act.  In August 1961, the  Government  issued  a notification under s. 103 (1) of the 1922 Act dissolving the Trust.  The Municipal Committee was reconstituted in January 1962   and  in  October  1962  the  Government  decided   to reconstitute  the Trust.  The Municipal Committee  thereupon passed  a  resolution  opposing the  reconstitution  of  the Trust.   In  January  1963,  however,  the  Government   re- constituted the Trust and the Municipal Committee was  asked to  name  its representatives to be appointed  as  trustees. The  rate-payers  filed  a  writ  petition  challenging  the reconstitution  of the trust and the High Court allowed  the petition. In appeal to this Court, HELD : (1) The attention of the High Court was not drawn  to s. 4A of the 1922 Act and therefore it erred in holding that the Trust could not be set up in 1958 because, under s. 1(3) of  the  1922 Act a Trust cannot be created in  a  Municipal area  unless  the committee was functioning.  Under  s.  4A, where  the  Municipal  Committee was  superseded  the  State ,Government  could  appoint the trustees, and there  was  no anomaly in the -Government nominating the trustees, because, the  Administrator who had all the powers and duties of  the Committee under s. 238 of the 1911 Act was competent to  say to the Government that the 1922 Act should not be applied to the Municipality. [205 C-D 206 B] (2)  Once  the  1922 Act had come into  operation  under  s.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5  

1(3),  it  ,continues to apply and it was not  necessary  to apply   it   again   when  the   Municipal   Committee   was reconstituted in 1962. [206 D] (3)  Under  ss.  3  and 4 of the 1922 Act  and  the  General Clauses  (Punjab)  Act, 1898, Government has  the  power  to create  a  new  trust or -reconstitute  a  Trust  which  was dissolved. [206 H]

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1121 of 1966. Appeal  by special leave from the judgment and  order  dated August 17, 1965 of the Punjab High Court, in Letters  Patent Appeal No. I 10 of 1965. 203 Janardan Sharma -and R. N. Sachthey, for the appellant. The respondent did not appear. The Judgment of the Court was delivered by Sikri,  J.-This appeal by special leave is directed  against the  judgment  of  the High Court of  Punjab  accepting  the petition  filed by the rate-payers of  Municipal  Committee, Rohtak,  respondents before us, and ordering that the  State Government  shall not proceed with the constitution  of  the Rohtak  Improvement Trust under the notification  of  August 30,  1961.  The High Court allowed the petition  because  it held  (1)  that  sub-s.  (3) of s.  I  of  the  Punjab  Town Improvement  Act  (Punjab  Act IV  of  1922)-here  in  after referred  to  as the Act-only envisages the creation  ’of  a Trust in a Municipal area where -a Committee is  functioning and so is in a position to hold a special meeting to  decide whether  or  not  it  considers  the  creation  of  a  trust desirable,  and (2) that once a trust ceases to exist  under s. 103(l) of the Act in order to recreate the trust, the Act has to be applied again, and as the Municipal Committee  had at  a  special  meeting held on November  9,  1962,  decided unanimously   that  the  Act  should  not  be  applied   the Government was bound to give effect to that decision. The  learned  counsel  for  the  appellant,  Mr.   Sachthey, contends   that   the  High  Court  has   placed   a   wrong interpretation  on  the two provisions mentioned  above  and somehow s. 4-A of the Act was not noticed by the High Court. Before  we  deal with the interpretation of  the  provisions mentioned  above it is necessary to state a few facts.   The Rohtak Municipal Committee was superseded on August 2, 1954. The Government purported to extend the provisions of the Act to  the  whole of the area of the Municipality  on  May  21, 1958.  The notification to this effect reads "In pursuance of the provisions of sub-section of Section  I of  the Punjab Town Improvement Act 1922 (Punjab Act No.  IV of  1922),  the  Governor of Punjab proposes  to  apply  the provisions  of the said Act to the whole of the area of  the municipalities  specified below with effect from  9th  June, 1958 1....... 2..... 3. Rohtak,......" Sub-section (3) of s. 1 of the Act reads as follows "1. (3) This section and section 66 shall come into force at once.   The State Government may by notification propose  to apply  the rest of the Act to the whole or any part  of  any municipality and to any locality adjacent 204 thereto,   on  such  date  as  may  be  specified  in   such notification;  and the Act shall come into  operation  after

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5  

the,  lapse  of three months unless within that  period  the municipal  committee concerned at meeting convened  for  the purpose of considering the application of the Act resolve by a  majority  of  two-thirds  that  the  Act  should  not  be so applied." In  pursuance of this notification a trust was set up.   But on August 30, 1961, the Government issued a notification  in exercise of its powers under sub-s. (1) of s. 103 of the Act and  declared  that the Rohtak Improvement  Trust  shall  be dissolved  with effect from August 30, 1961 from  which  the Chairman  and the trustees of the aforesaid Trust ceased  to function. Section 103(1) of the Act reads as follows : "103.  (1) When all schemes sanctioned under this  Act  have been executed or have been so far executed as to render  the continued  existence  of the trust, in the  opinion  of  the State Government, unnecessary, or when in the opinion of the State Government it is expedient that the trust shall  cease to  exist, the State Government may by notification  declare that  the trust shall be dissolved from such date as may  be specified in this behalf in such notification; and the trust shall be deemed to be dissolved accordingly." It  appears that on the supersession of the Municipality  of Rohtak in 1954 an Administration was appointed under S.  238 of  the  Punjab Municipal Act, 191 1.  This  section,  inter alia, provides: "238. (1) .... (2)  When  a  committee  is so  superseeded.  the  following consequences shall ensue (a).... (b)  all  powers and duties of the committee may, until  the committee  is reconstituted, be exercised and  performed  by such  persons  as the State Government may appoint  in  that behalf;" Fresh  elections  of the Municipal Committee,  Rohtak,  were held in July 1961, and the Municipal Committee reconstituted on  January 10, 1962.  On October 23, 1962,  the  Government informed  the  Deputy  Commissioner,  Rohtak,  that  it  had decided to reconstitute Rohtak Improvement Trust immediately and  asked the Deputy Commissioner to recommend a  panel  of six  names of suitable persons for appointment  as  trustees and the Government also asked him to call upon the Municipal Committee, Rohtak, to elect its representatives as trustees. 205 This  was not to the liking of the Municipal  Committee  and the  Municipal Committee unanimously passed a resolution  on November  9, 1962, strongly opposing the  reconstitution  of the Improvement Trust, Rohtak. The  Government by notification dated January 10,  1963,  in exercise  of powers conferred ’by sub-s. (2) of s. 4 of  the Act  appointed  one Major S. K.Mehta  -as  Chairman,  Rohtak Improvement  Trust.   The  Municipal  Committee  was   again requested  to  send  two  names  of  three  members  of  the Municipal Committee to be appointed as trustees as  required by cl. (b) of sub-s. ( 1) of s. 4 of the Act.  Thereupon  32 rate-payers  filed  the  petition  under  Art.  226  of  the Constitution  challenging the reconstitution of  the  Rohtak Improvement Trust. Coming  to  the first point decided by the  High  Court,  it seems  to us that s. 4-A to the Act was-not brought  to  its notice  and  if it had been brought to its notice  the  High Court  may  well  have  come  to  the  contrary  conclusion. Section  4-A which, was inserted by Punjab Act VIII of  1936 reads : "4-A.      During the period of supersession of a Municipal

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5  

Committee under section 238 of the Punjab Municipal    Act, 191 1, the three seats allotted to the Municipal  Committee on the trust under clause (b) of sub-section (1) of  section 4 shall be filled by the State Government by appointing  any three persons by notification in the Official Gazette.   The term of office of every trustee so appointed shall be  three years  or until the Trust is dissolved, whichever period  is less,   provided   that  if  the  Municipal   Committee   is reconstituted three members of the Municipal Committee shall be elected or appointed in accordance with the provisions of section  4, and on their election or appointment  the  three trustees  appointed  by  the  State  Government  under  this section shall cease to be members of the Trust." Reading  s.  1(3) and s. 4A of the Act, and s.  238  of  the Punjab  Municipal Act, 191 1, together, it seems to us  that the true meaning of the latter portion of sub-section (3) of s.  1 is that when the Government -applies the  section  and the  Municipal  Committee has been  superseded  before  that date, it is the Administrator who would exercise the  powers given  under the latter part of that sub-section;  in  other words,  the Administrator would be competent to say  to  the Government that the Act shall not come into operation.   The words  of s. 238 of the Punjab Municipal Act are  very  wide and it is difficult to limit the expression "all powers -and duties  of the committee" in any manner.   The  Municipality exercised  powers by resolution passed by majority  and  the fact that this particular resolution had to be by  two-third majority does not lead 206 to  the conclusion that the power to oppose the  application of  the  Act vesting in the Municipal  Committee  cannot  be exercised   by  the  Administrator  under  s.  238,   Punjab Municipal Act. Section  4A  of the Act clearly proceeds on the  basis  that while   the  Municipal  Committee  stands   superseded   the appointment  of trustees which was originally to be made  by the  Municipal  Committee  would  be  made  ’by  the   State Government.  As the High Court did not have s. 4-A before it had  relied on the anomaly that where a Municipal  Committee was suspended the Government could nominate some members  of the suspended Committee as members of the Trust or otherwise fill these vacancies, and the High Court felt that it  could not believe that it was the intention of the Legislature. Coming to the second point. made by the High Court, it seems that the High Court has wrongly,, held that once the Act has been applied it is necessary that it should be applied again when  the  Municipal Committee is reconstituted.   There  is nothing in the words of sub-s. (3) of s. I to ’warrant  this conclusion.   Once  the  Act  has  come  into  operation  in accordance  with the provisions of sub-s. (3) of s. 1  there is no provision by which the Act can cease to apply. The only point that remains is,: when a trust has been  dis- solved  under  s. 103 of the Act, can  it  be  reconstituted under the Act ? The only provisions under which a trust  can be reconstituted under the Act are sections 3 and 4. Section 3 reads : "3. The duty of carrying out the provisions of this’ Act  in any  local  area  shall,  subject  to  the  conditions   and limitations  hereinafter contained, be vested in a board  to be called "The (name of town) Improvement Trust" hereinafter referred  to as the ’The Trust"; and every such board  shall be  -a  body  corporate and have  perpetual  succession  and common seal, and shall by the said name sue and be sued." Section 4 reads; "4. (1) The trust shall consist of seven trustees, namely

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5  

The other sub-sections of s. 4 provide how the trustees  are to be appointed. It seems to us that if the trust could originally be created under  ss.  3 and 4, reading ss. 3 and 4 and s.  12  of  the General Clauses Act, the Government has the power to  create a  view trust or reconstitute a new trust.  We  may  mention that s. 12 of the Gene- 207 ral Clauses (Punjab.) Act, 1898, provides that "where by any Punjab  Act  any power is conferred then that power  may  be exercised from time to time as occasion requires." In  the result the judgment of the High Court is set  aside, the appeal allowed and the writ petition dismissed.   There, will be no order as to costs throughout. Y.P.                          Appeal  allowed. 208