Holding

The Panchayat Service is a civil service of the State of Gujarat and, under the unamended Act, constitutes a single centralized service.

Summary

The petitioners, former municipal employees now serving in gram or nagar panchayats, sought orders directing the Gujarat government to equate their posts with those in the Panchayat Service, fix seniority, pay scales and extend pay‑commission benefits, arguing that the Panchayat Service is a civil service of the State. The State contended that the Panchayat Service was distinct from the State civil service and its members were not government servants. The Supreme Court examined the nature of the Panchayat Service under the Gujarat Panchayat Act, 1961, and relevant constitutional provisions, concluding that the Service possesses all the hallmarks of a State civil service and, under the unamended Act, operates as a single, centralized service for the whole State. Consequently, the Court held that the petitioners are entitled to the benefits of a State civil service and rejected the State's contention. The appeal was allowed in part, with the matter remanded for further hearing on remaining issues.

Issues considered

Whether the Panchayat Service constituted under the Gujarat Panchayat Act, 1961 is a civil service of the State of Gujarat.
Whether, under the unamended Gujarat Panchayat Act, there exists a common centralized Panchayat Service.

Legislation cited

Bombay Municipal Act, 1901
Constitution of Indias. Article 12, s. Article 276, s. Article 277, s. Article 309, s. Article 310, s. Article 311, s. Article 40
Gujarat Panchayat Act, 1961 (Gujarat Act No. VI of 1962)s. 102, s. 122, s. 142, s. 143, s. 203, s. 204, s. 205, s. 206, s. 210
Gujarat Panchayat (Amendment) Ordinance, 1978
Gujarat Panchayat (Third Amendment) Act, 1978

Subjects

Panchayat ServiceCivil serviceState of GujaratLocal self‑governmentPay Commission benefitsPromotion and seniorityCentralized serviceConstitutional lawArticle 309Article 310Article 311

Judgment

144 " 1 :

A

STATE OF GUJARAT &:ORS ETC.
v.
RAMAN LAL KESHAV LAL & ORS. ETC.
B

c

D Words & Phrases-'Civil Services'-'Civil Post'-Meaning of.
The Gu]arat Panchayat Act, 1961 (Gujarat Act No. VI of 1962) came into
force on June 15, 1962 in the State of Gujarat except in Kutch area and the
district of Dangs. By an order made by the State Government on March 4,
1963, the areas which .were within the jurisdiction of the several municipalities
constituted under the Bombay Municipal Act, 1901 were declared to be gram
or nagar, as the case may be. On April 1, 1963, sections 203 to 205 of the
E Panchayats Act were brought into operation. On March 26, 1963, the State
Government entrusted some of its functions relating to recovery of land revenue
etc. to the nagar and gram panchayats with effect from April 15, 1963. On
August 1, .1963 by a notification issued under section 149 of the Panchayats
Act, the State Government delegated some of its powers under the Land Reve-
nue .Code and rules made thereunder to the gram and nagar panchayats. Service
rules like the Gujarat Panchayat Service (Conduct) Rules, 1964, the Gujarat
F Service (Discipline & Appeal) Rules, 1964, Gujarat Panchayat Service (Absorp·
tion Seniority, Pay & Allowances) Rules, the Gujarat Panchayat Service (Trans·
fer of Servants) Rules, 1968, Gujarat Panchayat Service (Promotion to Cadres
in State Service) Rules, 1974, Gujarat Panchayat Service (Pension) Rules, i976
were promulgated and iSsued by the State Government. On Ja~uary 2, 1967,
the State Government passed an order under sub-section (2) of section 203
of the Panchayats Act directing that the Panchayat Service shall consist of
G district cadre, taluka cadre and local cadre and specified the posts which
. iwere to belong to each of such cadres in the Schedule appended to the said
order. 'In Part III of the Schedule to that Order, the posts belonging to the
local cadre were !)Pecified.
Although the above steps were taken by the State for the constitution of
the Panchayat Service, the State Government did not make any order regarding
H the equation of posts of the staff in the local cadre and fixation of . the.ir
pay scale till 1975 notwithstanding repeated representations made by the ex·
municipal employees and others who were included in the local cadre. The
.'stat~ G~vemnii:nt also did not make any rules prescribing the promotional
GUJARAT V. RAMANLAL 145

avenues for the staff borne _on the local cadre of the Panchayat Service, nor -'A
extended the benefit of revisions of pay scales and other allowances which
were made on the basis of the recommendations of the First Pay Commission
(Sarela Commission) and of the Second Pay Commission (Desai Commission).

The Respondent Nos. 1 to 5 in the appeal filed a writ application in a
representative capacity for and on behalf of themselves and other officers ~nd
servants who were originally in the employment of several municipalities which B
had been constituted under the Bombay District Municipal Act, 1901 and
who were working as employees under gram panchayats or nagar panchayats
which were established in the place of municipalities under the provisions of
the Gujarat Panchayats Act, 1961 for a Writ, order or direction to the Appel-
Jant (State of Gujarat) and others who had been impleaded as respondents
directing them : (i) to pass orders regarding appointment in equivalent posts
in the Panchayat Service of the State Government, fixation of seniority, pay C
scales and allowances in the equivalent posts with retrospective effect and pay-
ment of ·the difference in salary and allowances, (ii) to frame rules providing
for promotional avenues in the Panchayat Service as also in the State Service,
and (iii) to extend the benefits flowing from pay revisions ordered by the
State Government on the basis of the recommendations of the First Pay Com-
mission (Sarela Commission) and the Second Pay Commission (Desai Com-
mission) retrospectively. It was contended that the Panchayat Service was as -D
much a service under the State as any other Civil Service, that the State
'Government had faiied to discharge its statutory duties in relation to the
members of the staff included in the local cadre of the Panchayat Service
and that the denial of benefits similar to those extended to other members
of the State Civil Service on the basis of the reports of the two Pay Com-
missions amounted to hostile discrimination. Tiie State G~vemment contested
the application alleging that the members of the Panchayat Service were not
government >ervants.
E

Following its earlier decision in G. L. Shukla & ano•ther v. The State of
Gujarat & Ors. 8 GLR 833 the High Court held tha( the respondents who
belonged to the local cadre were government servants and allowed the appli-
cation.

During the pendency of the appeal to this Court, the Gujarat Panchayats F
(Amendment) Ordinance 1978 was promulgated by the Governor amending some
of the provisions of the Panchayats Act and the said Ordinance was repealed
and replaced by the Gujarat Panchayats (Third Amendment) Act, 1978. As
the Ordinance and the Amending Act adversely affected the interests of thr.
employees, writ petitions were filed questioning the validity of the Amending
Act.
G
In the appeal and writ petitions to this Court on the questions :
(I) Whether the Panchayat Service was a Civil Service of the State, and
(2) Whether under the unamended Act, there was a common Centralizerl
Panchayat Service.

HELD : 1. (i) The Panchayat Service constituted under section 203 of H ·
the Panchayats. Act has all the characteristics 'of a Civil Service of the State.
This also appears to, have been the view of the State Government when it -
constituted the Second Pay Commission (Desai Commission) to examine the
146 SUPREME COURT REPORTS [1981] 1 S.C.R.

A general conditions of service applicable to Government employees other than
officers of the all-India services but including employees in the Panchayat
Service. [!65H-!66B]
(ii) It is a question of fact to be decided· in ·the circumstances of each
'case whether every employee of a Panchayat should be treated as a member ~
of the State Civil Service. [!66H-167A]
B 2. The provisious contained in sect.ion 206 of the Panchayats Act and the
provisions iu sub-sections (2), (2A), (3) and (4) of section 2Q3 clearly establish
that the Panchayat service c;onstituted under section 203 can only be a centra-

.·~
lized service and recruitment of candidatls to be made under section 210 of
the Panchayats Act by the Gujarat Panchayat Service Selection Hoard can only
be to that centralised service. The division of the Panchayat Service into
district cadre, taluka cadre- and local cadre does not affect the integrity of
c the Panchayat Service. It continues to be a single service notwithstanding
such division. When the Panchayat Service is a Statewise service, ft has neces-
sarily to be a common centralised service. [167B-C]

" Aforucipal Corporations, city municipalities, town municipalities, muni-
cipal boroughs, district boards, zilla parishads, taluka development boards, town
pauchayats, village panchayats, sanitary boards and towu area committees were
D some of the different kinds of local bodies whicn were constituted under the
local laws and the management of their. affairs were entrusted subject to the
control of the State Government to elected bodies. Each one of them was
treated as a body corporate. In the staffing pattern of these bodies there were
at least three classes of persons. Officers holding high administrative posts such
as commissioners of corporations, deputy commissioners of corporations, muni-
cipal health officers, municipal educational officers, district development officers
E and chief executive officers of district boards were usually drawn from the
ranks of the provincial or the State Services and they were deputed to the
various bodies to discharge functions · which were either statutory or non-
statutory. Even though they drew their salary and allowances from ·the local
bodies to which they were deputed, they still retained their identity as officers
of the State Civil Service and their services were liable to be withdrawn by
the State Government at any time it pleased. [! 590-E]
F 4. The expressions 'civil service' or 'civil post' are not formally defined.
Entry 70 of List I of the Seventh Schedule to the Constitution refers to Union
Public Services and All-India Services, and Entry 41 of List II of that Sche-
dule refers to State Pu\Jlic Services. Part XIV of the Constitution deals with
services under the Union and the States. In Article 309 of the Constitution,
there is reference to persons appointed to public services and posts in connec-
tion with the affairs of the Union or of any State. Article 310 of the Consti-
tution distinguishes the defence service from the civil service when it refers to
members of a 'defence service or of a civil service'. But all persons who are
members of a defence service or of a civil service of the Union or of an all-
India service or persons who hold any post connected with defence or any
civil post under the Union are treated as persons serving the Union and every
'person who is a member of the civil service of a State or holds any civil post
under a State is treated as a person serving a State. [!60D~F]
H
5. The true test for determination of ·the question whether a person is
bolding a civil post or is a member of a civil service is the existence of a
relationship of master and servant between the State and the person holding
GUJARAT v. RAMANLAL
,. · 147

:a post under it and that the existence of such relationship is dependent upon A
othe right of the State to select and appoint the holder of the post; its ·right
-:to suspend and dismiss him, its right to control the manner atid method of his
-<loing the work and the payment by it of his wages and remuneration. The
'relationship of master and servant may be established by .the presence· of all
-<Jr some of the above factors in conjunction with other circumstaRCes. (161E-F]
State of Assam & Ors. v. Sh.ri Nanak Chandra Dutta, [1967] 1 S.C.:l. 679 : B
"Superintendent of Post Offices ~re. etc. v. P. K. Rajamma etc. etc. [1977] · 3
·:s.C.R. 678, referred to.

~
6. Entry 5 of List II of the Seventh Schedule to the Constitution specifi-
·Cally refers to local authorities established for the purpose of local self-Gov-
ernment or village administration as part of local government. The local autho·
.. .rities are included in the definition of the expression 'State' in Article 12 of
'the Constitution. [1650} c
7. The Panchayats exercise many governmental functions which the State
.-,Government can perform. They are entrusted with the power to levy taxes
.-and to exercise large number of powers whic1' are loosely called as "police
-powers" regulating several aspects of human life. ·Articles 276 and 277 of
the Constitution also take note of the powers of local authorities to levy
•certain taxes. [165E]
D
8. The Panchayats Act was enacted for the purpose of consolidating and
·amending the law relating to village Panchayats and district local boards in
·the State of Gujarat with a view to reorganising the administration pertaining
·to the local Government in furtherance of the object of democratic decentra·
lisation of powers in favour of different classes of panchayats. It provided
·for the· establishment of Panchayats of different tiers viz.1 a gram panchayat
for each gram, a nagar panchayat for each nagar, a taluka panchayat for each E
·taluka and a district panchayat for a district. [151C-D]
·9. Section .203 of the Panchayats Act provided for the constitution of a
-Panchayat Service which shall be distinct from the State Service. The State
·Government was authorised to determine by orders issued from time to time
the several classes, cadres and posts in the Panchayat Service and the initial
strength of the officers and servants in each such class and cadres. The Pancha-
yat Service consisted of district cadres, taluka cadres and local cadres. A F
-servant belonging to a district cadre was liable to be posted either by promotion
or transfer to any post in any taluka in the district, a servant belonging to
a taluka cadre was liable to be posted similarly to any post in any gram or
nagar in the same taluka, and a· servant belonging to a local cadre similarly
·to be posted in the same gram or, as the case may be, nagar. The Panchayat
·Service was also to consist of certain posts designed as deputation posts, which
may be filled in accordance with section 207. The State Government was G
·empowered to make rules regulating the mode of 'recruitment and conditions
of service of persons appointed to the Panchayat Service, and the powers in
respect of appointments, transfers and promotions of officers and servants in
·the panchayat Service and disciplinary action against any such officers
·or servants. [154B-E]
10. Under section 206 of the Panchayats Act, it is open to the State Gov- H
-ernment to allocate to the Panchayat Service such number· of officers and ser-
·vants out of the staff allotted or transferred to a panchayat under sections 157,
158 and 325 as it may deem fit. [154GJ
,145 SUPREME COURT REPORTS [1981] 1 S.C.R.

11. Sections 102, 122 and 142 of the Panchayats Act provide that the gram
panchayat or the nagar panchayat or the taluka panchayat or the district pan-
chayat a:s the case may be, shall have such other officers and servants as may
be determined under section 203 of the Panchayats Act and such officers
and servants shall be appointed by such authority and their conditions of
service shall be such as may be prescribed. Clause (c) of sub-section (2) of
.section. 143 of the Panchayats Act r.mpowers the. District Development Officer·
B ·to appoint such class of officers and servants as may be prescribed. [163C, BJ
12. The Panchayat Service contemplated under section 203 is a single·
service for the whole State and it is not a collection of distinct and separate·
services of each individual panchayat. · That Panchayat .Service is a service
under the State is again emphasized by section 206 which authorises the State
Government to pool together the four classes of persons mentioned therein
who originally belonged to four different sources and to allocate them to the·
c Panchayat Service and one class of such persons are th9se who belong to the
State Service: Unless the Panchayat Service is. held to be a State Service, in-
clusion of officers and servants in the State Service will be uncons~itutional..
[163E-F]
State of Mysore v. H. Papanna Gowda & Anr. etc., [1971] 2 S.C.R. 831,.
referred to.
D In the instant case there is no compelling reason to hold that' the Panchayat
Service is not a civil service under the State. Further recruitment cif candidates.
to the Panchayat Service had to be made by the Gujarat Panchayat Service·
Selection Board constituted by the State Government. [163H]
Jalgaon Zilla Parishad v. Duman Govind & Ors. Civil Appeals Nos. 24 and'
25 of 1968 decided on December 20, 1968 distinguished.
13. Entry 41 of List II of the Seventh Schedule to the Constitution, refers·.
E to State Public Services suggesting that there can be more than one State Public·
Service under the State. A number of such services under a State e.g. Police·
Service, educational service, revenue service etc. State Public Services may be
constituted or established either by a law made by the State Legislature or·
by rules made under the proviso to Article 309 of the Constitution or even by-
an executive order made by the State Govern~ent in exercise ·of its powers
under Article 162 of the Constitution. The recruitment and conditions of ser-·
F vice of the officers and servants of the State Governmen~ may also be regu-
lated by statute, rules or executive orders. [164A-BJ
14. The administration of a service• under a State involves broadly the·
following functions : (I) the organisation of the Civil Service ~nd the deter-·
mination of the remuneration, conditions of service, expenses and allowances.
of persons serving in it; (ii) the manner of admitting persons to civil service;
G (iii) exercise of disciplinary control over members of the service and power to·
transfer, suspend, remove or dismiss them in the public interest as and when'
occasion to do so arises. [164C-D]
In the instant case, the Panchayat Service is constituted by the Panchayats·
Act and the State Government is empowered to make orders and rules regard-·
ing its organisation and management. Having regard io the broad features or
the Panchayat Service, the declaration in Section 203 that the Panchayat Service,
H shall' be distiriet from the State Service, appears to have been made only to -
distinguish the Panchayat Service from other services of the State attached'
ti> .the several departments \\•hich are under the direct contr.ol of the Stat~
Government. [164E]
GUJARAT v.·RAMANLAL (Venkataramiah, J.) 149

, 15, If the members of the Panchayat Service are not to be members of a
Service under the .State Government but are to be the officers and servants
of the panchayat unit to which they .are allotted then sub-sections (2), (2A) and
4(a) of section 203 of the Panchayats Act would to sorrie extent become un-
;workable, as every time there is a transfer of an officer borne on the Panchayat
Service there would be a change of master. The Legislature could not have
. contended such a bizarre result. [164F]
16, The reason for treating Panchayat Service as a service distinct from
State Service appears· fo be that the law intended that persons belonging to
the Panchayat Service should be transferable from one post in a panchayat
to another post in a panchayat and unless there was an order of promotion,
such persons could not be transferred to posts outside the Panchayats, [I 65B]
17, Merely because the Panchayats are declared to be body corporates,
'it cannot be said that any of the persons 1working under them cannot be c
considered as members· of a civil service under a State. The panchayats consti-
·tuted under the Panchayats Act derive their authority. from the statute and
are under the control of the State Government. They form part of the local
self-Government organisation which the State Government is under an obligation
to foster under Article 4q of the Constitution. [!65C]

CIVIL APPELLAT.E JURISDICTION: Civil Appeal No. 359 of 1978.
Appeal by special leave from the Judgment and Order· dated
28-1-1977 of the Gujarart High Court in Special Civil Application
No. 309/1975.
WITH
'E:
WRIT PETITION NOS. 4266-4270 O!f 1978
(Under Article 32 of the Constitution)
V. M. Tarkunde, Niranjan Mehta, P. H. Parekh, C. B. Singh and
M. Mudgal for the Petitioners in Writ Petitions and Respondents 1-3
and 5 in CA 359 j78.
F
D. V. Patel, R. H. Dhebar, M. N. Shroff and G. A. Shah for the
Appellants in CA 359 /78 and Respondents 1-2 in Writ Petitions.
Niranjan Mehta, Vimal Dave and Miss Kailash Mehta for the
Applicant intervener in Writ Petition.
The Judgment of the Court was delivered by G

VENKATARAMl)AH,. J. The State olll Gujarat and the Develop-
ment Commissioner of the State of Gujarat have filed Civil Appeal
No. 359 of 1978 under Article 136 of the Constitution against the
judgment, dated January 28th, 1977 passed in Special Civil Appli-
caiion No. 30? of 1975 on the file. of the High Court of Gujarat.
Respondents Nos,. 1 to 5 in the above appeal were the petitioners
in the aforesadd Special Civil Applioatibn. They had filed the
• I ~

150 · SUPREME COURT REPORTS' [1981] 1 S.C.R.
I
A said application with the leave of the High Court in a representa·
tive capacity for and on behalf of themselves arid other officers
and servants who· were originally in tire employment of several
muni'cipalities which had been constituted under the Bombay District
Municipal Act, 1901 (hereinafter referred to as 'the Municipal Act')
and· who were working as the employees under gram panchayats
B
or nagar panchayats which were establishled in the place of the
municipalities referred to above under the provisions of the Gujarat
Panchayats Act, 1961 (Gujarat Act No. VI of 1962) (hereinafter
refurred to as 'the Panchayats AcC) unde,r Article 226 of the Consti·
tution requesting the High Court to issue an appropriate writ, order
or direction to the State of Gujanat and others who had been
impleaded as respondents therein directing them (i) to pass orders
regarding the appointment of the persons for and on whose behalf .A
the said appli'cation had been filed in equivalent posts in the
Panchayat ·Service of the State Government, fixation of their senio·
· rity and pay scales and allowances in the equiV'alient posts with
D retrospective effect and payment to th1em of the difference in: salary
and allowances to which they would become entitled on such fixa·
tion bf salary and allowances payable to them, (ii) to frame rules
providi1n.g for promotional avenues to them in the Panchayat Service-
<ts also in the State Seirvice and (iii) to extend to them the benefits
flowing from the pay revisions ordered by the State Government on
the basis of the recommendations of the first Pay Commission
(Sarela Commission) and the second Pay Commission (Desai Comis-
sion) retrospectively. They also prayed for certain incidental
reliefs.

Writ Petitions Nos. 4266 to 4270 of 1978 were filed by them
.F
before this Court under Article 32 of Constitution in a representa.-
tive capacity with the leave of this Court requesting the Court to
declare the Gujarat Panchayats (Amendment) Ordinance, 1978
(blereinafter referred to as 'the Ordinance',) as unconstitutional. void
and of no effect and to grant them such reliefs as may be permissible
consequent upon such declaration. After the iibove writ petitions
were filed, the Ordinance was repealed and replaced ·by the Gujat'at
\ Pauchayats (Third Amendment) Act, 1978 (Gujarat Act No. 28 of
-1978) (herein1after refened to as 'the Amending Act'~. Thereafter
.the petitioners prayed for an amendment of the writ petitions request·
.ing the Court to permit them to question the validity of the Amend-
H ing Act in so far as it adversely affected them. Their prayer was
'· · accordingly granted. · The. writ petitions are contested by the State
Government.-
GUJARAT v. RAMANLAL ("I?_enkataramiah, !.) 151

For purposes of convenience, respondents· Nos. 1 to 5 in Civil A
A~al No. 359 of 1978 who are also petitioners .in the writ petitions
Nos. 4266 to 4270 of 1978 are hereafller referred to as the pefitioners.

Before the Panchayats Act was enacted there existed in the State
of Gujarat a number of municipalities constituted under the Municipal
Act and the petitioners and th:ose whom they .represent in these
proceedings by virtue of the leave granted to them to prosecute these
proceedings in a representative capacity were employees of such
municipalities.

The Panchayats Act was enacted for the purpose of consolidat-
ing and amending the law relating to village panchayats and district c
local boards in the State of Gujarat with a view to reorganise the
administration pertaining to the local Government in furtherance of the
object of democratic decentralisation of powers in favour of different
classes of panchayats. It provided for the establishment of panchayats
of different tiers viz. a gram panchayat for each gram, a nagar
panchayat lfor each nagar, a taluka · panchayat for each taluka and
D·
a district panchayat for a district. Section1 9 of the Panchayats Act
empowered the Stalte Government to declare any local area com-
prising a revenue village or a group of revenue vi'lfages or hamlets
forming part of a revenue village or such othen administrative unit
or part thereof to be a nagar, if the population of such local area E
exceeded 10,000 but did not exceed 20,000 and to be a gram, if the
population of such local area did not exceed 10,000 by issuing a
notification in the Official Gazette to that effect. Section 307 of the
Panchayats Act provided that where any local area was declared to.
be a gram or nagar under section 9 and, immediately before such
declaration, the local area was co-extensive with the limits of a F
municipal district or a municipal borough or included an area comQris- ·
ing a municipal district or municipal borough as well as any other area,
then with effect from the date on which such local area was ·so declared
to be a gnam or nagar, the consequences mentioned therein would
ensue notwithstanding I anything in the relevant municipal law. Two
of the consequences which flowed from such a declaration were that the G
--+ municipality functionihg in such a local area or part thereof would
• I
cease to exist and all officers and servants in the employ of the
municipality immediately before the said date would become officers
and servants of the ikterim panchayait under the Panchayats Act, and
shall until other provision was made in accordance with the provi-
sions tbereofl woljld 'receive salaries and allowances and be subject H
to the condition! of 1service to which they were entitled or subject
on such date. Section 308 of the Panchayats Act required the
151 SUPREME ~OURT REPORTS [1981] 1 S.C.R.

A District Development Officer· to take steps to hold election for a new
gram panchayat or n:agar pancha)lat, as .. the case may be, within a
period not exceeding one year from the date on which the interim
panchayat came into existence. Chapter XI in which sections 203
to 211 of the Panchayats Act are included sets out provisions relat-
ing to services. Section 203 of the Panchayats Act prior to the
B promulgation of the Ordinance read as follows:-

"203. (1) For thle pUipOse of bringing a1bout uniform
scales of pay and uniform conditions of service for persons
employed in the discharge of functions and duties of panchayats,
there shall be constituted a Panchayat Service in . connection
with the affairs of panchayats. Such servi'oo shall be distinct
from the State Service.

(2) The Panchayat Service shall consist of such classes,
cadres and posts and the initial strength of officers and servants
in each such class and cadre shall be such, as the State Govern-
D ment may by order from time to time determine:

Provided that nothing in this sub-secti'on shall prevent a
district panchayat from altering, with the previous approval of
the State Government, any class, cadre or number of posts so
determined by the State Government.
E
(2A) (a) The cadres referred to in sub-section (2) may
consist of· district cadres, taluka cadres and local cadres.
(b) A servant belonging to a district cadre shall be
liable to be posted whether by promotion or transfer to
F any post in any taluka in the district.
(c) A servant belonging to a taluka cadre shall be liable
to be posted, whether by promotion or transfer .to any
post in any gram or nagar in the same taluka.
\

(d) A servant belonging to a local cadre shall be
G liable to be posted whether by promotion or transfer to any
post in the same gram or, as the case may be, nagar.

(i2B) In addition to the posts in the cadre referred to in
sub-section (2A), a panchayat may haV'e such other posts of
such classes as the State Government may by general or special
H order determine. Such posts shall be called "deputation posts"
and shall be fille9 in accordance with the pro'Visions of section
207.
GUJARAT v. RAMANLAL (Venkataramiah, J.) 153

(3) Subject to the provisions of this Act, the State G?vem- A
ment 'may make rules regulating the mode of recruitment
either by holding examinations or . otherwise and conditions of
service of persons appointed to the panchayat service and the
powers in resJ)°...ct of appointments, transfers and promotions of
officers and servants in the Panchayat Service and disciplinary
action against any such officers or servants. B

(4) Rules made under sub-section (3) shali' in particular
contaffi!--.
(a) a provision entitling servants of such cadres in
the Panchayat Service to promotlion to such cadres in the
State Service as may be prescribed. c
(b) a provision specifying ·the classes of posts recruit-
ment to which shall be made through the District Panchayat
Service Se!edtion Committee and thle classes of posts,
recruitment to which shall be made by the Gujarat Panchayat
Service Selection Board, and D
(c) a provision regarding the percentag.e of vacancies
.to be reserved for the members of Scheduled Castes,
Scheduled Tribes and · other backward classes in the
Pa.nchayat Service.
(5). Such rules may provide for inter-district transfer of E
servants belonging to the panchayat service Md the circums-
tances in which and the conditions subject to which such
transfers may be made.
Section 205 of the Panchayats Act states that subject to any
rules made under section 203, appointments to the Panchayat Service F
shall be made (i) by direct recruitipent, (ii) by promotion and
{iii) by transfer of members of the State Service to the Panchayat
Service. Section 206 of the Panchayats Act before the Amending
Act was passed empowered the State · Government by a general on
special order to allocate to the Pa.nchayat Service (i) such number
of officers and servants out of the staff allotted or transferred to a G
+ panchayat under sections 157, 158 and 325 as it may deem fit,
{ii) all officers and sewants of the municipalities dissolved under
section 307, (iii) all officers and servants in the service of district
local boards and district school boards i~ediately before their
·dissolution under the Panchayats Act and transferred to the pancha-
yats under sections 155 and 326 and (iv) and other officers and H
servants employed in the State service as may be necessary· to enabJe
:the panchayats to discharge efficiently their functions and duties
.,,

154 SUPREME COURT REPORTS [1981] 1 S.C.R~

A under the Panchayats Act. Section 210 of the Panchayats Act
provides for the establishment of a Gujarat Panchayat Service
Selection Board for the purpose of recruitment o~ candidates to the
several posts in the Panchayat &rvioe.
.
The provisions contained in Chapter XI of the Panchayat Act
B may be summarised thus: Section 203 of the Panchayats Act
provides for the constitutioll! of a Panchayat Service which shall be
distinct from the State Service. The State Government is authorised
to detennrine by orders issued from time to time several classes,
cadres and posts in the Panchayat Service and the initial strength
c of the officers and servants in each sucbi class and cadre. The·
Panchayat Service may consist of district cadres, taluka cadres and'
local cadres. A servant belonging to a district cadre is liable to-
be posted either by promotion or /&aifsfer to any post in ~ny taluka
in the district, a servant belonging to a taluka cadre is liable to be
posted similarly to any post in aily gram or nagar in the same taluka
D and a servant belonging to a local cadre may similarly be posted
in the same gram or, as the case may be, na~r. The Panchayat
Service may also consist of certain posts designated as deputation
posts, which may be filled in accorqance with the provisions of
section 207. The Sfate Government is empowered to make rules
regulating the mode of recruitment and conditions of service of
E of appointments, transfers and promotions of officers and servants
oJ1 appointments, transfers and promotions of officers and servants
in the Panchayat Service and disciplinary action· against any such
officers or servants. Sub-section (4) of section 203 of the Panchayats
Act provides that rules may be made under sub-section (3) thereof
containing provisions entitling servants of such cadres in the
F Panchayat Service to promotion to such cadres in the State Service
as may be prescribed. We have noticed earlier that under section
206 of the Panchayats Act, it is open to the StJate Government to
allocate to the Panchayat Service such number of officers and servants
out of the staff allotted or transferred to a panchayat under sections
G 157, 158 and 325 as it may deem fit. Section 157 of the. Panchayats
Act provides that notwithstanding anything .contained in any law
for the time being in force, the State Governrment may subject to
such condiliions as it may think fit to impose, transfer by an order
published in the Official Gazette to a district panchayat any such
powers, functions and duties relating to any matter ·as are exercised
H or performed by the State Government or any officer of Government
under any enactment which the State Legislature is competent to
enact, or otherwise in the executive power of the State, and appear
GUJARAT v. RAMANLAL (Venkataramiah, ].j 155
•
to relate to matters arising wi:thin a district and to be of an adminis- I A
trative character and shall on such transfer. allot to the district
panchayat such fund and personnel as may be necessary to enable
the district panchayat to exercise the power and disch~rge tl::e
functions and duties so transferred. Sub•sectioil.1i (,2) of section 157
sets out some of the departments whose powers, £unctions and duties
that may be transferred under section 157 (1). SeCtion 158 of the B
. Pancbayats Act provides that any functions and duties relating to

~·.
any of the matters specified in the Panchayat Functions List performed
before the commencemen~ of that section by the State Government
through its officers withln a gram,· nagar, taluka or district shall,
subject to such exceptions as the State Government may by order in c
writing specify, be transferred to the district panchayat together
· with the funds p>ovided, and the staff employed therefor. By
section 325, of the Pianchayats Act, the Bombay Village Panchayats
Act, 1958 was repealed and all officers and servants in the employ
of the old village panchayats immediately before the said date
became the officers and servants of the new gram panchayats establi- D
shed under the Panchayats Act.

We shall now briefly refer to some of the steps taken under
the Panchayats Act after it came into force on June 15, 1962 in the.
Sltate of Gujarat except in Kutch area and. the district of Dangs. ·
On March 4, 1963 by an order made by the State Government, 1he E
areas which were within the jurisdiction of the several municipalities
constituted under the Municipal Act were. declared to be. gram or
nagar. as the case may be. On April 1, 1963, sections 203 to 205
of the Panchayats Act were brought into operalion. On March
26, 1963, the State Government entrusted some of its functions relat-
ing to recovery of land revenue etc. to the nagar and gram pancha-
yats with effect from April 15~ 1963. On August I,' 1963 by a
notification issued under sectiOn 149 of the Panchayats Act, the
State Government delegated some of its powers under the Land'
Revenue Code and rules made .thereunder to the· gram and nagar
pancbayats. On July 13, 1964, :the· Gujarat Panchayat Service G
(Conduct) Rules, 1964 promulgated under section 203 of the Panchayats
""t· . Act came into force. On, July 16, 1964, the Gujarat Service (Discip-.
line & Appeal) Rules, 1964 came into force. On November 11, 1965,
the Gujarat Panchayat Service (Absorption, Seniority, Pay &
Allowances) Rules were promulgated. On October 16, 1968, the
Gujarat Panchayat Service (Transfer of Servants) Rules, 1968 were H
promulgated. The Gujarat Panchayat Service (Promotion to cadres
in State Service) Rules, 1974 were issued on September 16, 1974.
11-64' S.C. Tndia/80

I
156 SUPREME COURT REPORTS [1981] 1 S.C.R.

A The Gujarat Panch1\yat Service (Pension) Rules, 1976 were issued on
January 9, 1976. The State Government passed an order under
sub-section (2) of sectiOl!l 203 of the Panchayats Act on January 2,
1967 directing that the Panchayat Service shall consist of district
C13icJ.re, taluk:a cadre and local cadre and specified the posts which
were to belong to each of such cadres in the Schedule appended to
B
the said order. In Pnrt II:I of the Schedule to that Orde11, the
posts belonging to the local cadre with which we are concerned in
these cases were specified. It is stated that by certain administrative
orders the State Government had a)so Ullldertaken the liability of
reimbursing the panchayats, either wholly or in part in respect of
c the remuneration paid by them to the specified staff even though uiider
section 204 of the Panchayats Act, the expenditure towards pay,
allowances etc. of officers and servants in Panchayat Service should
be met out of panchayat funds.

Although 'the abov;e · mentioned and some other steps were
D
taken l;ly the State Government under the Panchayats Act prnvid-
ing for the constitution of the Panchayat Service, the State Govern- '
ment did not mak!e any order regarding the equation: of posts of
thJe staff in the local cadre and fixation oi.; their pay scale till 1975
notwithstanding the fact that repeated representations were made by
E the ex-municipal employees and others who were included in the
local cadre. The State Government also failed to extend to the
staff borne on the local cadre of the Panchayat Service the benefit
of revisions of pay scales and other allowances whi'ch were made
on the basis of the recommendations of the first Pay Commission
(Sare!~ C~mission) and of the second Pay Commission (Desai
F Commission). The State Government also did not make any rules
prescribmg the promotional avenue~ for the staff borne on the local
cadre of the Panchayat Service. The petitioners, therefore, filed the
Special Civil Application No. 309 of 1975 on the file of the High
Cou;rt of Gujarat out of which the above appeal arises under Article
226 of the Constitution for several reliefs, referred to above. The
G said application was r1esisted by the State of Gujarat and the Develop-
ment Commissioner who had been impleaded as the respondents.
The contentions urged by the petitioners before the High Court
among others were that the Panchayat Service was as much a service
under the State as any other State Civil Service; that the State
Government had failed to discharge its statutory duties in relatioru
H to the members of the staff included in the local cadre of the
Panchayat Service and that the denial of benefits similar to those
extended to other members of the State Civil Service on the basis
GUJARAT v. RAMANLAL (Venkataramiah, /.) 157
Qf the reports of the two Pay Commissions to them amounted to A
hostile discrimination. The principal oonitention urged on behalf of
the State Government was that the members of the Panchayat Service
were not Government servants and, · therefore, could not claim the
reliefs prayed for by them. I:n support o~ thie above contention,
reliance was placed by the State Government on section 203 (1) of
the Panchayats Act which stated that the Panchayat Service was B

~
-distinct from the State Service. · It should be menti'oned here rthat
· the question whether the Panchayat Service constituted under the
..
Panchayaits Act was a Civil Senvice under the State Government or
not arose for consideration before the High Court of Gujarat in
G. L. Shukla & Anr. v. The State of Gujarat & Ors.(1). That was
a case in which some of the employees of the State Government
c
working in the Public Wen-ks Department questioned the constitu-
tional validity of a notificationi issued by the Sfute Government
transfer.rinig certain functions of the Public Works Department to the
panchayats and transferring some of the officers and servants work-
1ng in· that department to the Panchayat ·Service. The petitioners D
therein who had been allotted to the Paoohayat Service under that
order contended that the notification was violative of Artic)es 14,
310 and 311 of the Constitution on the ground that by virtue of the
:impugned notification, they had been removed from the servibe of
tl1e State Government against their will ·and ifn, violation of their
Tights under the Constitution. The High Court dismissed the peti- E
tion holding that they had not ceased to be Government servants by
reason of the allocation of their services to .the Panchayat Service.
Bhagwati, J. (as he theil was) observed in the course of the said
.decision at page 845 thus:

F
"When an order of allocation is made under sec. 206,
the Government servant who is allocated does not cease to be
a State servant and become a servant of the panchayat. There
is no termination of h:is service as a State servant and the only
effiect of the order of allocati'on is that whereas, prior to the
G
order of allocation, he was a member of one civil service of the
State, namely, the State Service, he is now, after the order of
allocation, a member of another civil servioe of the State,
namely, the panchayat service. He is merely transferred
from one civil service of the State to another. The Panchayat
Service contemplated under the Act is as much a civil service H
of the State as the State service. The Legislature by enactir.g
(1) 8 G.L.R. '833.
:::

158 SUPREME COURT REPORTS [198'1J r s:c.R.

A the Aet provided for the establishment of the Panchayat
Organization of the State and for the efficient administration
of the Panchayat Organization, particui.arly in view of the fact
that a large part of the service personnel would be drawn from
different sources and would, therefore, be heterogeneous in
composilion with widely differing scales of pay and conditions
B of service, the Legislature felt that it would be desirable to

~
have a .separate civil service of persons employed in the
discharge of functions and du1ies of panchayats with, uniform
..
scales of pay and uniform conditions of service and', therefore.
with that end in view the Legisfature provided for constitution
c of the panchayat service. All the provisions of the Act relating
to the panchayat service point unmistakably and inevitably to
one and only one conclusion, namely, that the panchayat
service is one single service with the State as the master."

Following the decision in Shuklds case (supra) the High Court
D held in the case out of which this appeal arises that the petitioners
herein who belonged to the local cadre were Government servants and
directed the State Government (i) to issue suitable orders, in so far
as the_ members included in the local cadre were concerned regarding
the equivalence of posts, fixation of pay scales for such posts, fixation
of the petitioners and the persons whom they represent at an appro-
E priate stage in such pay scales and other incidental matters and to give
effect to such orders from the date of allocation of the petitioners and
others whom they represent to the Panchayat Service, that is to say,
from February 11, 1969, (ii) to fix their initial pay scales and allowances
and to revise them in accordance with the orders passed by the State
Government in the case of other Government employees on the basis
F of the first Pay Commission (Sarela Commission) and of the second
Pay Commission (Desai Commission) with effect from the dates on
which similar benefits were extended to other State Civil Services,
and (iii) to consider the question of making suitable provisions in the
appropriate rules providing for promotion of members of· the local
G
cadre who were formerly the employees of the municipalities. Ag-
grieved by the directions issu~d by the High Court, the State Govern-
ment and the Development Commissioner have filed this appeal.
During the pendency of the above appeal, as stated above, the
Ordinance was issued by the Governor of Gujarat amending some of
the provisions of the Panchayats Act and the said Ordinance was re-
H placed by the Amending Act. As the petitioners felt that their interests
were adversely affected by the Ordinance' and the Amending Act, they
filed the writ petitions referred to above..
GUJARAT v. RAMANLAL (Venkataramiah, J.) 159'

Although several questions arise ,for consideration in the above A
appeal, at this stage we propose to deal with only the following two
contentions as per orders passed by the Court on July 24, 1980 : -
"(l) Whether the Panchayat Service. was a C'ivil Service of
the State and
(2) whether under the unamended Act, there was a common B
centralized Panchayat Service?"
It is well-known that in India exp~riment in administration of local

~·
1Self Government had been going on for well over a century in almost
a:II British Indian provinces and many princely States that were in
.. existence before the commencement of the Constitution. There were, c
laws having local operation under which different kinds of local self.
Government bodies were constituted to enable persons living in differ-
1 ent local areas to participate in the administration of such local areas
in so far as functions that were delegated to them by law. All those
laws continued to be in force even after the commencement of the
Constitution. Some of them have since been repealed and replaced ·D
by new laws. Municipal corporations, city municipalities, town muni-
cipalities, municipal boroughs, district boards, zilla parishads, taluka
development boards, town panchayats, village panchayats, sanitary
boards and town area committees were some of the diffaent kinds of
local bodies which were constituted under the said laws and the
E
management of their affairs· were entrusted subject to the control of
the State Government to elected bodies. Each one of them was treated
as a body corporate. In so far as the staffing pattern of these bodies
was concerned, there were at least 'three classes of persons working
under them. Officers holding high administrative posts such as com-
missioners.. of , corporations, deputy commissioners of corporations, F
municipal health officers, municipal educational officers, district deve-
lopment officers and chief executive officers of district boards were
usually drawn from the ranks of the provincial or the State Services
and they were deputed to the various bodies to discharge functions
which were either statutory or non-statutory. Even though they drew
their salary and allowances from the local bodies to which they were G
/
deputed, they still retained their identity as dfficers of the State Civil
Service and their services were liable to be withdrawn by the State Gov-
ernment at any time it pleased. There was a second class of officers
like chief executive officers of town municipalities who were officers
belonging to the provincial or State local self-Government Service and
who were liable to be transferred from one local body to another. H
There was a third class of officers and servants of the local bodies
who were appointed by them and who were for all intents and purposes
160 SUPREME COURT REPORTS [1981] 1 S.C.R.

A the employeei; of the local bodies by which they were appointed. They
could not be transferred from one local body to another. The fore-
going shows that in the case of persons borne on the State Civil Service
or the Provincial local self-Government Service, the fact that they were
for the time being working under a local body arid were in receipt
of salary and allowances from them did not militate against their
B status as members of the Service from which they were drawn. That
was so because even when they were functioning under local bodies,

. -.t
they were engaged in discharging duties and functions which legiti- '
mately belonged to the State Government but which had been trans-
ferred to the local bodies with the intention of the decentralizing
administrative functions and of fostering democratic ideals amongst
c the people.
The first question is whether the Panchayat Service constituted
under the Panchayats Act is a civil service of the State. The expres-
sions 'civil service' or 'civil post' are not formally defined. Entry 70
of List I of the Seventh Schedule to the Constitution refers to Union
D Public Services and All-India Services, and Entry 41 of List II of'
that Schedule refers to State public services. Part XIV of the Consti-
tution deals with services under the Union and the Sta1es. In Article 309
of the Constitution, we find reference to persons appointed to public
services and posts in connection with the affairs of the Union or of
any State. Article 310 of the Constitution distinguishes the defence
E service from the civil service when it refers to memebrs of a 'defence
service or Qf a civil service'. But all persons who are members of a
,defence service or of a civil service of 1he Union or of an ail-India J-
service or pf'.rsons who hold any post connected with d~fence or any
civil post under the Union are treated as persons serving the Union
.and every person who is a member of the civil service of a State or
F holds any civil post under a State is trea•ted as a person serving a
State. The factors which govern the determination of the question
whether a person holds a civil post or is a member of civil service were
considered by a Constitution Bench of this Court in State of Assam &
Ors. v. Shri Nanak Chandra Duttq(1) and Bachaw'ait, J. speaking for the
G Bench observed thus :
"There is no formal definition of "post" and "civil post". The
sense in which they are used in the Services Chapter of Part XIV
of the Constitution is indicated by their context and setting. A
civil post is distinguished in Article 310 from a post connected
with defence; it is a post on the civil as distinguished from the
H defence side 'of the administration, an employment in a civil capa-
city under the Union or a State. See marginal note to Article 311.
(1) [1967] 1 S.C.R. 679.
GUJARAT v. RAMANLAL (Venkataramiah, J.) 16 1

In Article 311, a member of a civil -service of the Union or an A
all-India service or a civil service of a State is mentioned sepa-
rately, and a civil post means a post not connected with defence
outside the regular civil services. A post is a service or employ-
ment. A person holding a post under a State is a person serving
or employed under the State. See the marginal notes to Arti-
cles 309, 310 and 311. The heading and the sub-heading · of B
Part XIV and Chapter I emphasise tlie element of service. There

~
is a relationship of master and servant between the State and a
person holding a post under it. The existence of this' relation-
.. ship is indicated by the State's right to select and appoint the
holder of the post, its right to suspend and dismiss him, its right c
to control and manner and method of his ,doing the work and
the payment by it of his wages or remuneration. A relationship
of master and servant may be established by the presence of all
or some of· these indicia in conjunction with other circumstances
and it is a question of fact in each case whether there is such a D
relation between the State and the alleged holder of a post."

According to the above decision, the true test for determination
of the question whether a person is holding a civil post or is a member
of the civil service is the existence of a relationship of master and
E
servant between the State and the person holding . a post under it
and that the_ existence of such relationship is dependent upon the right
of the State to select and appoint the holder of the post, its right to
suspend and dismiss him, its right to control the manner and method
of his doing the work arid the payment by it of his wages and remu- F
neration. It is further held tha.t the relationship of master and servant
may be established by the presence of all or some of the factors refer-
red to above in conjunction with other circumstances. Applying these
tests, this Court held that a Mauzadar in the Assam Valley who was
engaged in the work of collection of land revenue and other Govern- G
· ment dues and in the performance of certain other special duties was
a person holding a civil post under the State. Following the abov-e
decision in Superintendent of Po:>t Office> etc. etc. v. P. K. Rajamma
etc. etc.(1) this Court held that persons who were working as extra
departmental agents of the Posts and Telegraphs Department were H
persons holding civil posts.
(1) [1977] 3 S.C.R. 678.
162 SUPl!.EME COURT REPORTS [1981] 1 S.C.R.

A Section 102 of the Panchayats Act before it was amended by the
Amending Act read as follows :-

"102. (I) Subject to the provisions of this Act and the rules
made thereunder-
(a) there shall be a Secretary for every gram panchayat
B and nagar panchayat who 1>hall be appointed in atcordance
with the rules;,
(b) a gram panchayat or as the case may be, nagar pan-
chayat shall have such other liervants as may be determined
under section 203. Such i;ervants shall be appointed by such
authority and their conditions of i;ervice shall be such as may
c be prescribed : ............... "
Section 122 of the Panchayats Act read~ :
. "122. Subject to the provisions of this Act and the rules made
thereunder-
(!) there shall be a Secretary for every taluka panchayat,
(2) the Talulrn Development Officer who shall be an officer
belonging to the State Service and posted under the panchayat,
shall be the ex-officio Secretary of the panchayat.
(3)' a taluka panchayat iiliall h;tve i;uch other officers and
E servants as may be determined under section 203. Such offi-
cers and servants shall be appointed by 1mch authority and
their conditions of service shall be such as may be prescribed.
The officers and servants so appointed shall in the discharge
of their functions and duties exercise such powers as may be
conferred on them by the panchayat, subject to rules, if any,
F made in this behalf."
Clause (c) of sub-section (2) of section 123 of the Panchayats Act
authorises the Taluka Development Officer to appoint such class of
officers and servants as may be prescribed.
Section 142 of the Panchayats Act reads:
G "142. Subject to the provisions of this Act and the rules made ·
thereunder-
(1) there shall be a secretary for every district panchayat;
(2) (a) a District Development Officer posted under the
panchayat, shall be ex-offi.cio secretary of the panchayat; ..... .
H (3) a district panchayat shall have such other 0fficers ancl
servants as may be determined under section 203. Such offi-
cers and servants shall be appointed by such authority and.
GUJARAT v. RAMANLAL (Venkataramiah, ].) 163
I •

• their conditions of service shall be such as may be prescribed.
The officers and servants so appointed shall in the discharge
of their functions and duties exercise such powers as may be
A

conferred on them by the panchayat, subject to rules, if any,
made in this behalf."
Clause (c) of sub-section (2) of section 143 of the Panchayats Act
B
rempowers the District Development Officer to appoint such class of
-officers and servants as may be prescribed.
It is significant that sections 102, 122 and 142 of the Panchayats
Act provide that the gram panchayat or the nagar panchayat or the
taluka parichayat or the district panchayat, as the case may b~. shall
1

have liuch other officers and servants as may be determined under c
£ection 203 of the Panchayats Act and such officers and servants shall
be appointed by such authority and their conditions of service shall
be such as may b~ prescribed. As mentioned earlier, ~ection 203(1)
of the Panchayats Act provides that there shall be constituted a Pancha-
yat Service in connection with the affairs of panchayats i.e. gram and
nagar paiichayat, taluka panchayat and district panchayat for the pur- D
pose of bringing about uniform scales. of pay and uniform conditions of
11ervice of the person employed in the discharge of functions and duties
of panchayats. It may be noted that the Panchayat Service contem-
plated under section 203 of the Panchayats Act is a single service for
the whole State and it is not a collection of distinct and separate services
of each individual panchayat. That Panchayat Service is a service E
under the State is again emphasized by section 206 which authorises the
State Government to pool together four classes of persons mentioned
therein who originally belonged to four different sources and to
allocate them to the Panchayat Service and one class of such persons
are those who belong to the State Service. Unless the Panchayat Service
F
is held to be ~ State service, inclusion of officers and servants in the
State service will be unconstitutional. Sections 157 and 158 would
also be exposed to a similar attack. (Vide State of Mysore v. H.
Pappana Gowda & Anr. etc.)( 1) It is a well-settled rule of construction
that a court ought not to interpret statutory provisions unless compelled
by their language in such a manner as would involve their unconsti- G
tutionality because the legislature is presumed to enact a law which
does not contravene the Constitution. In the instant case, we feel that
there is no compelling reason to hold that the Panchayat Service is
not a civil service under the State. It is seen that further recruitment
of candidates to the Panchayat Service has to be made by the Gujarat
Panchayat Service Selection Board constituted by the State Govern- H
ment. Entry 41 of List II of the Seventh Schedule to the Constitution,
(1) {19'.71] 2 S.C.R. 831.
164 SUPREME COURT REPORTS [1981] 1 S.C.R.

A as mentioned earlier, also refers to State Public Services suggesting:
/ that there can be more than one State Public Service under the State.
We have indeed a number of such services under a State e.g. Police
Service, educational service, revenue service etc. State Public Services
may be constituted or established either by a law made by the State
Legislature or by rules made ~nder the provision to Article 309 of
B ~he Constitution or even by an executive order made by the State·
Government in exercise of its powers under Article 162 of the Consti-
tution. The recruitment and conditions of service of the officers and'
servants of the State Government may also be regulated by statute,
rules or executive orders. The administration of a service under a
c State involves broadly the following functions : (i) the organisation of
the Civil Service and the determination of the remuneration,. conditions
of service, expenses and allowances of persons serving in it; (ii) the
manner of admitting persons to civil service; (iii) exercise of discipli-
to
nary control over members of the service and power transfer, suspend,
remove or dismiss them in the public interest as and when occasion
D to do so arises.. In the instant case. the Panchayat Service is consti-
tuted by the Panchayats Act and the State Government is empowered:
to make orders and rules regarding its organisation and management.
It is ·true that section 203 of the Panchayats Act, it is stated that the
Panchayat Service shall be distinct from the State Service. Having
regard to the broad features of the Panchayat Service, we are of the
E view that the said declaration appears to have been made only to·
distinguish the · Panchayat Service from other services of the State
attached to the several departments which are under the direct control'
of the State Government. If the members of the Panchayat Service
are not to be the members of a Service under the State Government
but are to be the officers and servants of the panchayat unit to which·
F
they are allotted then sub-sections (2), (2A) and 4(a) of section 203
of the Panchayats Act would to some extent become unworkable as
every time there is a transfer of an officer borne on the Panchayat
Service there would be a change of master. We do not think that
the Legislature intended such a bizarre result. Sub-section (2) of sec-·
G tion 203 authorises the division of the Panchayat Service into different·
classes, cadres and posts. Sub-section (2A) of section 203' provides
that the Panchayat Service may consist of district cadres, taluka cadres
and local cadres and that a servant belonging to a district cadre may
be transferred from a post in any one taluka to a post in another taluka
in the district, a servant belonging to a taluka cadre may be transferred
H from a post in any gram or nagar to a post in any other gram or
nagar in the same taluka. Sub-section (4) of section 203 authorises
promulgation of rules providing for promotion of servants in the Pan--
GUJARAT v. RAMANLAL (Venkataramiah, J.) 165

chayat Service to cadres in the State Service. Such promotion is pos- A
sible only because the State Government is the master of the Panchayat
Service. The reason for treating Panchayat Service as a service distinct
fFom State Service appears to be that the law intended that person
belonging to the Panchayat Service should be transferable from one
post in a panchayat to another post in a panchayat and unless there
was an order of promotion, such persons could not be transferred to
posts outside the panchayats. •·
Merely because the panchayats are declared to be body corporates,
it cannot be said that any of the persons working under them cannot
be considered as members of a civil service under a State. The pancha-
yats constituted under the Panchayats' Act derive their authority from c
the statute and are under the control of the State Government. They
form part of the local self-Government organisation which the State
Government is under an obligation to foster under Article 40 of the
Constitution. Entry 5 of List II of the Seventh Schedule to the Consti-
tution specifically refers
I
to local authorities established for the purpose
of local self-Government or village administration as part of local Gov-
ernment. The local authorities are included in the definition of the
expression 'State' in Article 12 of the Constitution. The panchayats
exercise many governmental functions which the State Government can
perform. They are entrusted with the power to levy taxes and to
exercise large number of powers which are loosely called as "police
powers" regulating several aspects of human life. Articles 276 and 277
of the Constitution also take note of the powers of local authorities to
levy certain taxes.· In addition to the express powers granted to the
panchayats, the State Government is also authorised under the Pancha-
yats Act to delegate many of its functions to them and to transfer many
of its officers and servants to function under their supervision and F
control as members of ,the Panchayat Service. It is manifest from
the foregoing that it cannot be said that person working a8 members
of the Panchayat Service are not' persons engaged in governmental
functions and, therefore, it is not possible to treat them as members
of the State Civil Service. We, however, make it clear th;it it is quite
possible that under the statute it may be open to the panchayats tCI G
employ servants for the purpose of administration of the panchayats
who may not be members of the Panchayat Service. We are concerned
in these cases only with the members of the Panchayat Service consti-
tuted under section 203(1) with regard to whose appointment and
conditions of service the Government alone has been entrusted witb
the power to make rules under section 203(3). We are of the view H
that the Panchayat Service constituted under section 203 of the Pancha-
yats Act biaiS all the characteristics of a Civil Servke of the State. This
166 SUPREME COURT REPORTS [1981] 1 S.C.R.

A also appears to have been the view of the State Government when it
constituted the second Pay Commission (Desai Commission) as can be
seen from the Government Resolution constituting the said Commis-
, sion requiring it to examine the general conditions of 11ervice applicable
to Government employees other than officers of the all-India services
but including employees in the Panchayat Service (Vide Resolution
B No. PDS 1672/1526/P dated November 20, 1972 passed by the Gov-
ernment of Gujarat) and there is no justification for taking a view
different from the one taken by the High Court of Gujarat in Shukla's
case (supra) as early as 1967. Several orders and rules issued by the
Goyernment of Gujarat ·under the Panchayats Act since its commence· ' _____
·C ment also 1mpport the aforesaid view.

At this. stage, it is necessary to refer to a decision of this Court
in J~lgaon Zilla Parishad v. Duman Govind & Ors.( 1) on which rdiance
was placed by the learned counsel for the State Government in support
of the contention that the Panchayat Service cannot be considered as
D a State Civil Service. In that case, the question which arose for consi-
deration was whether kotwals who were holding posts under the State
Government ceased to be the employees of the Government on the
transfer of their services to Zilla Parishads. This Court held that they
ceased to be the Government servants as they had been transferred
to the services of the Zilla Parishads. That decision turned on the true
construction of section 239 of the Maharashtra Zilla Parishads and
Panchayat Samitis Act, 1961 which provided for the constitution by
the State Government as from the appointed day a District Technical
Service (Class III), a District Service (Class III) and a District Service
(Class IV) for each Zilla Parishad. We do not have a corresponding
provision in the Panchayats Act providing for the constitution of a
F service for each panchayat but on the other hand, the statutory re-
quirement is that a Panchayat Service should be constituted in respect
of all the panchayats i.e. district panchayats, taluka panchayats and
gram and nagar panchayats. Such a common service constituted for
the benefit of all panchayats leads to the inevitable conclusion that
the State alone can be the master of the members of that Service and
not the individual Panchayats. The decision relied on has, therefore,
no bearing on the question before us. We, therefore, reject the conten-
tion of the State Government that the Panchayat Service is not a civil
service under the State. We, however, make it clear that the view
taken by us in the present case does not necessarily lead to the conclu-
sion that every employee of a local body who is not a member of
the Panchayat Service should be treated as a member of the State
(1) (Civil Appeals Nos. 24 and 25 of 1968 decided on December 20, 1968).
GUJARAT v. RAMANLAL (Venkataramiah, J.) 167

Civil Service. It is a question of fact to be decided in each case A
depending on the circumstances of that case.
The second question is a simple one and does not require much
elaboration. The provisions contained in section 206 of the Panchayats
Act and the provisions in sub-sections (2), (2A), (3) .and (4) of section
203 clearly establish that the Panchayat Service constituted under sec-
B
tion 203 can only be. a centralized service and recruitment of candi-
dates to be . made under section 210 of the Panchayats Act by the
Gujarat Panchayat Service Selection Board can only be to that cen-
tralized service. The divisiC?n of the Panchayat Service into district
cadre, taluka cadre and local cadre does not affect the integrity of the
Panchayat Service. It continues to be a single service notwithstanding c
such division. When the Panchayat Service is a State-wide servi<;e, it
has necessarily to be held that it is a common centralised service.
In the result, we answer the two points which are set down for
decision at this stage as follows : -
"l. The Panchayait Service constituted under the Panchayats D
Act is a civil service of the State of Gujarat; and
2. that under the unamended Act, there was a common cen-
tralized Panchayat Service."
The cases shall now be posted before a Bench of three Hon'ble
Judges for further hearing on other points as directed by the Court E
on July 24, 1980.

I N.YK.
~~