P.D. Desai, Actg. C.J.
1. The petitioners are the employees of the first respondent Municipality. The first petitioner is occupying the post of Octroi Clerk since 1975. The second petitioner is occupying the post of Hydraulic Engineer since 1973. The first and the second petitioners were at the material time elected members of the Board of Directors of two Societies registered under the Gujarat Co-operative Societies Act, 1961 (hereinafter referred to as 'the Act'). They were elected as Directors of Anand Peoples Co-operative Bank Ltd. in or about August 1981. They were also elected as Directors of the Anand Dudh Vaparnari Madhyastha Grahak Sahakari Mandali Ltd. in or about September, 1981. The second petitioner was also at the material time an elected Director of the Anand Industrial Estate Co-operative Society Ltd. It would thus appear that the petitioners, while in the employment of the respondent-Municipality, were taking active interest in the Co-operative movement and that they were intimately connected with the management of some Societies registered under the Act.
2. The General Board of the respondent-Municipality, at its meeting held on January 30, 1981, passed resolution No. 380 whereunder it was decided to add the following two rules in the existing rules and to seek the approval of the State Government for the addition of those rules:
87-1. No officer or servant of the Municipality can contest as a candidate or actively take part in the election of the local Co-operative Societies, Co-operative Banks or other local institutions.
87-2. If any officer or servant has contested as a candidate or taken active part in the election of local Co-operative Societies, Co-operative Banks or other local institutions, he shall cease to be a Municipal Officer or servant and his office shall become vacant.
In exercise of the powers conferred by proviso (a) to Section 1 of the Gujarat Municipalities Act, 1963 (hereinafter referred to as 'the Municipalities Act'), the Director of Municipalities of Gujarat State purported to grant approval to the said two rules under his order dated October 1, 1981. The Central Board of the respondent Municipality thereafter passed resolution No. 583 on March 26, 1982 bringing into force the said two rules on and with effect from July 1, 1982.
3. The petitioners instituted the present petition on June 28, 1982 challenging Rules 87-1 & 87-2 on the ground that the said two rules were unconstitutional. Notice was issued on the petition on June 29, 1982. On July 21, 1982, Rule nisi was issued on the petition and ad-interim relief was granted directing that the rules in question shall not be construed as preventing or disabling the petitioners from contesting the election in a Co-operative Society formed by the employees of the respondent-Municipality.
4. During the pendency of the petition, the respondent-Municipality served notice upon the petitioners on or about October 14, 1982 requiring them to show cause why their services should not be terminated in view of the fact that they had committed a breach of Rules 87-1 & 87-2 by being elected on the Board of Directors of the two Societies in question. Thereupon the petitioners instituted Civil Application No. 3934 of 1982 seeking amendment of the petition as also interim relief restraining the respondent-Municipality from taking any step pursuant to the show cause notice or terminating the services of the petitioners invoking in aid Rules 87-1 and 87-2. By an order made on October 21, 1982 the amendment was granted and status quo was ordered to be maintained.
5. At the hearing of the petition, the validity of Rules 87-1 and 87-2 has been challenged on the following grounds:
(1) Rule 87-1, in so far as it prohibits a Municipal employee from contesting as a candidate or taking active part in the election of Co-operative Societies, Co-operative Banks or other local institutions is ultra vires Articles 14, 16, 19(1)(a) & 19(1)(c) of the Constitution.
(2) Rule 87-2, in so far as it provides for automatic cessation of the employment of a municipal employee who has contested as a candidate or taken active part in such election is ultra vires Articles 14 and 16 of the Constitution.
(3) The rules are ultra vires Section 271 of the Municipalities Act, in so far as the said section does not confer power, authority and jurisdiction upon the respondent-Municipality to frame such rules.
(4) In any event, the show cause notices are bad inasmuch as both the petitioners were holding an elective office in a Co-operative Society much prior to the bringing into force of the amended rules and no action in the direction of terminating the services of the petitioners could be taken on the strength of the provisions contained in those rules which came into force subsequently.
6. In our opinion, it is not necessary to consider the validity or otherwise of the submissions other than the submission that the rules contravene the fundamental right guaranteed under Article 14 & 16 since the petitioners are entitled to succeed on the said ground.
7. Before considering the challenge to the constitutional validity of the rules, it is necessary to point out that in the preambulary portion of resolution No. 380 passed by the respondent-Municipality, the object and purpose behind the enactment of the impugned rules have been clearly spelt out. The preamble mentions that the Municipal employees were taking part in the elections of various Co-operative Societies which resulted in factionalism and, consequently, in the loss of objectivity and loyalty in the discharge of their duties as Municipal employees. This was the underlying purpose and the evil sought to be remedied by the enactment of the impugned rules.
8. Rule 87-1 enacts a complete bar against a municipal employee contesting as a candidate or taking an active part in the election of the local Co-operative Societies, Co-operative Banks or other local institutions. The bar thus enacted operates as regards Co-operative Societies of all categories and description including Co-operative Banks and other local institutions functioning within the limits of the Anand Municipal Borough. The words 'other local institutions' are words of wide import. They would take in all kinds and varieties of institutions such as educational institutions, social service organizations, trade unions, etc.
9. Rule 87-2 provides for the consequence which would automatically follow in the event of the prohibition being contravened by a municipal employee. If a municipal employee has contested as a candidate or taken active part in the election of local Co-operative Societies, Co-operative Banks or other local institutions, he will cease to be a municipal employee and his office shall become vacant. In the event, therefore, of a breach of Rule 87-1, the services of the municipal employee would automatically stand terminated.
10. Two fold challenge against the constitutional validity of the impugned rules in the context of Articles 14 and 16 was levelled. First, Rule 87-1 is arbitrary, unreasonable and oppressive; in any case, the rule, in its operation, overreaches the underlying purpose and it is grossly disproportionate to the evil sought to be remedied by its enactment. Secondly, Rule 87-2, in so far as it provides for automatic termination of the service of a municipal employee in whose case the prohibition imposed by Rule 87-1 is contravened, without following any procedure and without complying with the rules of natural justice, is arbitrary; it is not right, just and fair in its operation and it fails to answer the test of fairness and reasonableness.
11. We shall first take up for consideration the challenge to Rule 87-2. We do not think there is any merit in the challenge levelled against the said rule on the ground aforesaid. Though the rule does not provide for an inquiry being held and an opportunity of hearing being given to the municipal employee against whom an action is intended to be taken, such a requirement will have to be read into the rule by necessary implication. There are no express words indicating that such requirement is dispensed with. In the absence of a specific provision to that effect, it would be fair and proper to read into the rule the requirement of following a just and fair procedure which would include prior notice and hearing being afforded to the employee against whom the action is proposed to be taken. It is settled law that a statutory rule may be read down in order to uphold its constitutionality. The principle must be applied in the present case in the absence of a clear indication to the contrary. Under the circumstances, in our opinion, on a true and proper interpretation of Rule 87-2 in the constitutional perspective, the requirement of prior notice and the right of hearing must be read into the said rule. If, therefore, the services of a municipal employee are proposed to be terminated under the said rule, it would be essential to hold an inquiry at which the concerned employee will have to be given a proper notice as to the nature of the case against him and he will also have to be given a fair and proper opportunity to meet the case against him and to state his own case. The decision will thereafter have to be reached objectively and bona fide, taking into consideration all the relevant facts and circumstances of the case. If the action under the said rule is taken otherwise than by following such a procedure, the action will be open to challenge as being in contravention of the rule as well as of the constitutional guarantee under Article 14. For the foregoing reasons, we do not think there is any merit in the challenge against Rule 87-2 on the ground articulated earlier.
12. Be it clarified at this stage that Rule 87-2 is closely connected with Rule 87-1. In fact, as earlier pointed out, Rule 87-2 prescribes the consequences which would automatically follow upon the contravention of the injunction contained in Rule 87-1. Therefore, if the petitioners succeed in their challenge the Rule 87-1, Rule 87-2 will simultaneously fall to the ground. In that event, Rule 87-2 will also be liable to be declared as ultra vires.
13. The attention must be turned now to Rule 87-1. Before we consider the challenge to the said rule, it would be advantageous to ascertain the true scope and ambit of Article 14. Pursuant to three leading decisions of the Supreme Court delivered in recent years, Article 14 has acquired a new dimension. Those decisions are E.P. Royappa v. State of Tamil Nadu : (1974)ILLJ172SC ; Ramana Dayaram Shetty v. The International Airport Authority of India : (1979)IILLJ217SC and Ajay Ilasia v. Khalid Majib : (1981)ILLJ103SC . Since the decision in Ajay Hasia's case is the latest in point of time, it would be profitable to extract the relevant observations from the said decision. It is observed as follows:
The true scope and ambit of Article 14 has been the subject-matter of numerous decisions and it is not necessary to make any detailed reference to them. It is sufficient to state that the content and reach of Article 14 must not be confused with the doctrine of classification. Unfortunately, in the early stages of the evolution of our constitutional law, Article 14 came to be indentified with the doctrine of classification because the view taken was that Article forbids discrimination and there would be no discrimination where the classification making the differentia fulfils two conditions, namely, (i) that the classification is founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group, and (ii) that that differentia has a rational relation to the object sought to be achieved by the impugned legislative or executive action. It was for the first time in E.P. Royappa State of Tamil Nadu (1974) 2 S.C.R. 348 : : (1974)ILLJ172SC , that this Court laid bare a new dimension of Article 14 and pointed out that that Article has highly activist magnitude and it embodies a guarantee against arbitrariness. This Court speaking through one of us (Bhagwati, J.) said-.We cannot countenance any attempt to truncate its all-embracing scope and meaning, for do so would be to violate its activist magnitude. Equality is a dynamic concept with many aspects and dimensions and it cannot be 'cribbed, cabined and confined' within traditional and doctrinaire limits. From a positivist's point of view, equality is antithetic to arbitrariness. In fact, equality and arbitrariness are sworn enemies, one belongs to the rule of law in a republic while the other, to the whim and caprice of an absolute monarch. Where an act is arbitrary it is implicit in it that it is unequal both according to political logic and constitutional law and is, therefore, violative of Article 14, and if it affects any matter relating to public employment, it is also violative of Article 16. Articles 14 and 16 strike at arbitrariness in State action and ensure fairness and equality of treatment.
This vital and dynamic aspect which was till then lying latent and submerged in few simple but pregnant words of Article 14 was explored and brought to light in Royappa's case and it was reaffirmed and elaborated by the Court in Maneka Gandhi v. Union of India : 2SCR621 , where this Court again speaking through one of us (Bhagwati, J.) observed:
Now the question immediately arises as to what is the requirement of Article 14; what is the content and reach of the great equalising principle enunciated in this Article. There can be no doubt that it is a founding faith of the Constitution. It is indeed the pillar on which rests securely the foundation of our democratic republic. And, therefore, it must not be subjected to a narrow, pedantic or texicographic approach. No attempt should be made to truncate its all-embracing scope and meaning, for, to do so would be to violate its activist magnitude. Equality is a dynamic concept with many aspects and dimensions and it cannot be imprisoned within traditional and doctrinaire limits... Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. The principle of reasonableness, which legally as well as philosophically, is an essential element of equality or non-arbitrariness pervades Article 14 like a breeding omnipresence.
This was again reiterated by this Court in International Airport Authority's case : (1979)IILLJ217SC (supra) of the Report. It must, therefore, now be taken to be well-settled that what Article 14 strikes at is arbitrariness because an action that is arbitrary must necessarily involve negation of equality. The doctrine of classification which is evolved by the Courts is not paraphrase of Article 14 nor is it the objective and end of that Article. It is merely a judicial formula for determining whether the legislative or executive action in question is arbitrary and, therefore, constituting denial of equality. If the classification is not reasonable and does not satisfy the two conditions referred to above, the impugned legislative or executive action would plainly be arbitrary, and the guarantee of equality under Article 14 would be breached. Wherever, therefore, there is arbitrariness in State action whether it be of the legislature or of the executive or of an 'authority' under Article 12, Article 14 immediately springs into action and strikes down such State action. In fact, the concept of reasonableness and non-arbitrariness pervades the entire constitutional scheme and is a golden thread which runs through the whole of the fabric of the Constitution.
14. The law enunciated by the Supreme Court in the aforesaid decision proclaims that where an act is arbitrary, it would be violative of Article 14 and that if such an act, whether legislative or executive in character, affect any matter relating to public employment, it would also be violative of Article 16. This is so because an action that is arbitrary must necessarily involve negation of equality. Wherever, therefore, there is arbitrariness in State action, Article 14, and if it is a matter pertaining to Service Law, Article 16, would immediately spring into action and strike down such State action.
15. We may now turn to the merits of the controversy cenerting round the validity of Rule 87-1. It has been pointed out earlier that in the preambulary portion of resolution No. 380, the object and purpose underlying the enactment of the said rule have been set out. It has been recited in the preambulary portion that factionalism was generated amongst municipal employees if they took part in the elections of different Co-operative Societies and that there was consequential loss of objectivity and loyalty in the discharge of their duties as municipal employees. Nothing more is found to have been stated in the body of the resolution in justification of the enactment of the rule. Even by way of illustration, the categories of Co-operative Societies in the elections of which the municipal employees were taking part are not specified and how such activity on their part necessarily generated factionalism so as to affect the discharge of their duties as municipal employees is not explained. No affidavit-in-reply has been filed on behalf of the respondent-Municipality to place on record any such material. It is a matter of common knowledge that there are various types of Co-operative Societies such as Co-operative Housing Societies, Consumers' Co-operative Societies, Credit Co-operative Societies, Employees Co-operative Societies, etc. The activities of such Co-operative Societies may be spread over different areas in the Municipal Borough. It is not unlikely that in quite a few of them, only one or two or an extremely limited number of municipal employees might be members. It is extremely difficult, if not impossible, to believe that taking part in the election of such Societies by a few employees inevitably generate factionalism and that the same would reflect upon the discharge of duties as employees of the Municipality. One could have appreciated if in light of the past experience and in order to achieve the underlying purpose and to cure the mischief, if any, resulting from such activity on the part of the municipal employees, the prohibition against taking part in the elections of a few specified categories of local Co-operative Societies was laid down by the enactment of a proper rule. However, a blanket ban against a municipal employee contesting as a candidate or taking an active part in the election of all categories of local Co-operative Societies and Co-operative Banks is clearly arbitrary and unreasonable. The irrationality of the rule becomes evident if it is appreciated that its resultant effect would be that the municipal employees would not be able to organise and manage even an Employees' Co-operative Housing Society or an Employees' Cooperative Credit Society or an Employees' Consumer Co-operative Society, all of which are generally organised with the object of promotion of economic interests or general welfare of the employees and are usually regarded as promoting fellowship and not factionalism.
16. It would not be out of place to point out that Co-operative Socities are governed by and that the rights of its members are regulated by statutory provisions. The Act makes detailed provisions with regard to the management of Co-operative Societies. Section 74, inter alia, provides that the management of every society shall vestin a Committee constituted in accordance with the Act, the rules and the by-laws and that such Committee shall exercise such powers and perform such duties as may be conferred or imposed on it respectively by the Act, the rules and the by-laws. Section 74C specifies certain categories of societies and provides for the conduct of election of the members of the Committees, and of the officers by the Committee, of such Societies. Such elections are required to be conducted in the manner laid down by or under Chapter XI-A. Chapter XI-A, which consists of Sections 145A to 145Z, makes detailed provisions with regard to the elections of Committees and officers of such Societies. In regard of the elections of the members and office bearers of the categories of Co-operative Societies not covered by Section 74C, the matter would be governed by the by-laws of such Societies enacted in exercise of the powers conferred by the Act. It would thus appear that the right to contest at an election of a Co-operative Society is a statutory or a contractual right, as the case may be. When a statutory rule enacted by a local authority seeks to prohibit the exercise of such right in the guise of regulating the conduct of its employees in public interest, such a measure will have to pass the test of reasonableness in order to ensure that the injunction contained in Articles 14 and 16 is not violated. Even assuming, without deciding, that it is open to a local authority to enact such a regulatory measure of a prohibitive nature and to govern the conduct of its employees in regard to activities which do not strictly relate to the discharge of their duties but concern their conduct divorced from their official duties, on the ground that it is necessary so to do in order to ensure efficiency and impartiality in its administration, the expanse of the regulatory measure, its underlying purpose, its extent of the evil sought to be remedied thereby, disproportionate nature, if any, of the imposition are all factors which must enter into account in judging the reasonableness of the regulatory measure. If Rule 87-1 is examined from that view-point or angle, it is apparent that it fails to pass the test. As earlier pointed out, the prohibition is in relation to all categories of Co-operative Societies and Banks functioning within the local limits of the Municipal Borough. There is no material on record to show as to how and to what extent contesting or actively taking part in the election of all categories of Co-operative Societies by any one or more of the municipal employees tends to generate factionalism so as to affect the discharge of their duties. In any case, the blanket ban so imposed is grossly disproportionate to the evil, if any sought to be remedied and its wide expanse overreaches the underlying purpose.
17. However, this is not all. The ban operates even as regards a municipal employee contesting as a candidate or taking active part in the election of 'other local institutions'. The preambulary portion of resolution No. 380 makes no reference to factionalism coming into existence on account of the municipal employee taking part in the election process of such other local institutions. The rule thus transcends the proclaimed underlying purpose. Besides, as earlier pointed out, the words 'other local institutions' are words of wide import. They would take in all kinds and varieties of institutions. It is not inconceivable that in those institutions no other municipal employee may be a member or the institutions may have no concern with municipal affairs or administration. Take, for example, the case of a School, Orphanage, Library or the like, which might be running under me auspices of a particular caste or creed to which only one municipal employee belongs and which has no connection with municipal administration or affairs. If such a municipal employee is elected as a member of the Managing Committee of such a School, Orphanage, Library or the like, his case would be hit by the provisions of Rule 87-1, although his membership as such may not generate any factionalism amongst the municipal employees and bring about loss of objectivity and loyalty in the discharge of his duties. In our opinion, therefore, Rule 87-1 suffers from the vice of arbitrariness and unreasonableness and it is, therefore, violative of Articles 14 and 15 of the Constitution.
18. In the foregoing discussion, we have approached the question of validity of the rule by viewing the preambulary portion of resolution No. 380 at spelling out the underlying purpose of the regulatory measure, namely, preventing factionalism amongst municipal employees, who might contest as candidates or take active part in the election of legal Co-operative Societies or other local institutions and thereby insulating against loss of objectivity and loyalty in the discharge of their duties. Even taking a little wider or broader view of the underlying object as spelt out in the preambulary portion and even assuming that the underlying object is to prevent a municipal employee even if he is a solitary employee - from contesting as a candidate or actively taking part in the election of a local Co-operative Society or other local institution on the ground that thereby he is likely to become a party to the groupism or factionalism in such Society or institution and, on that account, he is likely to lose objectivity and impartiality in the discharge of his duties as a municipal employee, no conclusion other than the one we have reached earlier could have been arrived at. The respondent-Municipality could not have reasonably proceeded on the assumption that in all local Co-operative Societies or institutions necessarily there are groups or factions, that any municipal employee who contests an election or takes active part in the election of such a Co-operative Society or institution would necessarily become a member of one or the other group and that his objectivity and impartiality in the discharge of duties would be affected even though such society or institution may have no concern with the municipal administration. Even from this point of view the expanse of the rule is too wide and the prohibition overreaches the underlying object which was sought to be achieved.
19. As earlier pointed out, no affidavit-in-reply has been filed on behalf of the respondent - Municipality. No attempt has been made on behalf of the respondent-Municipality to uphold the rule by placing on record any material which would help sustain the validity of the rule in the context of the challenge levelled. Under the circumstances, we have no option but to test the rationality of the rule on the basis of the slender material provided in the preambulary portion of resolution No. 380.
20. Once Rule 87-1 is declared ultra vires, Rule 87-2 would also meet with the same fate, as earlier pointed out. The said rule has no independent existence and it must fall to the ground along with Rule 87-1.
20.1. It may be mentioned that the doctrine of severability has no scope or play in the context of the rules in question. No part of the rule, on the basis of the aforesaid reasoning, could be held to be valid and therefore, severable from the other invalid part. The whole of the rule, having regard to its frame, requires to be struck down.
21. For the foregoing reasons, the writ petition is allowed. Rules 87-1 and 87-2 of the respondent-Municipality are declared to be void as being in violation of Articles 14 and 15 of the Constitution. Actions, if any, initiated under the said rules are also declared to be void. The respondent-Municipality is restrained from enforcing those rules against any of its employees. Rule made absolute accordingly. The respondent-Municipality will pay the costs of this petition to the petitioners.