Sunil Ambwani, J.
1. Brief facts giving rise to this writ petition are stated as below :
The Chairman of Nagar Palika Parishad. Fatehpur published an advertisement in daily newspaper 'Dwaba Varta' on 2.7.2000 inviting applications for ten posts of Junior clerks and one post of Draftsman for interviews to be held on 16.7.2000. The petitioner applied and appeared before selection committee consisting of the Chairman, the Executive Officer, Water Works Junior Engineer and Sanitary Inspector of Nagar Palika Parishad, Fatehpur. The petitioners, were selected and Issued appointment letter dated 18.7.2000 and joined in the office of Parishad on 19.7.2000. The daily wage workers, the staff of Octroi Department and other aggrieved persons lodged complaint in the office of District Magistrate, Fatehpur about the authority, manner and method of appointment by the then Chairperson in connivance with the Executive Officer. The District Magistrate Instituted an inquiry on which Additional District Magistrate, Fatehpur directed the Executive Officer, Nagar Palika Parishad to make available the entire record relating to such appointment, and not to take any work from the newly appointed persons, and to pay any salary to them. The petitioners filed Writ Petition Nos. 43541 of 2000, 44734 of 2000 and 44796 of 2000 in which interim orders were issued directing the Executive Officer to pay salary to petitioners, if they are working. The District Magistrate, sent a report to the State Government, on which the State Government, by its order dated 20.1.2001, decided and directed to cancel the appointment made in July, 2000. The order was passed in exercise of powers under Section 34 (1B) of the Municipalities Act, 1916. The State Government also directed the financial loss to be ascertained and to take proceedings for the realisation of such loss.
2. Petitioner Nos. 1 and 2 filed a Writ Petition No. 43601 of 2001 and rest of petitioners filed Writ Petition No. 5156 of 2001 challenging the orders passed by the State Government. This Court vide its order dated 13.2.2001 found that the State Government has not passed a reasoned order and had not given any opportunity to the petitioners. The Court directed that in case petitioners make appropriate representation to the authority who passed initial order cancelling the appointment, the said representation shall be decided by reasoned order. The State Government considered the representations filed by the petitioners afresh, and that by a detailed order dated 28.11.2001, these representations were rejected. The State Government found that the appointments were made against the Government Order dated 7.5.1992 by which the State Government had directed all the local bodies to fill up the vacant posts by regularisation of those dally wagers who were working on or before 11.10.1989 and had completed more than three years of service with 240 days in each year. In case, dally wagers are not available, in view of the financial difficulties, the posts were to be kept vacant. In case it was necessary to appoint persons, the prior approval of the State Government was required. It was further directed that such recruitments shall be made under the supervision of District Magistrate by inviting applications from Employment Exchange and following the procedures and rules of reservation. The State Government found that the special appointments made in July, 2000 were irregular. The State Government was not informed nor any approval was taken from the State Government. The surplus staff of octroi department was not adjusted and that the District Magistrate was not informed or associated with the recruitment.
3. The petitioners filed a Writ Petition No. 42218 of 2001, challenging the order dated 28.11.2001 passed by the State Government, on the ground that the necessary documents and reports sent by the District Magistrate, Additional District Magistrate and Executive Officer, Chairman of Nagar Palika Parishad as well as the complaint was not supplied to them. By a judgment and order dated 19.12.2001, this Court found that the orders have been passed in violation of principles of natural justice. The writ petition was allowed and it was made open to the State Government to pass fresh orders after complying with the principles of natural justice. A Contempt Petition No. 987 of 2002 was filed alleging that the judgment of this Court dated 19.12.2001 has not been complied with in which the respondents were directed to appear in person. The order directing the respondents to appear in person was challenged in Special Appeal No. 1181 of 2002. The Division Bench set aside the order of the learned single Judge dated 27.9.2002 on a statement that fresh orders have been passed by the State Government on 24.10.2002, and that the salary shall be paid to the respondents for the month of November, 2001.
4. By an order dated 24-10.2002, the State Government, after supplying all the documents to the petitioners rejected their representations afresh. The State Government again relied upon the Government Order dated 26.6.1992, by which all Local Bodies were directed to ensure regularisation by State Government and were restrained to fill up vacancies unless it was necessary, after prior approval of the State Government and in such cases they were required to make recruitment under the supervision of the District Magistrate by following rules of appointment and reservation. The State Government found that the then Chairman had sought approval of the State Government on 18.12.1999 and 3.5.2000, to which the State Government did not give any reply. It was found that the then Chairman was aware that the State Government had placed a ban on fresh appointment. In para 5 of Its order, the State Government also found that there were only 21 sanctioned posts of Junior Clerks on which 17 persons were working and that four vacancies were required to be offered to the surplus staff of Octroi Department. The State Government also observed that the District Magistrate by his letter dated 26.10.1997 had warned the Executive Officers for taking any steps for recruitment, and that in the present recruitment the rules of reservation were not followed. The representations dated 9/11.4.2000, 4.5,2002 and 17.2.2001 were consequently rejected. Aggrieved the petitioners have filed this writ petition.
5. Counter-affidavits of Shri Ashutosh Dwlvedl, Executive Officer, Nagar Palika Parishad, Fatehpur and Sri Sunll Kumar Gupta, Section Officer, Nagar Vikas Anubhag-6, Civil Secretariat, Lucknow have been filed defending the orders passed by the State Government.
6. Dr. R. G. Padia appearing for the petitioners, submits that the Chairman of Nagar Palika Parishad is the appointing authority. Section 74 of the U. P. Municipalities Act, 1916 (in short the Act) gives the powers of appointment, dismissal, removal to the Chairman and the Executive Officer. The Nagar Palika Parishad is a Local Body and has a constitutional status under Seventy Third Amendment to the Constitution of India. The State Government cannot interfere in the affairs of the Nagar Palika Parishad. He submits that Section 34 (1B) of the U. P. Municipalities Act, 1916 does not empower the State Government to prohibit the execution of Board's order and to cancel the appointment made by the Chairman of the Parishad. According to him, there are 24 sanctioned posts of Junior Clerks in the Parishad. Even after separation of Education Department, 24 Junior Clerks were initially working and that before the subject recruitment there was only 14 regular appointees. The vacancies were caused on retirement, detailed in para 14 of the writ petition and that there was a vacancy on the post of Daftari on the retirement of Chaudhari Habibayar. The Parishad was short of staff and that the then Chairman sent information to the State Government on 18.12.1999 with regard to these vacancies. He also sent reminders to the State Government on 3.5.2000. The Parishad had determined and submitted a report regarding the vacancies and requested for Immediate appointments. The report was approved and forwarded by the Executive Officer, on which it was decided to make appointment and that the advertisement was published on 2.7.2002. The Selection Committee was duly constituted. He submits that the posts of Junior Clerks and Draftsman do not fall in centralised service and there are no statutory provisions under the Act and Rules for recruitment to these posts. A clear and transparent procedure was adopted and the petitioners selected by following rules of reservations were offered appointments. Dr. Padia submits that Suman Verma. Shiv Shanker Singh and Dharmendra Singh belongs to Lodhi (Vimukta) caste which is Scheduled Tribes in district Fatehpur. Sri Ashok Kumar, Mohd. Suaib and Arvind Kumar belong to Backward Classes. Sri Ashok Kumar, Arvind Kumar and Mohd. Affaq Akhtar belong to Nai, Kumbhar and Muslim castes which are Backward Classes and thus the quota of reservation was followed. He further submits that Sub-section (1B) of Section 34 read with Sub-section (4) of the Act does not apply to cancel or restrict any resolution or order of the Board, which has exhausted in itself and has relied upon the judgment of this Court in Risht Kumar Gupta v. Nanoomal Yadav and Ors., AIR 1976 All 365 ; Har Pal Singh v. State of U. P. and Ors., AIR 1977 All 302 and Municipal Board, Kannauj v. State of U. P. and Ors., AIR 1971 SC 2147.
7. Learned standing counsel submits that the financial position of the Municipalities in the State of U. P. has deteriorated in the recent past and that the State Government was also suffering from financial crisis. The Ministry of Finance instructed and advised all the departments to curtail these expenses, and that by Government Orders dated 16.6.1999 all the departments including local bodies and authorities were required to improve their financial position. One of the measure taken was to prohibit any appointments on the vacant posts. Similar Government Orders were Issued on 7.1.1999 restraining appointments in the existing vacancies. The power of the Municipal Board to create the post and prescribe service condition is not absolute but it is subject to Section 71 of the Act which restricts the appointment subject to any general or special directions that may be issued by the State Government, which includes the power not to fill up vacancies as well as placing of ban upon it. The Municipal Bodies have been making indiscriminate appointments without following the procedures and the rules, and had created extraordinary financial burden upon the State Government. In the interest of existing employees and to maintain financial discipline various Government Orders have been issued. He has relied upon Government Orders dated 19.12.1977 which required prior approval/sanction from the State Government before creation of any permanent post and the Government Orders dated 5.7.1992 which restricted the local bodies to make any recruitment from open market without prior approval of the State Government. It is submitted by him that Section 34 (1B) read with Section 71 of the Act authorises the State Government to cancel any appointment made against the directions issued by the State Government. Whereas the selection and appointment is to be made by the Chairman, the sanction of the posts and the need to fill up the posts is to be ascertained by the State Government and in view of the special circumstances in which the local bodies are running on the financial grants given by the State Government, it is all the more necessary to ensure strict compliance of the Government Orders. In the present case, he submits, that there were no vacancies, and that the daily wagers and retrenched employees of the Octroi Department were required to be given preference. The District Magistrate had restrained the parishad from making any appointments, and that inspite of the restrictions, without taking prior approval, the Chairman proceeded to make appointment. Learned standing counsel submits that the State Government has rightly directed the Parishad to cancel these appointments.
8. Sri P. K. Singh, appearing for the Nagar Panchayat Parishad placed on record the averments and documents in the counter-affidavit which demonstrate that there were no vacancies to be filled by direct recruitment. He submits that in the year 1972 there were only 19 sanctioned posts of clerks to which only 5 additional posts were added. With the separation of the education department and the placement of staff attached to Basic School, under Basic Shiksha Parishad, 3 posts of clerks were transferred to Basic Shiksha Adhikari Fatehpur. There were only 21 sanctioned posts, and that on the date when the advertisement was issued 17 clerks were working on these posts. There were only 4 existing vacancies, and as per Government Orders dated 19.4.1996 prior sanction/approval was required to make appointment on these posts. The then Chairperson Smt. Raj Kumari Lodhi started making grounds to make appointment of her choice and started making efforts in writing letters to the State Government. The District Magistrate by his letter dated 24.6.1997 warned the Executive Officers to make any fresh appointment in violation of Government Order dated 3.4.1996. An advertisement was issued on 2.7.2000, inviting applications for interviews. The interviews were taken on 16.7.2000 and that on 18.9.2000 appointment letters were issued and that the petitioners joined on 19.7.2000. The-procedure was not followed and the entire recruitment was made within two days. The rules of reservation namely quota for S.C. and S.T./ B.C./ Physically Handicapped was not provided. Out of ten appointment, three appointees were relative of the sitting Chairman and the sitting elected members of Nagar Palika Parishad, Fatehpur. The daily wagers working in the Parishad and the erstwhile employees of Octroi Department protested against these appointments. Sri Slngh has also justified powers of District Magistrate under Section 34 (1A) and the powers of the State Government under Section 34 (1B) of the Act, to Issue orders for cancelling these appointments. In para 23 of the counter-affidavit, the alleged illegalities in the appointment are detailed as below :
"(a) The appointments have been made despite ban on appointments imposed by State Government vide G.O. No. 2425-1/0-1-96-78 SA/ 96, dated 3.4.1996.
(b) The appointments have been made in clear violation of guidelines/directions contained in G.O. dated 26.6.1992 and G.O. dated 6.1.1999 and G.O. dated 19.12.1977.
(c) The appointments have been made despite availability of surplus staff at Nagar Palika Parishad, Fatehpur.
(d) The appointments have been made without any approval from the State Government and in anticipation of such approval.
(e) The appointments have been made ignoring the reservation quota for S.C./S.T./O.B.C. and other preferential categories.
(f) The appointments have been made despite availability of surplus staff from the erstwhile Octroi Department (since abolished) who could have absorbed (Samahojan) against available vacancies if any.
(g) The appointments have been made to oblige/include close relatives of the then Chairperson Smt. Raj Kumari Singh Lodhi and persons associated with a particular political party.
(h) The office of District Magistrate, Fatehpur was kept in dark about all such appointments.
(i) The manner of appointments was very cloudy and does not reflect transparency and fair play.
(j) Against the available vacancies of four posts of clerk, thus the Chairman proceeded to make appointment of 10 clerks posts.
(k) On account of lack of appointment for several years even the four vacancies on the post of clerks available at Nagar Palika Parishad, Fatehpur had lapsed and no appointment against them could have been made without obtaining prior sanction/ approval by the State Government."
Section 71 of the Act. Is quoted as below :
"71. Power of Municipality to determine permanent staff.--Except as provided by Sections 57, 66, 68 and 70, and subject to any general or special directions as the State Government may from time to time issue a Municipality may, by special resolution, determine what servants are required for the discharge of the duties of the Municipality and their qualifications and conditions of service."
9. The powers of a Municipal Board (now Nagar Palika Parishad) to determine the strength of non-centralised services, for discharge of duties, their qualifications, condition
of service are subject to any general or special direction of the State Government. Section 74 authorises the President to appoint and dismiss permanent supervisory staff of non-centralised services. This appointment is, however, subject to the availability of the sanctioned posts and vacancies on such post. The President/Chairman in the absence of any rules of appointment has to follow the directions issued by the State Government with regard to the manner, method and procedure of appointment, which are the conditions of service and are subject to directions issued by the State Government under Section 71 of the Act. Although the local bodies such as municipalities have been given functional autonomous, they are still dependent upon the financial grants received from the State Government. These local bodies cannot make indiscriminate appointments or to fill up vacancies against the directions issued by the State Government. The power to issue directions, to determine the number of servants which are required to discharge the duties of municipalities, includes the power to restrain the municipalities to make any appointments and thus the State Government was competent to impose restrictions on filling up vacancies subject to certain conditions. In the present case the Government Order dated 3.4.1996 and 5th May, 1992 did not impose a complete ban, but made the exercise of such powers conditional, subject to regularisation of daily wage employees who had worked for the years or before 1.10.1989, the absorption of retrenched employees of Octroi Department, and prior approval of the State Government. These conditions were within the scope of Section 71 of the Act, and was neither unreasonable nor arbitrary to the exercise of such powers. Section 34 (1B) of the Act authorises the State Government to prohibit execution of or further execution of resolution or order of municipality. Sub-section (1B) of Section 34 is quoted as below :
"34 (1B). 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 Municipality or a Committee of a Municipality or a Joint Committee or any officer or servant of a Municipality or of a Joint Committee, if in its opinion such resolution or order is prejudicial to the public interest, or has been passed or made in abuse of powers or in flagrant breach of any provision of any taw for the time being in force and may prohibit the doing or continuance by any person of any act in pursuance of or under cover of such resolution or order."
10. Section 34 (1B) was added by U. P. Act No. 7 of 1949 and was amended by U. P. Act No. 26 of 1964 with effect from 30.11.1964. In Rishi Kumar Gupta v. Nanoomal Yadau and Ors., AIR 1976 All 365, the Court was concerned with exercise of powers by Prescribed Authority under Section 34, in respect of resolution of electing member as Vice-President of the Municipalities. The Division Bench held following the judgment in Kannauj Municipality v. State of U. P. and Ors., AIR 1971 SC 2147, that once the resolution electing the Vice-President became operative, there remains nothing to be done under resolution which could be prohibited by the Commissioner by exercising his power under Section 34 (1). It was held that the authority was created for a limited purpose and where a power is given under a statute to do a certain thing in a certain way, the things must be done in that way. The view expressed by Supreme Court in Municipal Board Kannauj v. State of U. P. and Ors., AIR 1971 SC 2147 was followed in Har Pal Singh v. State of U. P. and Anr. AIR 1977 All 302. In these cases the Division Bench was concerned with a compromise entered into by the Board with third party in pursuance of a resolution passed by the Board, the Bench drew a distinction between a resolution and a contract. The Act postulates that a contract before entered into by the Board must be proceeded by a resolution. It was held that Section 34 (1B) empowers the State Government to cancel a resolution and it is not possible to read into it, a power to enter into a contract by the Board with a third party.
11. In Municipal Board Kannauj (supra), the Supreme Court was concerned with interpretation of Section 34 (1B) as it stood before its amendment by U. P. Act No. 26 of 1964. The word or has been passed or made in abuse of powers or in flagrant breach of any provision of any law for the time being in force' were added by the amendment. The Supreme Court held that the unamended Sub-section (1B) read with Sub-section (4), does not apply to resolution or order which exhausts itself after it was passed or made.
12. An illegal appointment by an officer of the Board in abuse of its powers, can be restricted by the State Government. I do not find that the amended Sub-section (1B), can be read in such a manner, to restrict the powers of the State Government in respect of illegal appointment made after the amendment, on the ground that such appointments have been made and that thereafter nothing further remains to be done. In Municipal Board Kannauj (supra), the Supreme Court was concerned with the dismissal of certain supervisor by the Executive Officer of the Municipal Board. The dismissal or removal of an employee brings an employment to an end. In such case there was nothing further to be done. But where an employee has been appointed illegally he continues to serve the Board and remains in office inspite of his illegal appointment. The State Government, therefore, can restrain such person to act and thus cancel the appointment under Sub-section (1B). Such an exercise of power by the State Government will fall within the purview of the word 'may prohibit the doing or continuance by any person at any act in pursuance of or under cover of such order'.
13. The judgment cited by Dr. R. G. Padia not applicable under subsection (1B) of Section 34 to pass orders directing the Chairman of the Nagar Palika Parishad to cancel the appointments made in July, 2000, and to recover the amount.
14. The submission of Dr. R. G. Padia that the subsequent order of the State Government dated 24.10.2002 do not operate to terminate petitioners services is also not worthy of consideration as by this order the State Government only rejected the representations made by the petitioners against the order dated 20.1.2001.
15. Sri P. K. Singh has rightly contended that there were only four vacancies in July, 2000, and that these vacancies after prior approval of the State Government could only be filled by regularisation of the daily wagers who qualified for such appointments under Government Orders dated 7.5.1982, and the retrenched employees of the Octroi Department of the Municipality. The then Chairperson, Nagar Palika Parishad, Fatehpur not only defeated the rights of the eligible daily wagers and retrenched employees of Octroi Department, she deliberately having full knowledge of the restrictions imposed by the State Government and having applied to the State Government for appointment, proceeded to advertise non-existing vacancies and made selections without obtaining prior approval of the State Government and associating the District Magistrate with these selections. The interviews took place on 16.10.2000 and the appointment letters were issued on 18.10.2000. It is rather surprising that the petitioners joined on the next date. The expediency in which these selections were made clearly suggest that the selections were motivated for favoured persons.
16. In the facts and circumstances of the case, 1 find that there were only four vacancies on the sanctioned posts of clerks and that there was no vacancy on the post of Daftari as the post was abolished. The then Chairperson proceeded to make selection, against Government Orders dated 19.2.1977 and 7.5.1992, and that the advertisement was made for direct recruitment without considering the right of regularisation of eligible daily wagers, and absorption of retrenched employees of Octroi Department. She was not given approval of the State Government for such appointments. The urgency and the requirement of the staff was not established, The District Magistrate was not associated with the selection and that the State Government had authority under Section 34 (1B) of the Municipalities Act, 1916 to cancel such appointments, The entire selections were illegal and were held arbitrarily in hurry. The State Governmenl rightly cancelled these selections.
17. The writ petition is, accordingly, dismissed, with no order as to costs.