C.K. Thakker, C. J.
1. All these petitions have been placed for hearing before a Full Bench on a reference being made by a Division Bench consisting of one of us (B.H. Marllapale, J.) and N.H. Patil, J. In all the three petitions, a common question of law has been raised viz., the extent of power, authority and jurisdiction of the Collector under Sub-section (1) of Section 308 of the Maharashtra Municipal Councils, Nagar Panchayats and Industrial Townships Act, 1965 (hereinafter referred to as 'the Act') to suspend an order or resolution passed by a Municipal Council.
2. To appreciate the controversy raised in the present group of petitions, few relevant facts in the First matter i.e. Writ Petition No. 1928 of 1996, Sanjay Govind Sapkal and Ors. v. The Collector of Dhule and Ors., may be stated.
3. The said petition was filed by fourteen petitioners claimed to have been appointed by Municipal Council, Dhule, respondent No. 2 herein. The President of respondent No. 2-Council made several appointments between November 30, 1988 and December 21, 1989 as peons, clerks, cleaners, gardeners, etc. The Chief Officer of the Municipal Council, vide his letter No. Estt/974/89-90 dated December 12, 1989, informed the Collector, Dhule, respondent No. 1 herein that the President, Dhule Municipal Council had made certain appointments which were not in consonance with law. Respondent No. 1-Collector, considering the above communication of the Chief Officer of the Municipal Council passed an order in exercise of power under Sub-section (1) of Section 308 of the Act suspending the appointments and ordering removal of those persons from service with immediate effect. Similar orders were passed by the Commissioner and consequential actions were taken by the Chief Officer.
4. Being aggrieved by the said orders, the petitioners approached this Court by invoking Articles 226 and 227 read with Articles 14,16 and 300-A of the Constitution, challenging the action of the first respondent, inter alia contending that respondent No. 1 Collector has no power, authority or jurisdiction to exercise power under Sub-section (1) of Section 308 of the Act and the action was illegal, ultra vires and de hors the Act and null and void. A prayer was, therefore, made to issue an appropriate writ, direction or order quashing and setting aside the orders passed by the Collector as also by the Commissioner, respondent No. 4 herein and to reinstate the petitioners in service with full back wages and all other consequential benefits. Interim relief was also prayed restraining the respondent-authorities from operating, implementing and executing the orders passed against the petitioners and injuncting them from obstructing the petitioners from working.
5. The petition was instituted on 8th March, 1990 which was registered as Writ Petition No. 1277 of 1990 which was subsequently re-numbered as Writ Petition No. 1928 of 1996 (Aurangabad Bench). It also appears that on 22nd March 1990, ad interim relief in terms of prayer Clause- (c) was granted. Prayer Clause (c) reads thus -
'(C) Pending hearing and final disposal of this petition, the operation of the orders of the Collector of Dhule, bearing No. 90/K/Desk/5/ Municipalities-151, dated 19-1-1990, in respect of petitioners No. 12 to 14 Ex. 'B' suspending the appointments of the petitioners made by the Dhule Municipal Council, Dhule, (Ex. A to this petition) and further orders passed by the Chief Officer, Dhule, bearing No. Estt. No. 1241 dated 16-2-1990, in respect of petitioners No. 1 to 11, Ex. 'C' and Estt. No. 1320, dated 1-3-1990, in respect of petitioners passed in pursuance of the order of the Collector, Dhule, Exs. 'A' and 'B' to this petition be stayed.'
On 9th January, 1991, the matter was admitted by issuing rule and ad interim relief was ordered to continue as interim order.
6. When the matter was placed before the Division Bench for hearing on 28th February, 2002 along with other two petitions, a question was posed before the Division Bench that the Collector had no jurisdiction to exercise power under Sub-section (1) of Section 308 of the Act and the point had been finally concluded by two different Division Bench decisions of this Court in Chandrashekhar Shankarrao Zade and Ors. v. Additional Collector, Nagpur and Anr. 1984 Mh.L.J. 821 and Prakash Kutik Choudhary v. Collector of Dhule and Ors. 1989(1) C.L.R. 374. In both the cases, this Court held that the Collector could exercise the power under Sub-section (1) of Section 308 of the Act to prevent any imminent act of the Council which was likely to give rise to one of the situations contemplated by the section. But once an action is taken, the provision has no application and the Collector has no jurisdiction to exercise the power and any action taken thereafter would be without authority of law.
7. The learned Counsel for the Municipal Council, on the other hand, submitted that a plain reading of Section 308 of the Act shows that the Collector has such power and the decisions rendered by this Court are required to be overruled as they do not lay down correct law. The learned Government Pleader also supported the stand taken on behalf of the Municipal Council.
8. We have anxiously considered the rival contentions raised by the learned Counsel for the respective parties. The controversy raised in the petitions relates to interpretation of Section 308 of the Act and the power of the Collector to take actions thereunder.
9. Now, before we deal with the actual question, it may be necessary to observe that it is not in dispute that respondent No. 1-Municipal Council is governed by the provisions of 1965 Act. As observed in the Preamble, the Act has been enacted to unify, consolidate aria amend the law relating to Municipal Councils and to provide for Constitution of Nagar Panchayats and Industrial Townships in the State of Maharashtra and to make better provision therefor. Whereas Chapter II deals with Municipal Councils, Chapter III describes duties and functions of the Councils, Chapter IV consists of only one section, i.e. Section 74 which provides for appointment of Director and Regional Directors of Municipal Administration and their powers and also powers of Collector. Provisions regarding officers and servants of Municipal Councils have been made in Chapter V. Chapter XXIII deals with 'Control'. Section 306 confers on certain officers power of inspection and supervision and Section 307 authorises them to call for returns and reports.
10. Section 308 is material for the purpose of the present petitions and may be quoted in extenso :--
'308. (1) If, in the opinion of the Collector, the execution of any order or resolution of a Council, or the doing of anything which is about to be done or is being done by or on behalf of a Council, is causing or is likely to cause injury or annoyance to the public or is against public interest or to lead to a breach of the peace or is unlawful, he may by order in writing under his signature suspend the execution or prohibit the doing thereof.
(2) When the Collector makes any order under his signature, he shall forward to the Council affected thereby a copy of the order, indicating therein the reasons for making it and also submit a report to the Director, along with a copy of such order.
(3) Within thirty days from the receipt of such order of the Collector, the Council shall, if it so desires, forward a statement to the Director indicating therein why the order of the Collector should be rescinded, revised or modified. If no such statement is received by the Director within time, the Director shall presume that the Council has no objection if the order of the Collector is confirmed.
(4) On receipt of such report from the Collector and the Council's statement referred to in Sub-section (3), if any, the Director may within a period of six months, from the receipt of such report or within such period beyond six months as may, on the request of the Director, be extended by the State Government, rescind the order or may revise or modify or confirm the order or direct that the order shall continue to be in force with or without modifications :
Provided that, the Director shall take into account the statement of a Council, if received, before such an order is made by him.'
Section 309 deals with special situation in case of emergency which is also material and may be reproduced for ready reference :
'309(1) In case of emergency, the Collector may provide for the execution of any work, or the doing of any act, which may be executed or done by or on behalf of a Council and the immediate execution or doing of which is, in his opinion, necessary for the health or safety of the public; and may direct that the reasonable expense of executing the work or doing the act, with a reasonable remuneration to the person appointed to execute or to do it, shall forthwith be paid by the Council.
(2) If the expense and remuneration are not so paid, the Collector may make an order directing any person, who for the time being has custody of any moneys on behalf of a Council as its officer, treasurer banker or otherwise, to pay such expense and remuneration from such moneys as he may have in his hands or may from time to time receive, and such person shall be bound to obey such order. Every payment made pursuant to such order shall be a sufficient discharge to such person from all liability to the Council in respect of any sum or sums so paid by him out of the money of the Council held or received by him.
(3) The provisions of Sub-sections (2), (3) and (4) of the last preceding section shall apply so far as may be to any order made under this section.'
The Director is empowered to prevent extravagance in the employment of establishment under Section 310. The State Government may also make an order to hold inquiry into matters concerning municipal administration (Section 311). Section 312 enables the Director to enforce performance of duties imposed on Municipal Councils. Under Section 313, the State Government is authorised, inter alia, to dissolve a Council, if it is not competent to perform duties imposed on it by or under Act or any other law for the time being in force or persistently makes default in performance of such duties, or in complying with lawful directions and orders issued by the Collector, the Director, or the State Government or any other authority empowered under law to issue such directions or orders to Council. The consequences of dissolution have also been mentioned in subsequent provisions.
11. The question for consideration before us is whether the Collector could or could not exercise powers under Sub-section (1) of Section 308 of the Act once an order passed by the Council has been implemented, executed or effected. The contention of the petitioners is that no such power could be exercised by the Collector after an order passed by the Municipal Council has been implemented. The point, according to the petitioners, is no longer res integra and has been finally set at rest by several decisions of this Court. As the action of the Collector is unlawful and against the law laid down by this Court, it deserves to be quashed and set aside.
12. The contra-submission on behalf of the Municipal Council and theGovernment is that the decisions rendered by this Court earlier are not inconsonance with law. They are also against public interest. The relevantprovisions have not been considered, interpreted and applied by various DivisionBenches in their proper perspective and those decisions are required to bereconsidered and also overruled.
13. Having heard the learned Counsel for the parties, in our opinion, the contention raised on behalf of the State Government as well as by the Municipal Council must be upheld. It is true that a direct question arose before the Division Bench of this Court in Chandrashekhar. The Bench interpreted provisions of Sections 308 and 309 of the Act and held that the Collector had no power or authority to suspend the execution of any order or resolution, if such order or resolution has already been implemented or executed. Dealing with the relevant provisions of law, the Court stated :
'Insofar as the second contention of Mr. Deshmukh is concerned, proper reading of Sub-section (1) of Section 308 would indicate that the Collector can suspend, (a) the execution of any order or resolution of a Council, or (b) the doing of anything which is about to be done or is being done by or on behalf of a Council. The Collector can exercise this power of suspension if the order, resolution or the act stated above is (a) likely to cause injury or annoyance to the public, (b) against public interest, (c) is likely to lead to breach of peace or (d) is unlawful. The words, 'the execution of any order or resolution of a Council, or the doing or anything which is about to be done or is being done by or on behalf of a Council', occurring in the opening part of Sub-section (1) of Section 308, suggest that the power under that sub-section is given to the Collector to prevent any imminent act on the part of the Council which is likely to give rise to one of the four situations stated above. In this connection it may be stated that Sections 308 and 309 are part of the same scheme. While Section 308 is designed to present in emergency an order, resolution or act of the Council which is likely to lead to serious consequence, Section 309 invests the Collector with the power of execution of certain works in case of emergency. It would, therefore, be seen that Sections 308 and 309 are, as it were, the negative and positive aspects of an action required to be taken in case of emergency or in emergent situation by an extraneous authority like the Collector, when the Council is doing something which is likely and imminently to lead to serious consequence or to do an act which must be done by the Council immediately. Having regard to the language of Sections 308 and 309, therefore, it is not possible to resort to Sub-section (1) of Section 308 to suspend an order which has been already executed or the execution of which does not lead to any of the four consequences stated at the penultimate portion of this sub-section. Mr. Desai has tried to urge that the appointments of the petitioners in disregard of the Rules and Regulations were likely to cause injury or annoyance to the public or would be against public interest and hence the Additional Collector was within his powers to act under this sub-section. For this purpose, he relies on the complaint which had been made to the Additional Collector against the appointments made by the Administrator. Now perusal of the order passed by the Additional Collector does not indicate that he resorted to exercise power under Sub-section (1) of Section 308 of the Act because he was apprehending any injury or annoyance in the public or that in his opinion it was against public interest or that it would lead to breach of the peace. As we have said above, the Additional Collector has deemed it fit to suspend the orders of appointment because, in his view, these appointments were made without creating posts, without selecting candidates sponsored by the Employment Exchange and without filling the back-log. It may be that the administrator has overlooked all these things, but it is difficult to see how these irregularities in the matter of appointments of the petitioners would lead to any consequence contemplated by Sub-section (1) of Section 308, Such appointment would not be unlawful as nothing is pointed out as to against which provision of law these appointments are made. We, therefore, find that the Additional Collector assumed that he had the power to act under Section 308 of the Act and exercised his power in a matter which did not fall within the purview of that section and hence also his order is void'.
14. It is, therefore, clear that in Chandrashekhar, the Court held that the Collector could suspend the execution of any order or resolution of Council or the doing of anything which is about to be done or is being done by or on behalf of a Council. The Division Bench indicated that the words 'execution of any order or resolution of a Council, or the doing or anything which is about to be done or is being done by or on behalf of the Council', suggested that the power conferred on the Collector could be exercised to prevent any imminent act of the Council which would give rise to one of the four situations. Having regard to the language of Section 308 of the Act, it was not possible to suspend an order which had already been executed. The Court also noted that Sections 308 and 309 are part of the same scheme. While the former designed to suspend execution of any order or resolution causing or likely to cause injury or annoyance to the public or is against the public interest or leading to breach of peace or otherwise unlawful, Section 309 invested the Collector with the power of execution of certain works in case of emergency. The legislature, therefore, in the opinion of the Division Bench, dealt with negative as well as positive aspects of an action required to be taken in emergency. The Court went to the extent in observing that even if there were irregularities in the matter of appointment of employees, it would be difficult to see how it would lead to any of the consequences contemplated by Sub-section (1) of Section 308 and hence, such appointment could not be countenanced unlawful and no power under Sub-section (1) of Section 308 could be exercised by the Collector.
15. In Prakash Kutik again, a similar question arose before a different Division Bench. It appears that though the judgment in Chandrashekar was not brought to the notice of the Court, considering the language of Sub-section (1) of Section 308, the Court held that plain reading of the provisions left no room for doubt that the powers conferred on the Collector could be exercised only in exceptional circumstances and in emergency. The Court stated that the dismissal of an employee on the ground that his appointment was in violation of rules can, by no stretch of imagination, attract Sub-section (1) of Section 308. The Court laid down a proposition of law that the powers under the said provision could be exercised 'only in cases of grave danger or emergency where the enforcement of power is a must to prevent serious damage'.
16. The Court stated,
'The plain reading of this sub-section makes it clear that the powers conferred on the Collector are to be exercised in exceptional circumstances and in emergency. The dismissal of an employee on the ground that his appointment is in violation of the Rules can by no stretch of imagination attracts the powers under Sub-section (1) of Section 308 of the Act. It is difficult to appreciate how dismissing 35 employees appointed by the Municipal Council is required to prevent annoyance to the public or would lead to the breach of peace. In our judgment, the powers under Sub-section (1) of Section 308 of the Act can be exercised only in cases of grave danger or emergency where the enforcement of power is a must to prevent serious damage. The Collector had no power under Sub-section (1) of Section 308 of the Act to remove the employees on specious ground that their appointments are in violation of the Rules.'
17. One more ground also weighed with the Division Bench and it was that even if the Collector had power to dismiss an employee under the said provision, since the impugned action would result in civil consequences being ensued, it could not be taken without giving an opportunity of hearing to the person likely to be adversely affected. In the opinion of the Court, the action of the Collector was 'high-handed' inasmuch as the appointment of the petitioner could not be said to be irregular. If the Municipal Council had passed a resolution that a member of the family of an employee who would be retiring would be provided with employment in the cases where there is no other earning member in the family of such member, the Collector could not disturb the appointment by observing that the appointment was made without inviting applications or without inviting names from the employment exchange or without holding interviews.
18. The provision for giving appointment to a member of the family of an employee who had retired from service was described as a salutary provision by the Division Bench. Virtually, therefore, the doctrine of hereditary office had been approved by this Court, submitted the learned Government Pleader appearing for the State and the learned Counsel appearing for the Municipal Council.
19. The above view was reiterated in Dinesh Namdeo Pingale and Ors. v. Collector of Dhule and Ors., Writ Petition No. 6018 of 1986. In Bhalchandra Pandit Gharote and Ors. v. Collector, Dhule and Ors., Writ Petition No. 4922 of 1990, following the above decisions and setting aside the order passed by the Collector, the Court observed :
'We are unable to persuade ourselves to take a view different from the one taken in the aforesaid three rulings,'
20. Reference was also made to two decisions in Writ Petition No. 852 of 1990 and Writ Petition No. 1928 of 1996 decided on 10th January, 2002. It may, however, be stated that the above two cases were not decided on interpretation of Section 308 of the Act. Relief was granted to the petitioners by observing that they were appointed in 1990 and 1996 and though substantial time had passed 'nothing adverse was found against any of the employees' and, thus, there was no alternative but to allow the petitions in terms of interim directions.
21. Affidavits in reply have been filed in Writ Petition No. 1990 of 1996, one by the Administrator, Municipal Council, Dhule on 27th of August, 1998 and another by the Chief Officer of Municipal Council, Dhule, on 24th of January, 2002. In the first affidavit, the Administrator stated that the appointments of the petitioners are illegal and void ab initio. The provisions of the Act, Rules and Regulations for appointment of employees in the Municipal Council were followed more in breach than in observance. According to the deponent, there was no advertisement for the posts on which the petitioners were appointed, no applications were invited, prior sanction of the competent authority was not obtained, names were not called from Employment Exchange, even the posts were not sanctioned posts, the Municipal Council did not require services of the petitioners and yet, ignoring all those considerations, appointments were made by the President. The petitioners, therefore, did not get any right in their favour to continue in service. Reference was made to Keval Bana Gopal Mali and Ors. v. Dhule Municipal Council, 1988 (II) C.L.R. 842.
22. It was further stated that the Council was over-burdened by employees. Many of the employees were surplus and the Council did not require their services. The Director of Administration has also raised an objection against illegal appointments and surplus staff in the Municipal Council. Moreover, financial position of the Council was also not such that it could sustain additional burden. According to the deponent, effective steps were, therefore, taken to terminate services of additional and surplus employees.
23. In the second affidavit, it was stated that as per the available record, 394 persons were surplus employees working on unsanctioned posts in Dhule Municipal Council. It was also stated that in addition, 238 employees were working on daily wages and they were also surplus. Most of them were appointed by the President of the Council illegally. The appointments were mostly oral appointments. It was also stated by the Chief Officer that the Municipal Council was overburdened with expenses on its establishment and about half of the expenses related to establishment. It was also asserted by him that the Municipal Council did not require services of surplus employees and it could effectively and efficiently work with the help of employees as sanctioned from time to time.
24. In the affidavit in rejoinder, the petitioners controverted the facts stated and averments made in reply affidavits and reiterated their stand taken in the petition.
25. As stated by us hereinabove, no doubt, this Court in earlier cases held that once an appointment is made, the Collector has no power to invoke Section 308 of the Act and he cannot suspend the execution of an order or resolution passed by the Council. It was also observed that Sections 308 and 309 of the Act are part of the same scheme and must be construed as such.
26. With respect to the Division Benches, in our considered opinion, the law laid down and observations made by the Court in those decisions do not lay down correct law. To us, it is clear that if, in the opinion of the Collector, the execution of any order or resolution of a Council causes or is likely to cause injury or annoyance to the public, or is against public interest, or leads to a breach of peace, or is unlawful, he may suspend the execution or prohibit the doing thereof. If any of the conditions laid down in Sub-section (1) of Section 308 of the Act is satisfied or is present, the Collector has jurisdiction to exercise power under Sub-section (1). The sine qua non for exercise of power by the Collector is that he must be satisfied that execution of any order or resolution or doing of anything which is or about to be done or being done on behalf of the Council (i) is causing or is likely to cause injury or annoyance to the public, or (ii) is against public interest, or (iii) is likely to lead to a breach of peace, or (iv) is otherwise unlawful.
27. In our judgment, therefore, the Division Bench was not right in observing in Chandrashekhar that the words 'the execution of any order or resolution of a Council, or the doing of anything which is about to be done or is being done by or on behalf of a Council', occurring in the opening part of Sub-section (1) of Section 308, suggest that the power under that sub-section is given to the Collector to prevent any imminent act on the part of the Council which is likely to give rise to one of the four situations specified therein.
28. The Court was also not right in observing that Sections 308 and 309 of the Act deal with emergency. Unfortunately, by placing powers under Section 308 on par with powers under Section 309 and considering both the sections as 'part of the same scheme', the Division Bench observed -
'Having regard to the language of Sections 308 and 309, therefore, it is not possible to resort to Sub-section (1) of Section 308 to suspend an order which has been already executed or the execution of which does not lead to any of the four consequences stated at the penultimate portion of this sub-section.'
The Division Bench concluded that the Collector assumed the power under Section 308 of the Act which was not vested in him and exercised the same in a matter which did not fall within the purview of that section and hence the order was bad.
29. In our view, the Division Bench was right to the limited extent in holding that the power conferred by the legislature under Sub-section (1) of Section 308 upon the Collector must be exercised only when one of the conditions laid down therein is fulfilled. Existence of such a situation is a preliminary fact or condition precedent for the exercise of such power. But once the said condition is complied with, the section (Section 308) will operate independently and the power can be exercised without recourse to Section 309. In fact, to us, it is abundantly clear that both the sections operate in different fields and in different situations. Whereas Section 308 is general in nature and provide for exercise of power to suspend execution of orders and resolution of Council on certain grounds in all circumstances, Section 309 is exceptional and deals with the extraordinary situations in cases of emergency. It was, therefore, incorrect to state that both deal with same or similar situation. True it is, that both are in Chapter XXIII (CONTROL) and both of them empower statutory authorities under the Act to take certain steps, but the situations contemplated by two different sections are totally different, distinct, separate and independent. By not properly interpreting and applying them, a clear error of law has been committed by the Court and the decisions, in our opinion, deserve to be overruled.
30. We may, however, refer to a decision of the Supreme Court in Municipal Board, Kannauj v. The State of U.P. and Ors., : [1972]1SCR193 . Considering the provisions of Section 34(1-B) of the Uttar Pradesh Municipalities Act, 1916, the Apex Court held that when a resolution had been fully executed, it could not be suspended by the Collector because there was nothing in the resolution which could be suspended. Section 34(1-B) of the U.P. Act which came up for consideration before the Apex Court read thus -
'The State Government may of its own motion or on report or complaint received by order prohibit the execution or further execution of a resolution or order passed or made under this or any other enactment by a Board or a Committee of a Board or a Joint Committee, or any officer or servant of a Board or of a Joint Committee if in its opinion such resolution or order is prejudicial to the public interest and may prohibit the doing or continuance by any person of any act in pursuance of or under cover of such resolution or order.'
Considering the phraseology used in the section, the Apex Court held that after the execution of the resolution, nothing remained to suspend it and accordingly, the action of the Collector was held to be without jurisdiction. The language used in Section 308 of the Act is different than the language used in the U.P. Act and hence, the ratio laid down in Municipal Board, Kannauj would not apply.
31. A similar question came up for consideration before a Full Bench of the High Court Gujarat in Parshottambhai G. Chavda v. State of Gujarat and Ors., 1998(39) G.L.R. 1048(FB). Section 258 of the Gujarat Municipalities Act, 1963 empowered the Collector to suspend a resolution of a Municipality if he was of the opinion that execution of any order or resolution of the Municipality or the doing of anything which was about to be done or was being done on behalf of the Municipality was causing or likely to cause injury or annoyance to public, etc. Considering the case law on the point, the Full Bench held that the Collector could suspend the resolution even after it was implemented or executed. A decision of the Division Bench of that Court in H.H. Parmar v. Collector, Rajkot, 1979 (20) G.L.R. 97 was overruled. Such an interpretation, according to the Full Bench, would be against public interest and would perpetuate illegality. It might as well result in discriminatory and arbitrary exercise of power.
32. Suppose, by one resolution, two persons A and B are promoted from the post of junior clerk to the post of senior clerk. As soon as the resolution is passed, A reports for duty to the promotional post, and immediately takes charge of the new assignment and starts working as senior clerk. B is unable to attend the office on that day either because of his ill-health or, say, for some work of the Municipality, he was sent out of the town and hence could not resume duty to the promotional post. Thus, it was not his fault in not joining the duty on the promotional post but due to the work of the Municipality, he could not join. Meanwhile, suppose the Collector forms an opinion that the resolution passed by the Municipality was unlawful. In exercise of power under Section 258, therefore, he suspends the resolution. The effect of the order would be that it could be implemented and treated as legal and valid as against A but invalid and illegal as against 6. Such an interpretation, to say the least, would be absurd and would lead to gross injustice and inequity. Unless compelled, a Court of law would not interpret a statutory provision in such a manner. We are in whole-hearted agreement and endorse the view taken by the Full Bench of the High Court of Gujarat.
33. We are, therefore, of the opinion that the interpretation put forward by the Division Bench of this Court in Chandrashekhar and Prakash Kutik does not lay down correct law and we expressly overrule it.
34. In Life Insurance Corporation of India v. Vishwanath Verma and Ors. : AIR1995SC189 , a similar point came up for consideration. It was held by the Apex Court that if the act of the Municipality was not in conformity with law, the doing of such act would be prohibited. In that case, Jabalpur Municipal Corporation formulated a scheme for the benefit of its employees known as Nagar Nigam Karmachari Parivarik Kalyan Yojana. The validity of the scheme was questioned. The Government examined the question from the perspective whether the scheme was in violation of the provisions of the Life Insurance Corporation Act, 1956 or the Insurance Act, 1938. By an order dated 16th December, 1980, the Government of Madhya Pradesh directed the Jabalpur Municipal Corporation to stop the scheme forthwith. The said order was challenged by the employees by filing a petition. The High Court quashed the order on the ground that the State Government had no jurisdiction to suspend or cancel the scheme when it did not fall within the ambit of Section 421 of the Corporation Act. The said section read as under :--
'Power of Government to suspend any resolution or order.-- (1) If, the Government is of opinion that the execution of any resolution or order of the Corporation or of any other authority or officer subordinate thereto or the doing of an act which is about to be done or is being done by or on behalf of the Corporation, is not in conformity with law or with the rules or bye-laws made thereunder, or is likely to lead to a breach of the peace or to cause injury or annoyance to public or to any class or body of persons or is likely to cause waste of or damage to Municipal funds, the Government may, by order in writing, suspend the execution of such resolution or order or prohibit the doing of any such act.
(2) A copy of such order of the Government shall be sent to the Corporation by the Government.
(3) On receipt of copy of the order as aforesaid, the Corporation may, if it is of opinion that the resolution, order or act is not in contravention or excess of the powers conferred by any law for the time being in force, or the execution of the resolution or the doing of the act is not likely to cause waste of or damage to the Municipal funds, make a representation to the Government against the said order.
(4) The Government may, after considering the said representation, either cancel, modify or confirm the order passed by it under Section 1 or take such other action in respect of the matter as may be in the opinion of the Government be just or expedient having regard to all the circumstances of the case.'
The matter was taken by the Life Insurance Corporation to the Supreme Court. Allowing the appeal and setting aside the order of the High Court, the Supreme Court held that a careful reading of Section 421 clearly showed that if the doing of an act which was not in conformity with law, such act could indeed be prohibited and the State Government was within its jurisdiction to invoke Section 421. The exercise of power could not, therefore, be said to be faulty. The action of the State was accordingly held to be in consonance with law.
35. In the instant case, the case of the Municipal Council was that the posts were not sanctioned posts; there was no necessity of making appointments of employees, there were surplus and excess employees, no prior permission of the competent authority was taken; no applications were invited; no names from Employment Exchange were called; the provisions of the Act. Rules and Regulations were not observed; and the President made the appointments of his kiths and kins in violation of statutory provisions. A prayer was, therefore, made to the Collector to exercise power under Section 308(1) of the Act. The Collector, by a speaking order and recording reasons, suspended the said order, once it has been held that the Collector could exercise the power, the action cannot be held illegal on the ground of absence of authority. Declaration of law by different Division Benches of this Court in Chandrashekhar and Prakash Kutik reiterated in subsequent cases, in our considered opinion, did not lay down correct law on the interpretation of Section 308. We, therefore, overrule all the decisions. We hold that even if an order or resolution passed by the Municipal Council is implemented, executed or given effect to, power under Section 308(1) of the Act can be exercised and execution or implementation can be suspended by the Collector if the conditions laid down in the said provision are shown to be present,
36. Whether in a given set of circumstances, such power could or could not be exercised or whether or not such power was exercised bona fide, is a question of fact and must be decided in the light of attenuating circumstances of the case. As a proposition of law, however, it cannot be laid down that once an order or resolution is executed, the authority of Collector comes to an end, in our judgment, therefore, the Court, in earlier cases has committed an error of law and the said view deserves to be interfered with by overruling those decisions.
37. It was finally contended that in any case, such an order would adversely affect the employees inasmuch as their appointments will be set aside by the Collector. It was, therefore, obligatory on the Collector even if it is assumed that he has power to invoke Sub-section (1) of Section 308 of the Act that he should comply with principles of natural justice and fair-play. In the instant case, no notice was issued; no explanation was sought and no reasonable opportunity of hearing was afforded to the petitioners before taking an action of suspension of the order and on that ground also, the order passed by the Collector was liable to be set aside. For the submission, Prakash Kutik was relied upon. There, the Division Bench held, over and above the authority of the Collector, that while exercising statutory power, the Collector was obliged to comply with the principles of natural justice.
38. In our opinion, however, the submission of the learned Counsel for the Municipal Council is well-founded and deserves to be accepted that in the present proceedings, the question before the Collector related to the validity of an order passed by the Municipal Council, Dhule. If no action could have been taken by the Municipal Council or by the President and the action was unlawful, the same could have been suspended by the Collector and in exercise of power under Section 308(1) of the Act and by recording reasons, the Collector passed an order, which cannot be said to be without authority of law. If the case of employees was that the action taken by the Municipal Council was unlawful, it was open to them to take appropriate proceedings in accordance with law. But once it has been held that the Collector has power to press into service Section 308(1) of the Act and suspend an order or resolution of the Council, the matter must necessarily end there. In our opinion, therefore, even those observations in Prakash Kutik are not sound and we do not approve them.
39. We are supported in our conclusion by a decision of the Supreme Court in Subhash Chandra and Ors. v. Municipal Corporation of Delhi and Anr., : [1965]1SCR350 . There, the question of observance of principles of natural justice was raised against an order passed by the State Government under the Punjab Municipal Act, 1911. In that case, since an action of the Municipal Committee in granting certain benefits to the employees was not found to be in consonance with law, the execution was suspended. The aggrieved employees approached the Supreme Court by filing a petition under Article 32 of the Constitution.
40. It was contended on behalf of the employees that no opportunity was afforded to the Municipal Committee to show cause. Such opportunity could not be dispensed with. Non-compliance with natural justice rendered the order void and ineffective. Support was sought from a decision of the High Court of Madras in Abdul Gafoor v. State of Madras, : AIR1952Mad555 .
41. Negativing the contention, interpreting the provisions of the Act and distinguishing Abdul Gafoor and holding that, the petitioners could not raise such contention, the Supreme Court stated :
'Section 235 requires the State Government to give an opportunity to the Municipality and to none else. No grievance is alleged to have been made by the Committee of the omission by the Government to give it the opportunity contemplated by Section 235. It has to be borne in mind that an order under Section 235 takes effect immediately and its operation is not made dependent upon the action contemplated under Section 235. Where an order is made thereunder by an authority other than the State Government that authority has to report to the State Government. But, though such authority is bound to make a report is not inoperative or inchoate. It has to be given effect to by the Committee. It is true that till the procedure set out in Section 235 is complied with, it cannot be regarded as final. But want of finality does not vitiate the order under Section 232. The order is, unless modified or annulled by the State Government, legally effective and binding on the Committee. The Committee can, therefore, acquiesce in it and waive the non-compliance by the State Government with the provisions of Section 235. Since Section 235 does not require an opportunity to be given to parties affected by the order other than the Municipality the petitioners are not entitled to say that the order is bad.'
42. The above observations in Subhash Chandra apply with equal force in interpreting the provisions of Section 308 of the Act as well. The Collector has passed an order and as per the requirement of Sub-section (2) of Section 308, he has forwarded the said order to the Municipal Council, Dhule, affected by the said order, indicating therein the reasons for making the order. The Collector has also submitted a report to the Director along with a copy of the order. It was, therefore, open to the Municipal Council, Dhule, to invoke Sub-section (3) of Section 308 of the Act and to forward a statement to the Director within 30 days from the receipt of the order of the Collector indicating that the order of the Collector should be rescinded, revised or modified. Sub-section (3) clarifies that if no such statement is received by the Director within time, it shall presume that the Council has no objection if the order of the Collector is confirmed. Sub-section (4) of Section 308 of the Act enjoins the Director on receipt of the report from the Collector, and Council's statement referred to in Sub-section (3), if any, to rescind the order or revise, modify or confirm it or direct that the order shall continue to remain in force with or without modification. The proviso to the said sub-section casts a duty on the Director to take into account the statement, if received before such an order is made by him.
43. It is thus clear that the order passed by the Collector is subject to confirmation, modification or setting aside by the Director and if the Municipal Council was aggrieved by such action or was of the view that no such order could have been made, the legislature had provided remedy and it was open to the Municipal Council to make grievance against the action taken by the Collector by invoking Sub-section (3) of Section 308. The provision expressly declares that if no such communication has been sent by the Council to the Director, the latter will presume that the former has no objection if the order passed by the Collector is confirmed. It is not the case of the Municipal Council or even the petitioners that an action was taken by the Municipal Council under Sub-section (3) of Section 308 and yet, the Director had failed to perform his statutory obligation under Sub-section (4) of Section 308 of the Act. Nor it is the case of the Municipal Council that the procedure required by the section had not been followed and in spite of objections raised by it against the report of the Collector, the Director, in violation of statutory provisions, confirmed the order passed by the Collector. It, therefore, cannot be said that the principles of natural justice were violated. The action taken by the respondents, hence cannot be said to be invalid, illegal or contrary to the principles of natural justice and fair-play.
44. For the aforesaid reasons, in our opinion, the reference deserves to be accepted. We hold that the Collector has power, authority and jurisdiction to invoke Sub-section (1) of Section 308 of the Act if he is satisfied that one of the eventualities mentioned in the said sub-section exists. His power, authority and jurisdiction does not come to an end even if the order or resolution is implemented, executed or effected. The reference is answered accordingly. In the facts and circumstances, however, there shall be no order as to costs.
45. The registry is now directed to place the matters before an appropriate Court taking up such matters for further hearing.