SUB DIVISIONAL OFFICER & ORS. ETC.versusDR. MEHAR SINGH AND ORS. ETC.

                SUB DIVISIONAL OFFICER & ORS. ETC.                                 A
                                v.
                  DR. MEHAR SINGH AND ORS. ETC.

                               AUGUST 17, 1988

            [S. NATARAJAN ANDS. RANGANATHAN, JJ.]                                  B

           Punjab Municipal Act, 1939: Section 244-Challenging the Con-
    stitutional validity of section 244-Guidelines discernible in section 241 to
    be read into section 244-Whether provisions of section 244 are ultra
     vires Article 14 of the Constitution.

          Certain areas in Punjab State were constituted as notified areas.
                                                                                   c
    An area was declared a 'notified area' by notification under s. 241 of the
    Act. The Government nominated members, issued the necessary enabl-
    ing notifications under s. 242 and appointed a notified area committee
    consisting of certain persons. Later, the Government issued a notifica-
    tion under s. 244, cancelling the earlier notification under s. 241.           D

          Writ Petitions were filed in the High Court by tbe office-bearers of
    the notified area committees challenging the constitutional validity of s.
    244. The challenge was sustained by the High Court, leading to the
    appeals in this Court.
                                                                                   E
          Before the High Court, bare proposition of law was urged that s.
    244 violated Art. 14 of the Constitution for the reason that it gave an
    arbitrary and unguided power to the State Government to cancel a
    notification issued under s. 241 without specifying/indicating the
    guidelines or the principles on the basis of which such cancellation could
    be effected.                                                                   F


J         Allowing the appeals, the Court,

          HELD: The preliminary objection raised by the appellants to the
    locus standi of the members of the notified area committees to pursue
    the matter was not tenable. As a result of the notification, the rights of     G
    the members under the statute had been taken away, and they were
    entitled to come to the Court impugning the notifications which affected
    them. Merely because they had ceased to be members of the notified
    area committees, their locus standi to ventilate their grievance was not
    affected. [473D, G]
                                                                                   H
                                        467
    468         SUPREME COURT REPORTS                 (1988] Supp. 2 S.C.R.

A         Section 244, by itself, does not in express words spell out the
    circumstances in which a notification issued under s. 241 or an order
    under s. 242 may be cancelled or modified, buts. 244 should not be read
    or construed in isolation from the rest of the Chapter dealing with this
    subject-matter. The whole purpose of notifying areas under Chapter
    XIII of the Act is to grant a degree of self autonomy to an area which is
B   comprised in a village. [477H; 478A]

           As and when the economy of a particular area develops, the
    State Government should see to it that arrangements for its adminis·
    tration also improve and provide for more efficient local administra·
    tion. [478G-H]
c
           The provisions that notified area will exercise only such powers as
    are entrusted to it by the State Government under s. 242 and that only
    such provisions of the Act as the State Government considers tit can be
    applicable to a notified area, show that the_principal consideration was
    the economic and administrative viability of the particular unit to look
D   after its own local affairs. If the area develops further and proves viable
    and self-sufficient economically and efficient administratively, it may
    be eventually converted into a municipal area. If the area is not finan-
    cially solvent or is administratively weak, the status quo ante may have
    to be restored. [479B-C]            ·

E         Section 244 is intended as a power enabling the Government to go
    forward or backward in the process of this evolution depending upon
    the circumstances of each case. It may turn out that a particular area is
    not economically viable and the uotitication issued under s. 241 has to
    be cancelled. [279D]

F       The situations, in which a cancellation or modification of a notifi.
  cation under s. 241 may be called for, will be numerous and impossible
  to be spelt out in a statutory provision. The power of cancellation or          [
  modifitation is not an arbitrary and unguided one but is one intended to
  be exercised in the light .of the implementation of the notification in a
  particular local area baving regard to the main principle and purpose
G behinds. 241. [279E-G]

        There are sufficient guidelines or indications available in the Sta·
  tote as to the circumstances in which the power can be invoked. It could
  not be said to be a naked and arbitrary power. Section 244 contains
  sufficient guidelines to act thereunder and it was not possible to accept
H the plea that s. 244 itself was ultra vires and should be declared void.
    SUB DIVISIONAL OFFICER v. MEHAR SINGH [RANGANATHAN, J.] 469

    The provisions of s. 244 are valid. They could not be said to be bad     A
    heini violaliVe of Article 14 of the Constitution. [481F-G l

         Gram Sabha Begowa/ v. State of Punjab and another, AIR 1981 P
    & H 101, approved.

          State of Punjab v. Dewan Chand, AIR 1979 P &_ H 46 and             B
    Ayodhya Prasad Vajpai v. State of U.P: and others, AIR 1968 SC 1344,
    referred to.

         CIVIL APPELLATE JURISDICTION: Civil App~al Nos. 1888
    and 1888-A of 1982.

          Ftom the Judgment and Order dated 16.9.1987 of the Punjab
                                                                             c
    and Haryana High Court in Civil Writ Nos. 3880 of 1980 and 1839 of
    1981...

          C.M. Nayyar for the Appellants.
                                                                             D
          E.C. Agarwala and Ms. Purnima Bhatt fot the Respondents.

         The Judgment of the Court was delivered by

          S. RANGANATHAN, J. These appeals raise a common point.
    They arise out of two out of a batch of writ petitions, disposed of by    E
    the Punjab & Haryana High Court, which challenged the validity of
    Section 244 of the Punjab Municipal Act. The High Court concluded
    that, both onjirinciple and precedent, the provisions should be struck
    down as they plainly suffer from the taint of unconstitutionality. The
    State of Punjab has preferred these appeals.
                                                                               F
          The Punjab Municipal Act (hereinafter referred to as the 'Act')
]   was an Act to make better provisions for the administration of
    municipalities in Punjab. The procedure for constituting any local area
    as a municipality is set out in Sections 4 to 10 (Chapter II) of the Act.
    Under section 4 the. State Government is empowered by notification to
    propose any local area (other than any IJart of a military cantonment) G
    to be a municipality under the Act. Any inhabitant, who desires to
    object to such a proposal, can put forward his objections in writing
    within a specific period. The State Government is obiiged to take such
    objections into consideration. It may then, by anotification, declare
    the local area to be a municipality of the first, second or third class as
    the case may be. Section 5 enables the Government to alter the ateas . 1-i
    470          SUPREME COURT REPORTS               [1988] Supp. 2 S.C.R.

A of a municipality by including within the municipality·any other local
  area. In such a case also the inhabitants of the municipality or the local
  area proposed to be included, are entitled to file objections which the
  State Government is obliged to take into account before notifying the
  inclusion of the local area in the municipality. Section 6 provides for a
  notification of the intention of the Government to exclude from a
B municipality any local area comprised therein. Here again, any in-
  habitant of the municipality or local area is entitled to put forward his
  objections and a final notification of exclusion of the local area from
  the municipality will lie issued by the State Government after taking
  such objections into consideration. Section 9 confers a power on the
  State Government to except·any municipality or part thereof from the
  operation of such of the provisions of the Act as are unsuited thereto.
c Section 10 of the Act (as originally enacted) gave power to the State
  Government fo withdraw from the operation of the. Act the area of any
  municipality constituted thereunder with the result that the Act would
  not apply within the limits of that area. These are the sets of provisions
  relating to the constitution of a local area as a municipal area to be
D fully governed by the provisions of the municipal Act. These
  municipalities are managed by committees constituted as proviaed in
  Section 12 and they have powers of raising money by taxation. The
  fund of the municipality, called the municipal fund, consists of all sums
  raised by or on behalf of the Committee under the Act or otherwise.
  The funds are to be defrayed by the committee on various types of
E civic needs set out in detail in Section 52 of the Act.

         The Act also contemplates the constitution of certain local areas
   into what may be described as 'notified areas'. These notified areas do
   not function as municipalities proper but they are given a certain
   amount of local autonomy. The State Government appoints a commit-
F tee and the committee manages the affairs of the local area. They are
   in charge of all aspects of local administration like a full-fledged
   municipality. They are given powers to impose certain taxes as are
   permitted by the State Government and only such provisions of the
                                                                               [
   Act are applicable to them as may be extended by the State Govern-
   ment. The creation of a notified area is the recognition by the Govern-
G ment of the necessity for granting powers of local administration to a
   particular area in a smaller measure than is the case with a municipal-
   ity. The provisions governing the constitution of a notified area are set
   out in Section 241 to Section 245 (Chapter XIII) of the Act. It is
   however, sufficient to set out the provisions of Section 241 to section
   244 here for a proper appreciation of the issue that arises in these
H ,appeals:
    SUB DIVISIONAL OFFICER v. MEHAR SINGH [RANGANATHAN, J.] 471

                 Section 241:                                                  A
             Constitution of Notified Area

             (1) The State Government may, by notification, declare
             that with respect to some or all of the matters upon which a
             municipal fund may be expended under section 52, iirt-            B
             proved arrangement are required within a specified area,
             which nevertheless, it is not expedient to constitute as a
             municipality.

             (2) An area in regard to which a notification has be~n
             issued under sub-section (1) is hereinafter called a notifiep
             area.
                                                                               c
             (3) No area shall be made anotified area unless it contains
             a town or a bazar and is not a purely agricultural village.

              (4) The decision of the State Government that a local area       D
              is not an agricultural village within the meaning of sub-
              section (2) (sic) shall be final, and a publication in the
              Official Gazette of a notification declaring an area to be
              notified area shall be conclusive proof of such decision.·

                 Section 242:                                                  E

              Power of State Government to impose ta,xation and regular
              expenditure of proceeds thereof- (1) The State Govern-
              ment may-

              (a) impose in any notified area any tax which could be           F
              imposed there by the committee under the provisions of
              section 6 if the notified area were a municipality:

                 Provided that any tax imposed on buildings and lands shall.
                 not be subject to the maximum limits prescribed by sub
                 clause (a)of clause (1) of section 6:                         G
             I
              Provided also that a tax payable by the owner may be made
              payable by the occupier:

                 (b) apply or adapt to the notified area for the assessment
                 and recovery of any tax imposed under clause (a), any of      H

\
     472         SUPREME COURT REPORTS                 [1988] Supp. 2 S.C.R.

                 the provisions of this Act, or of any rules for the time being
A
                 in force, with respect to the assessment and recovery of any
                 tax imposed under this Act:

                (c) arrange for the due expenditure of the proceeds of
                taxes imposed under clause (a) and for preparation and
B               maintenance of proper accounts.

                (d) appoint a committee of one or more persons for the
                purposes of clauses (b) and (c):

                (e) appoint a president of such committee and fix the term
                of office of member or president of the committee.
c
                (f) extend to any notified area provisions of any section of
                this Act subject to such restrictions and modifications, if
                any, as the Government may think fit.

D               (2) The proceeds of any tax levied in any notified area
                under this section shall be expended only in some (sic)
                manner in which the municipal fund of such notified area
                might be expended if the notified area were a municipality.

                Section 243:
E
                Application of Act to notified area-

                For the purposes of any section of this Act which may be
                extended to a notified area the committee appointed for
                such area under section 242 shall be deemed to be a munici-
.F              pal committee under this Act and the area to be a
                municipality.
                                                                                  [
                Section 244:

                Discontinuance of notified area-
G
                The State Government may at any time cancel or modify
                any notification under section 241 or any order under
                section 242.

           In Punjab, certain areas in the State-it is not necessary to set
H    out these in detail-were constituted as notified areas. To give the
SUB DIVISIONAL OFFICER v. MEHAR SINGH [RANGANATHAN, J.I 473

relevant details in regard to one of theni, it was declared a 'notified
                                                                              A
area' by a notification under section 241 of the Act dated 19.10.1978.
It took sometime for the State Government to nominate members and
issue the necessary enabling notifications under section 242. These
were issued only on 11. 2. 1980 and a notified area committee consisting
of certain persons was appointed. The committee functioned for a few
months. Soon there.after, on 7.10.1980, the Government issued a               B
notification under Section 244 cancelling the earlier notification made
under section 241. A batch of writ petitions was filed in the High Court
by the office bearers of the notified area committees challenging the
constitutional validity of section 244 and this challenge has been
sustained by the division bench leading to the present appeal.

         At the outset, the counsel for the appellant raised a preliminary    c
  contention. He stated that the members of the various notified area
  committees were appointed only for a period of three years. Even if
  the notifications under section 241 had continued to be in force, their
. term of office would have expired quite· some time back. He, there-
  fore, submitted that the writ petitioners have ceased to have any locus     D
  standi to pursue the matter further. In our opinion, this objection is
  neither tenable nor can it entitle the appellant to any relief automati-
  cally. At the time the writ petitions were filed, these persons were the
  members of the notified area committees and as a result of the notifi-
  cation, their rights under the statute had been taken away. They were,
  therefore, entitled to come to the Court impugning the notifications        E
  which affected them. The High Court 11as sustained their challenge
  and, since the conclusion of the High Court affects the appellant, the
  appeal has to be heard on the merits and cannot be disposed of as
  infructuous. That apart, the petitioners were concerned with the
  matter not only in their capacity as members of the notified area com-
  mittees but also in their capacity as inhabitants of the concerned          F
  notified areas. They had, and continue to have, an interest in seeing
  that the uplift in status conferred on their local areas by the notifica-
tions under section 241 continues to be in operation and is not with-
Clrawn or cancelled to their detrement. Merely because some or
all 'of them have ceased to be members of the notifkd area com-
mittees, their locus standi to ventilate this grievance is not af-            G
fected.

     Coming to the principalquestion, the short ground on which the
High Court has accepted the plea of the petitioners is that section 244
does not contain any guidelines or indications as to the considerations
which should be taken note of by.the Government in deciding to cancel         H
    474         SUPREME COURT REPORTS                [1988] Supp. 2 S.C.R.

    a notification already issued under section 241. Referring to the earlier
A
    decision of the same High Court in Gram Sabha v. State, AIR 1981 P &
    H 101 which repelled a like challenge to the constitutionality of sec-
    tion 241, the Bench observed that the criteria spelt out by the statute
    for the creation of a notified area committee under section 241 could
    have little or no relevance to the pre-conditions which might be neces-
B   sary for its denotification and dissolution. Reliance was placed on a
    decision of the Punjab High Court in State of Punjab v. Dewan Chand,
    AIR 1979 P & H 46 by which section 10 of the Municipal Act was
    declared to be unconstitutional. The Court was of the opinion that the
    ratio of Dewan Chand's case covered the issue before them. It added
    that even de hors the same, on principle and on the existing statutory
    provisions, the same conclusion appeared to be inevitable. The
c   learned judges distinguished the decision in Ayodhaya Prasad Vajpai
    v. State of U.P. and others, AIR 1968 SC 1344 on which the State
    relied and repelled an argument of 'desperation' that section 244
    should be treated as merely a statutory declaration of the inherent
    power of cancellation of any order that is vested in any authority under·
D   the General Clauses Act. Referring to the well established constitu-
    tional proposition that a statute has to be held to be discriminatory
    irrespective of the way in which it is applied, "if the statute itself does
    not disclose a definite policy or objective and confers authority on
    another to make selection at its pleasure", the Court declared section
    244 to be unconstitutional.
E
          It may be mentioned at the outset that, before the High Court,
    the writ petitioners had also taken certain objections on the merits and
    also attributed ma/a fides to the State Government in issuing the notifi-
    cations of cancellation but these allegations of mala fides and extrane-
    ous considerations having vitiated the notifications were expressly
F   given up. Only a bare proposition of law was urged that section 244
    violates article 14 of the Constitution for the sole and simple reason
    that it gives an arbitrary and unguided power to the State Government
    to cancel a notification issued under section 241 without also specify-
    ing, or atleast indicating, the guidelines or principles on the basis of
    which such cancellation could be effected.                           ·
G
          It will be appropriate first to notice the Full Bench decision of
    Punjab High Court in Gram Sabha Begowal v. State of Punjab &
    another, AIR 1981 P & H 101 repelling a similar challenge to the
    provisions of section 241 and 242. Two objections were raised to the
    validity of sections 241 and 242. It was said first that these sections do
H   not provide enough guidelines regarding the circumstances in which an
SUB DIVISIONAL OFFICER v. MEHAR SINGH [RANGANATHAN, l.] 475

area can be constitutecl.into'a notified area and empowered to adminis-        A
ter its own fund for local administration. Secondly, it was submitted
that there· was no provision to provide persons affected by such notifi-
cation with an opportunity of hearing and that this was violative of
article 14. In that case, an area comprised in a gram sabha was
included under section 241 and the gram sabha came to the court
urging that it could not be so notified without hearing its objections.        B
These contentions were overruled by the Full Bench (to which one of
the members of the Bench which heard the present batch of cases was
a party). The principle of the decision is contained in the head note of
the report of the said case:

            "Section 241 of the Act gives sufficient guidelines to the
            State Government as to which area deserves to be declared          c
            as notified area. Whenever the State Government finds
            that the proposed area is not big enough to be constituted
            as a municipality, but nevertheless requires improved
            arrangements with respect to some or all of the matters
            enumerated in s. 52 for which municipal funds may be ex-           D
            pended, it can constitute a notified area. Further, the State
            Government has been prohibited from declaring a purely
            agricultural village to be a notified area but if such a village
            contains a town or a Bazar, then it can be declared to be a
            notified area. Before· a decision is taken under s. 241, the
            State Government has to apply its mind fully to consider           E
            the pros and cons whether the area can be constituted as a
            municipality but if it firtds that it is not possible to do so
            because it is not such a large area so as to be able to sustain
            the expense of a municipality, but at the same time the
            State Government considers that some of the improved
            arrangements as detailed in section 52 of the Act deserve to       F
            be made in that area, then the State Government ha.s been
            given the power to constitute that area into a notified area
            subject to the restrictions imposed in sub-s. (3) of section
            241 of the Act. Similarly, once a notified area is
            constituted, s. 242 merely authorises the State Government
            to impose tax under s. 61 and to apply any of the provisions       G
            of the Act to the notified area subject to such restrictions
           ·and limitations, if any, as the State Government may think
            proper besides doing other beneficial acts for the notified
            area as detailed in the section. Section 242 is merely conse-
            quential authorising the State Government to levy tax and
            to frame the procedure for recovery etc. and io apply the          H
      476         SUPREME COURT REPORTS                [1988) Supp. 2 S.C.R.

                  Act insorfar as it may be beneficial for the proper working
A
                  of the notified area.

                  Although in Ss. 4 to 7 a provision for hearing of objections
                  has been made, but no similar provision has been made in
                  section 241. Section 241 is however, not ultra vires article
B                 14 of the Constitution merely because there is no provision
                  therein for inviting objections from the inhabitants of the
                  area before declaring a notified area. No provision of law
                  can be struck down as ulta vires merely because it does not
                  contain a provision for affording a hearing to the persons
                  concerned. No violation of the principles of natural justice
                  arises in construing the ~tatutory provisions."

      The Full Bench, with which we are in agreement, clearly laid down
      that the provisions of section 241 are not liable to challenge on grounds
      similar to those raised in the present petition.

IJ)         Basing itself on this Full Bench decision, it was argued for the
      State that the same principle would be applicable in the case of section
      244 as well. The High Court repelled this contention by saying that the
      criteria spelt out in section 241 could have no relevance to the pre-
      conditions which might be necessary for its denotification. The Court
      observed:
E
                  "For instance, one of the pre-requisites for the creation of
                  a Notified Area Committee laid down in sub-section (3) is
                  the existence of a town or a bazar therein. Some modicum
                  of urbanization or semi-urbanization is thus a pre-requisite
                  for the creation of a Notified Area Committee. Now it is
F                 manifest that this cannot have the remotest relevance when
                  subsequently the question of the denotification or the dis-
                  solution of an existing Notified Area Committee arises.
                  Clearly the statute was not visualising an earthquake which
                  would raze the town or hazar to shambles and consequently
                  obliterate one of the pre-requisites f<>r the creation. An
G                 urban area in the shape of a town or bazar having already
                  come into existence, it is too remote a possibility that the
                  same would vanish into thin air and in this manner provide
                  a guideline or policy for de-notifying the Committee under
                  Section 244 of the Act.

li                4-.gain the other criterion negatively put for the creation of
SUB DIVISIONAL OFFICER v. MEHAR SINGH [RANGANATHAN, J.I 477
               I

          a Notified Area Committee is that the area comprised             A
          therefor is not a pure.!y agricultural village. Now once this
          is Satisfied that the area loses its pristine rural or
          agricultural nature ·SO as to warrant the creation of a
          Notified Area Committee. It seems rather inconceivable, if
          not impossible, that the same would revert again to a
          purely agricultural village so as to necessitate a de-noti-      B
          fication. Indeed, it appears to me that the learned counsel
          for the petitioner is on a sound footing that at least for the
        r limited purpose of the statute before us, the guidelines for
          the constitution and creation of a Notified Area Committee
          would be totally alien to the considerations which mi!iht
          later require its de-notification.                               C

      The Bench concluded that'

                    Once it is held as above, it appears to be plain and
           beyond cavil that in the language of Section 244, there is
           not the least hint of any legislative policy or any inkling of a D
           guideline for the de-notification of a Committee. Indeed,
           the language excels in its absoluteness and confers powers
           on the State Government to cancel at any time any notifica-
           tion under Section 241 of the Act without more. There is no
           manner of doubt that a de-notification of a corporate urban
           area is fraught with grave and material Jegal and civil con- ·E
           sequences not merely to the individual members of the
           Committee, but to the corporate existence of all the citi-
           zens composed thereof. Nevertheless, Section 244 is wholly
           silent, both as to policy and as to guideline for the exercise
           of a totally arbitrary power vested in the Government to
           de-notify an.existing Committee. It seems to be now well F
           settled that ·where such ail unlimited and uncanalised
           power is vested without even remotely indicating a legisla-
           tive policy or the rationalcriteria, the same would be hit by
           Article 14 of the Constitution, even though the repository
           of the power is the State· or the Central Government
           itself."                                                         G

      With respect to the learned judges, we are unable to concur in
this conclusion. It is true that section 244, by itself, does not in express
words spell out the circumstances in which a notification issued under
section 241 or an order under section 242 may be cancelled or
modified. But in our opinion, section 244 should not be read or con- · H
    478          SUPREME COURT REPORTS                 (1988] Supp. 2 S.C.R. ·

     . strued in isolation from the rest of the chapter dealing with this sub1ect
A matter. The whole purpose of notifying areas under Chapter XIII of
       the act is to grant a degree of self autonomy to an area which is
       comprised in a village. The circumstances in which such a notification
       can be issued are set out in section 241 with sufficient particularity.
       The section postulates that the State Government is to be satisfied in
 ijl regard to a particular area that it may be allowed to carry on its own
       local administration, that such administration should be run by a com-
       mittee appointed by the Government, that the committee should be
       empowered to collect taxes and finally, that the committee should be
       empowered to take over the onerous responsibility of providing for
       various types of civic amenities and facilities as may be entrusted to it.
       But at the same time the Government should be of the opinion that
([: either because of its location, population, lack of affluence, back-
       wardness or other considerations, it is not possible to constitute the
       area into a regular municipality fully governed by the provisions of the
       Municipal Act. The Government, therefore, should consider that it is
       sufficient if the area is carved out as a notified area, to be given such
b powers as may be considered fit and proper in regard to its administra-
       tion. The State Government is also empowered to gradually notify, if
       necessary, from time to time the various provisions of the Act which
       would. be applicable in respect of such notified area. In our opinion,
       the provision makes clear the guidelines for declaring an area as a
       notified area.

         Sub-section (3) of section 241 contains specific provisions against
  a purely agricultural village being converted into a notified area and,
  again, against the declaration of an area as a notified area, if it does
  not contain any town or bazar. The learned judges of the High Court
  have referred to the provisions of sub-section (3) and have pointed out           -
F that once these requirements are satisfied then it is practically impossi-
  ble to conceive of a situation when these requirements would cease to
  exist warranting the cancellation of the notification already issued
  under section 241. There is substance in this comment of the learned
  judges. But, in our opinion, the crux of section 241 lies in sub-section
  ( 1) to which we have already referred. The whole scheme of sections
G 241 to 244 is to be taken together. The idea is that as and when the
  economy of a particular area develops, the State Government should
  see to it that arrangements for its administration also improve and
  provide for more efficient local administration. Thus section 241(1)
  envisages the criteria of the development of a purely rural area into<l·
  township or commercial centre, with increased trade and commerce,
H owith increased population and with increased economic activities
    SUB DNISIONAL OFFICER v. MEHAR SINGH IRANGANATHAN, J.) 479

     justifying its evolution into a notified area to which a certain amount of A
     local autonomy could be granted. The whole process, however, is one ·
     of gradual evolution. The Act does not coniemplate the sudden con-
     ferment of all types of local administrative powers to a notified area
     committee. The provisions ofsections·241 to 244 of the Act make it
     clear that it is really an evolutionary process. The provisions that a
     notified area will exercise oµly such powers as are entrusted to it, by the B
     Staie Government under section 242 and that only such provisions of
     the· Act as the State Government considers fit can be applicable to a
     notified area show that the principal consideration is the economic and
     administrative viability of the particular unit to look after its own l'ocal
     affairs. If the area develops further and further and proves viable and
     self sufficient economically and efficient administratively it may be
     eventually converted into a municipal area. If on the other hand, the c
     area does not come up to expectations, is not financially solvent or is
     administratively weak, the status quo ante may have to be restored. If
     section 244 is read in this context and background, it will be very clear
     that it is intended as a power enabling the Government to go forward
     or backward in the process of this evolution depending upon the D
     circumstances of each case. It may turn out that a particular area is not
     economically viable and hence the notification issued under section

J    241 has to be cancelled. It may be that too much powers are found to
     have been entrusted to a particular notified area committee and some
     of the powers need to be withdrawn. It may again be that this type of
     administration does not properly work in a particular situation and E
     that the experiment undertaken in that particular area is somewhat
     pre-mature. The situations, in which a cancellation or modification of
     a notification under section 241 may be called for, will be numerous
     and impossible to be spelt out in a statutory provision. But all the same
    if one considers that sections 241 to 244 form a compact group of
     sections of the Act which deal with a particular topic and if one bears F
    jn mind the contents of sections 241 to 244, it will be clear that the
     power of cancellation or modification is not an arbitrary and unguided
    one but is one intended to be exercised in the light of the implementa-
    tion of the notification in a particular local-area having regard to the
    main principle and purpose behind section 241. It is, therefore,
    difficult to agree with the High Court that section 244 contains no G
    guidelines whatever or that the guidelines admittedly discernible in
    section 241 cannot be read into section 244 also.

          It is necessary to make a reference to the decision in Dewan
    Chand's case. That decision was rendered in a different context of
    provisions to which we have earlier referred. From the scheme of            H
      480         SUPREME COURT REPORTS                [1988] Supp. 2 S.C.R.

,A   Chapter II of the Act, it could be seen that a specific procedure was         \.,...
     prescribed for the constitution of a municipality as well as for the           l
     exclusion therefrom, or inclusion therein, of other areas. Sections 5 to
     9 are elaborate provisions under which, before any one of these exer-
     cises was undertaken, the inhabitants of the area were entitled to
     participate therein and the State Governments were to issue the notifi-
 B cation only after considering such objections. In particular, if it was
     decided that a particular local area should be excluded from a munici-
     pality, the prescribed procedure had to be gone through. It was in this
     context that section 10 and the purpose thereof became unintelligible.
     One could not even conceive in what respects this would be different
     from the power to exclude an area from a municipality for which an
 C:: elaborate procedure was laid down. It was in these circumstances that
     the High Court held that Section 10 contained a drastic power with no
     limits or guidelines regarding the circumstances in which the power
     could be invoked. We may mention that, subsequent to this decision,
     section 10 of the Act has been amended.

 D          We have pointed out that the scheme of sections 241 to 244 is
      totally different and should be treated as an integral whole. Section
      244 has to be understood, as section 10 was viewed, in the context of
      the preceding sections and, doing so, we are of opinion that there are
      sufficient guidelines or iudications available in the statute as to the
      circumstances in which the power can be invoked. It cannot be said to
 'E   be a naked and arbitrary power. In the present case, the appellants have
      attempted to explain the reasons why the order of cancellation of the
      notifications was issued. After pointing out that 31 areas were declared
      as notified areas in the State, the counter affidavit of the State Govern-
      ment filed before the High Court proceeded to say that:

 F                " .......... the working of all the 31 Notified Area Com-
                  mittees in the State was considered and examined
                  thoroughly because it was felt that these Committees are
                  not functioning properly and in other words failed to pro-
                  vide civic amenities to the residents of the area with their
                  lean resources. In the case of some of the Notified Area
 G                Committees the income was not sufficient to justify their
                  existence because major portion of the income was spent
                  on the establishment and the development of the area re-
                  mained altogether neglected. The very purpose for which
                  the Notified Area Committees were created for providing
                  better civic amenities to the area stauds forfeited.
 H                Moreover, the Notified Area Committee lacked demo-

                                                                                    1
                                                                                    '
     SUB DIVISIONAL OFFICER v. MEHAR SINGH [RANGANATHAN, J.] 481

                 cratic character because it consists of nominated members        A
..
;/
                 which were not liked by the inhabitants of the area con-
                 cerned. The State Government also received many rep-
                 resentations from the inhabitants of the entire area for the
                 dissolution of the Notified Area Committee, Nadala,
                 Bholath, Begowal and Dhilwan for the dissolution of the
                 Notified Area Committees in these areas. The State Govt.         B
                 after having through probe and proper application of mind
                 came to the conclusion that the Notified Area Committee,
                 Nadala has failed to achieve the very purpose for which it
                 was created and its income could not justify its existence
                 and as such the State Govt. exercised its legal right to
                 cancel the notification constituting the Notified Area           C
                 Committees u/s 244 of the Act, having less than annual
                 income of Rs.5 Jakhs. As such the State Government exer-
                 cised its legal right to cancel the notification constituting
                 Notified Area Committee u/s 241 of the Act. The action
                 taken by the State Govt. is perfectly legal and in accor-
                 dance with the provisions of Jaw. The provisions of Section      D
                 244 of the Act as already stated in para 5 of the written
                 statement provide sufficient guideline to the State Govern-
                 ment and are not arbitrary in nature."

     It is not necessary for us to go into the correctness or other\Vise of
     these averments because as we have already mentioned, what was               E
     argued before us was a pure question of Jaw that section 244 does not
     contain any indications or guidelines for the action to be taken there,
     under. No questions of fact are at all involved in the contention as
     urged before the High Court and before us. We are not called upon to
     express any opinion as to whether, in the case of any particular notifi-
     cation involved in these cases, the cancellation was justified or not in     F
     the light of the foregoing discussion and in the light of what has been
     stated in the counter-affidavit. It is sufficient for the present purposes
     to say that Section 244 contains sufficient guideiines to act thereunder
     and it is not possible to accept the plea that section 244 itself is ultra
     vires and should be declared void.
                                                                                  G
           For the reasons discussed above, we hold thatthe provisions of
     section 244 of the Act are valid. They cannot be said to be bad being
     violative of article 14 of the Constitution. The appeals are allowed.·
     There will, however, be no order as to costs.

     S.L.                                                   Appeals allowed.