S. RAJENDRA BABU, J. ( 1 ) BY these petitions the petitioners are seeking for quashing the Notifications at Annexure-A dated 9th August, 1995 and Annexure-B dated 20th October, 1995. They are issued by virtue of the powers under Sections 3 and 9 of the Karnataka Municipalities Act, 1964 (for short the Act ). ( 2 ) ANNEXURE-A proposes to specify certain areas to be smaller urban area of Bidar and the same shall be a City Municipal area of Bidar and calls upon those interested to fife objections to the proposal, it also describes the said smaller urban area as areas coming within the limits specified in Schedule-B to the Notification. ( 3 ) BY Annexure-B the Government of Karnataka specified the smaller urban area stating that objections have been invited by Notification dated 16. 8,1995, and objections received in time have been duly examined. It is stated in the Notification that having regard to : (i) the population of such area is not less than fifty thousand and not exceeding three lakhs; (ii) the density of population in such area is not less than one thousand five hundred inhabitants to one square kilometer of area; (iii) the revenue generated for local administration from such area from tax and non-tax sources in the year of the last preceding census is not less than Rs. 22,50,000/- per annum or a sum calculated at the rate of Rupees forty five per capita per annum, whichever is higher; (iv) the percentage of employment in non-agricultural activities is not less than fifty percent of the total employment. the City Municipal area of Bidar has been specified, which is a similar urban area coming within the limits mentioned in Schedule-B to the Notification. ( 4 ) ON behalf of the petitioners it is submitted that the Karnataka Panchayat Raj Act was enacted for greater participation of the people pursuant to the constitutional amendments relating to panchayats. the City Municipal area of Bidar has been specified, which is a similar urban area coming within the limits mentioned in Schedule-B to the Notification. ( 4 ) ON behalf of the petitioners it is submitted that the Karnataka Panchayat Raj Act was enacted for greater participation of the people pursuant to the constitutional amendments relating to panchayats. In view of the same the Gram Panchayats of Amalpur, Haladkeri and Naubadh have been formed in the Taluk of Bidar; that consequent upon the creation of these Gram Panchayats elections have taken place; the petitioners have been elected as Members of the said Gram panchayats; they have also been further elected as Adhyaksha and Upadhyaksha; they are holding offices and discharging their duties thereof; the villagers are also benefiting substantially from various schemes such as Jawahar Rozgar Yojana, Integrated Rural Development programme, Indira Awas Yojana, B'hagya Jyoti and several other Schemes; for purpose of implementation of these schemes about Rs. 4000 crores have been sanctioned, whereas the municipalities and Corporations get a grant or aid from the State only to an extent of Rs. 160 crores for the development of Municipalities and Corporations, Therefore, it is submitted that people living in villages under Gram Panchayat will be better placed than those of Municipal corporations. The villagers who have a right to decide on what should be the nature of society in which they live whether agrarian, semi rural or urban can decide the same and agriculture being the predominant occupation of more than 75% of people living in such villages, it was not proper on the part of the Government to have included these villages to declare the same as smaller urban area of Bidar. The villagers opposed their areas being converted to a semi-urban area thereby making it a part of Municipality of Bidar. The Gram Panchayats have all passed resolutions opposing the inclusion of these villages in the Muncipal Council. It is submitted that the impugned Notifications have been issued without due application of mind, as the Notifications do not indicate the purpose for which the same is sought to be done and as the purpose had not been indicated and the villagers did not have the necessary opportunity to put forth their grievance. It is submitted that the impugned Notifications have been issued without due application of mind, as the Notifications do not indicate the purpose for which the same is sought to be done and as the purpose had not been indicated and the villagers did not have the necessary opportunity to put forth their grievance. Relying upon the decision in STATE OF ORISSA v. SRIDHAR KUMAR MALLIK AND OTHERS AIR1985 SC 1411 , 1985 (2 ) SCALE317 , (1985 )3 SCC697 , [1985 ]supp2 SCR349 , 1985 (17 )UJ830 (SC ). it is contended that when there is lack of purpose and denial of opportunity, the impugned notifications require to be quashed. ( 5 ) UNDER Section 357 of the Act, it is submitted that a Notification has to be made declaring that local area ceases to be so and -thereafter a declaration that it is an area under the Municipality has to follow under the Act. In view of the same the Panchayat Raj Act when it occupies the field as regards the administration of Gram Panchayat the Municipalities Act cannot be applied. As the essential pre-requisite of a Notification that could be issued under the Panchayat Raj Act is non-existent the impugned Notifications need to be set aside. ( 6 ) THE statement of objections have been filed on behalf of the 4th respondent. It is pointed out that after Part-IXA of the Constitution was inserted by the Constitution (seventy-fourth) amendment Act, 1992 for formation of Municipalities afresh in all the States, the Act came to be amended. In constituting the Municipalities, the factors to be taken into consideration are also provided under the Constitution. The Municipalities have been classified into three categories (i) a Nagar Panchayat for a transitional area (ii) a Municipal Council for a small urban area and (iii) a Municipal Corporation for a larger urban area, under Article 243q of the Constitution. The karnataka Municipalities Act came to be amended and Section 3 is substituted by a new Section and therefore the old Section 3 is no longer available for consideration and Section 9 of the principal Act also stood amended. The karnataka Municipalities Act came to be amended and Section 3 is substituted by a new Section and therefore the old Section 3 is no longer available for consideration and Section 9 of the principal Act also stood amended. Section 3 of the Amendment Act requires that there shall be a smaller urban area, the population of which is not less than 20,000 and not more than 3 lakhs and the density of population of such area is not less than 1,500 per square kilometer and the revenue generated from such area for tax and non-tax purpose is not less than Rs. 9,00,000 or the sum calculated at Rs. 45/- per capita per annum, whichever is higher. The amended provision also took note of the fact that while notifying the smaller urban area the other circumstances and economic consideration shall also have to be taken into consideration, In the circumstances, keeping in view these factors the municipality under Annexure-B has been constituted afresh. Neither there is any inclusion nor any addition of the Gram Panchayat in the existing City Municipal Council as contended by the petitioners. The total population of the area notified in Annexure-B is 1,38,227 as on the date of the notification and under 1991 census it was 1,08,016; the density of population is 9,714 per square K. M. ; the per capita income is Rs. 150 per annum and the total of which is not less than 22,50,000. It was also pointed out that more than 50% of the inhabitants of the smaller urban area notified under Annexure-B are in the employment of non-agricultural activities. These factors were taken into consideration under Section 3 of the Act and accordingly the smaller urban area was constituted afresh and therefore it is submitted there is no legal infirmity in issuing the Notifications. In 1991 census, Bidar City is shown as Bidar Urban Agglomeration consisting of (1) Bidar (2) mailur (3) Naubad (4) Chidri (5) Kumbarwada. (6) Aliabad (7) Bag-E-Karanja (8) Guiler Haweli (9) Mohillate-E-Gairabi and (10) Seri Champa. Out of this, villages shown at Sl. Nos. 7 to 10 are shown as uninhabited and are in the urban area. These areas have already been declared as an urban area in the 1991 Census. (6) Aliabad (7) Bag-E-Karanja (8) Guiler Haweli (9) Mohillate-E-Gairabi and (10) Seri Champa. Out of this, villages shown at Sl. Nos. 7 to 10 are shown as uninhabited and are in the urban area. These areas have already been declared as an urban area in the 1991 Census. Now they are included in the smaller urban area under the notification issued under Annexure-B; that the inhabitants of this area have water connection, electricity, roads and street-lights from the 4th respondent since long and therefore there is no question of change of the life style of the inhabitants or imposing anything new on the residents of this area. It is seriously disputed that the Gram Panchayats in question are included now. Amalapur Gram Panchayat consists of two villages, Amalapur and Kumbarwada. Amalapur village, the headquarter of the said Gram Panchayat is not affected as it is not included in the notification at Annexure-B, but only Kumbarwada village is included. In that area there is a ayurvedic Medical College, a residential school, Housing Colony of the State Bank of India employees Housing Colony of H. K. E. Society's Employees, the Gandhi Gunj Police Station of bidar proper and an Ashram and so many other residential houses of employees working in different Organisations have come up and all these residential houses and the Institutions are within the Municipal Assessment List and they are subjected to Municipal Tax which are in the revenue area of Kumbarwada. For all these localities, roads, street lights and water facilities have been provided by the 4th respondent. The inhabitants of this locality are Lecturers in Colleges, employee in Banks or other Governmental organisations. Most of the residents of Kumbarwada village are businessmen having their business establishment in the Gandhi Gunj area of the Bidar market and many of the adjoining Survey Numbers are already part of Bidar City and many of the Lay-outs have been approved. In this background, it is submitted that petitioners contention that more than 50% of petitioner No. 1 Gram Panchayat included are agriculturists is not correct. It is further contended that Haladakeri Gram Panchayat consists of (1) Haladakeri (2) goranahalli (3) Sheri Husheni (4) Bage-E-Shahi (7) Bage-E-Ibrahim, (8) Bage-E-Goranahalli and (9) Maholate Gairab. Out of this, villages mentioned at Sl. Nos. 3 to 8 are deserted villages prior to independence. It is further contended that Haladakeri Gram Panchayat consists of (1) Haladakeri (2) goranahalli (3) Sheri Husheni (4) Bage-E-Shahi (7) Bage-E-Ibrahim, (8) Bage-E-Goranahalli and (9) Maholate Gairab. Out of this, villages mentioned at Sl. Nos. 3 to 8 are deserted villages prior to independence. In Bage-E-Hamman, which is a part of the City, office of the Superintendent of Police, Reserve police and Police Headquarters are located, which are subjected to Municipal Taxes. In mahilate-E-Gairabi the Offices of the Public Works Department, P. W. D. Officers Quarters, police Quarters and Tippu Sultan Colony are already in existence even before independence and all these properties are subjected to Municipal Taxes as per the records maintained by the municipality. The other villages are also part of the city. Facilities like roads, street lights and water supply are already extended by the Municipality. In addition to this, 186 houses bearing municipal Nos. 12. 1. 133 to 12. 1. 298 and their corresponding new Nos. 12. 1. 143 to 12. 1. 328 have been included including the official residences of the Employees of the South Central railways are within the above area and they are subjected to Municipal Taxes in law. House bearing Nos. 12. 1. 68, 12. 1. 69 to 12. 1. 161 and 12. 1. 162 are those situated within the limits of haladakeri Revenue village and they are part of the City and subjected to Municipal Tax. Sy. No. 50 of Haladakeri village coming within the revenue area of petitioner No. 2 is allotted in favour of the 4th respondent and 4th respondent formed a layout consisting of 174 housing sites, of which 20% were sold in public auction, 55 houses are constructed with the help of finance from the Karnataka Housing Board. Survey No. 28 measuring 31 acres 23 guntas of Goranahalli, which is part of Haladakeri Panchayat, was purchased by the 4th respondent at the rate of rs. 40,000/-per acre, out of which 807 plots have been formed, the beneficiaries have been put in possession of these plots and civic amenities have been provided by the 4th respondent. Similarly, Sy. No. 27 measuring 35 acres 8 guntas was purchased by the 4th respondent for implementation of the Ashraya Scheme and formed 1469 plots. The entire area stated above is within the urban area and many of the Government offices and residences are situate therein. Similarly, Sy. No. 27 measuring 35 acres 8 guntas was purchased by the 4th respondent for implementation of the Ashraya Scheme and formed 1469 plots. The entire area stated above is within the urban area and many of the Government offices and residences are situate therein. Naubadh Gram Panchayat consists of four villages, namely, (1) Naubadh, (2) Aliabad (3) choundi and (4) Chowli, Choundi and Chowli villages are not included in Annexure-B, Sy. Nos. 59 to 67 of Aliabad village are part of the City of 4th respondent and layout has been approved by the Bidar Development Authority nearly 10 years back. Shivanagar locality consists of the development Officers of the Life Insurance Corporation, Medical Officers working in the various District Hospitals of the District, Assistant Engineers, Lecturers working in various institutions and commercial complexes and they are constructed by the City Municipal Council and are subjected to municipal tax and records have been maintained in respect of such property by the Municipality. There is a bus stand adjoining the said locality. The Municipality has provided street lights, roads and all civic amenities since more than 10 years. Naubad is shown as an urban area in 1991 census itself as City Out-growth and S. B. Patil Dental college, B. Pharmacy and D-Pharmacy College buildings, Arts, Science and Commerce College holdings, Veterinary college building, Industrial Area Guest House and KSSIDC residential lay-out are all located in Naubad area and subjected to Municipal taxes. The Central Government integated Development of Small and Medium Town Scheme have been introduced. For construction of residential houses in Sy. Nos. 134, 135, 136, 138 and 139 of Naubad; Sy. Nos. 58, 59 and 67 of Aliabad village, Sy. Nos. 107 to 111 and 156 and 32 of Chidri Village under scheme Stage-I and Sy. No. 125 of Mailur under Chidri residential Scheme Stage-II, the Central government has given approval. In the circumstances, it is pointed out that there will be change in the life style of the villagers of the Gram Panchayats and the petitioners will be subjected to higher tax are all imaginary and out of facts. It is submitted that delimitation of constituencies have been taken up and notified on 24. 11. 1995 and elections were scheduled to be held on 7. 1. 1996. It is submitted that delimitation of constituencies have been taken up and notified on 24. 11. 1995 and elections were scheduled to be held on 7. 1. 1996. The contention advanced on behalf of the petitioner that there is lack of purpose and denial of opportunity in issuing the Notifications is not correct. The constitution of the Municipality under Annexure-B is in compliance with section 3 of the Amended Act and in conformity with the Constitution 74th Amendment and therefore there is no legal infirmity in issuing the said Notification and the petitions are liable to be dismissed. ( 7 ) UNDER Section 3 of the Act the Governor may subject to the provisions of Section 9 and having regard to: (a) the population of any area; (b) the density of population of such area; (c) the revenue generated for the local administration of such area; (d) the percentage of employment in non-agricultural activities in such area; (e) the economic importance of such area; specify, by Notification, such area to be a smaller urban area. Proviso thereto itself imposes certain conditions that before specifying as a smaller urban area certain factors will have to be taken note of such as population, the density of population and revenue generated should not be less than the figures mentioned therein. The Governor having regard to the size of the area and municipal services deemed to be provided or proposed to be provided by industrial establishment in any area and such other factors as he may deem fit, may by notification specify such area or part thereof to be an industrial township. Section 4 of the Act provides for inclusion or exclusion of areas in or from smaller urban area and the effect thereto. Identical provisions are available even under the Karnataka. Municipal corporations Act, A Notification issued under Section 3 merely specify a smaller urban area. Section 4 provides for inclusion or exclusion of areas within the limits of smaller urban area. There is distinction between Section 3 and 4. Section 3 provides for specification of an area while Section 4 provides for inclusion or exclusion of areas. Section 9 of the Act provides for procedure for constitution, abolition of smaller urban areas or alteration of the limits thereof. There is distinction between Section 3 and 4. Section 3 provides for specification of an area while Section 4 provides for inclusion or exclusion of areas. Section 9 of the Act provides for procedure for constitution, abolition of smaller urban areas or alteration of the limits thereof. It further provides that a Notification will have to be published not less than 30 days before declaring any local area to be a smaller urban area or altering the limits of such smaller urban area or declaring that any local area shall cease to be a smaller urban area. Such Notification will have to be published in the Gazette in English and Kannada and posted in conspicuous places in the local area in Kannada. A proclamation announcing that it is proposed to constitute the local area to be smaller urban area or to alter the limits of the smaller urban area or to declare that the local area shall cease to be a smaller urban area and requiring all persons who entertain any objection to the said proposal to submit the same with reasons in writing to the Commissioner within 30 days from the date of the said proclamation and whenever it is proposed to add to or exclude from a smaller urban area and inhabited area, it shall be the duty of the Municipal Council also to cause a copy of such proclamation to be posted up in conspicuous places in such area. The Notification will not be issued unless such objections are found to be insufficient or invalid. ( 8 ) IT is now contended that before the life style of any these villagers is altered it is necessary to hear the objections and decide the same. Unless hearing takes place it will not be permissible to include these areas in the Municipal Council. In this context reliance is placed upon the decision of the Supreme Court in STATE OF U. P. AND ORS. v. PRADHAN SINGH KSHETTRA samiti AND OTHERS AIR1995 SC 1512 , JT1995 (3 )SC 252 , 1995 (2 )SCALE453 , 1995 Supp (2 )SCC305 , (1995 )2 UPLBEC874. In that decision it is stated that the village is a habitat and the village for the purpose of the Panchayat can be specified only in accordance with the wishes of the inhabitants of the village cannot be accepted. In that decision it is stated that the village is a habitat and the village for the purpose of the Panchayat can be specified only in accordance with the wishes of the inhabitants of the village cannot be accepted. In a developing country where population is growing fast there is an urgent need to evolve and integrate the society. The Supreme Court took note of the various factors arising thereto and made it plain that it is for the Government to decide in what manner the Panchayat areas and the constituencies in each Panchayat area should be delimited. It is not for the Court to declare the manner in which the same should be done. However, while considering the question whether there was any lacuna in the steps taken up the Government to finalise the Panchayat areas, it was found that it was obligatory on the State Government to hear the objections before the Panchayat areas were finalised. It was stated therein that the decisions of the Supreme Court in VISAKHAPATNAM municipality v. KANDREGULA NUKARAJU AIR1975 SC 2172 , (1975 )2 SCC773 , [1976 ]1 SCR544 ; BALDEV SINGH v. STATE OF HIMACHAL pradesh AIR1987 SC 1239 , JT1987 (2 )SC 103 , 1987 (1 )SCALE724 , (1987 )2 SCC510 , 1987 (1 )UJ537 (SC ) and SUNDARIAS KANYALAL bhatija v. COLLECTOR THANE MAHARASHTRA AIR1990 SC 261 , (1990 )92 BOMLR13 , [1990 ]68 Compcas20 (SC ), 1989 (25 )ECR129 (NULL ), [1990 ]183 ITR130 (SC ), JT1989 (3 )SC 57 , 1989 (2 )SCALE7 , (1989 )3 SCC396 , 1989 (2 )UJ485 (SC ) require that reasonable opportunity for raising objections and hearing ought to be given in such matters since the change in areas of local bodies results in civil consequences. It was not disputed that action of bringing more than one village under one Gram Panchayat does involve civil consequences. Even a post-decisional hearing could be given. In TULSIPUR SUGAR CO. LTD. v. THE NOTIFIED AREA COMMITTEE, TULSIPUR AIR1980 SC 882 , (1980 )2 SCC295 , [1980 ]2 SCR1111 and sundarajias KANYALAL BHATHIJA AND ORS. v. THE COLLECTOR, THANE, maharashtra AND ORS. Even a post-decisional hearing could be given. In TULSIPUR SUGAR CO. LTD. v. THE NOTIFIED AREA COMMITTEE, TULSIPUR AIR1980 SC 882 , (1980 )2 SCC295 , [1980 ]2 SCR1111 and sundarajias KANYALAL BHATHIJA AND ORS. v. THE COLLECTOR, THANE, maharashtra AND ORS. , the nature of power exercised in forming a Municipality has been specifically considered and the view taken is that in formation of a Municipality or inclusion or exclusion of areas thereunder is exercise of a legislative power and it is neither executive nor administrative nor quasi judicial and when legislative action is taken the concept of hearing does not arise at all; Obviously, the attention of the Supreme Court was not drawn to this fact in the decision in State of UP. and Ors. v. Pradhan Singh Kshettra Samiti and Ors. It proceeded on a concession and not on any argument on the question. Therefore, the petitioners cannot place any reliance on the decision in State of UP. and Ors. v. Pradhan Singh Kshettra samiti and Ors. Thus, there is no requirement under the provisions of the Act to call for objections and to consider the same, In matters of this nature it will be very difficult for any Authority muchless the Government to examine the various objections being raised after giving hearing to the parties concerned. If the entire villages have to be heard, it will become an endless process. These aspects were borne in mind by the Supreme Court while rendering the decisions in Tulsipar sugar Co. Ltd. v. The Notified Area Committee, Tulsipur and Sundarajias Kanyalal Bhathija and ors. v. The Collector, Thane, Maharashtra and Ors. Therefore, we are of the view that hearing in each one of the cases is not required. ( 9 ) UNLESS there is a lis, that is affirmation by one party and denial by another and the dispute necessarily involves a decision on the rights and obligations of the parties to it and the authority is called upon to decide it, there is no exercise of judicial power. The main and the basic test, however, is whether the adjudicating power which a particular authority is empowered to exercise, has been conferred on it by a statute and can be described as a part of the State's inherent power exercised in discharging its judicial function. The main and the basic test, however, is whether the adjudicating power which a particular authority is empowered to exercise, has been conferred on it by a statute and can be described as a part of the State's inherent power exercised in discharging its judicial function. In that sense there will be a lis, that is, there is affirmation by one party and denial by another and the dispute necessarily involves the rights and obligations of the parties to it. The order which the State Government ultimately passes is described as its decision and it is made final and binding. On that basis we take it that the process of declaring an area to be a smaller urban area cannot be treated to be a judicial process where there is an assertion of fact and denial of the same and therefore we are of the view that the contention urged on behalf of the petitioners cannot be accepted. If, again, there are neither present rights asserted, nor a future rule of conduct prescribed, but merely a fact ascertained necessary for the practical effectuation of admitted rights, the proceeding, though called an arbitration, is rather in the nature of an appraisement or ministerial act and therefore does not have any judicial complexion. ( 10 ) WHAT is required to be considered in such cases is only the objections raised by those interested in the matter. Rights of citizens as such is not decided, but the fact that they may express their views has, its limits is confined to whether a locality should be included in one area or the other. However, ultimately the power is that of the Government subject to certain objective tests as provided under the statute and bearing those aspects in mind the Government could exercise its power. ( 11 ) THERE is serious dispute between the parties in the present case as to whether these areas were already part of the Municipal Council or not. If those areas had already had the advantage of a Municipal Council and were included in the Municipal area, which is now described as smaller urban area, the question of change of their life style does not arise at all. It is the only question with which we are concerned in the present case. If those areas had already had the advantage of a Municipal Council and were included in the Municipal area, which is now described as smaller urban area, the question of change of their life style does not arise at all. It is the only question with which we are concerned in the present case. It is not a case of constitution or reconstitution of a Panchayat, but specification of an area, as a smaller urban area. If that power could be exercised by the Authority concerned under the statute, the same cannot be found fault with. We have in detail adverted to the statement of objections filed by respondent No. 4, wherein the various factors referred to in Section 3 which have to be borne in mind before constituting a Municipality having been taken note of, we do not think it is open to the petitioners to urge that they should continue to be part of the Panchayats, for, whether an area should be specified either as a smaller urban area or Panchayat will have to be ultimately decided by the Government and not by the citizens. As long as the relevant factors are borne in mind and irrelevant factors are eschewed from consideration, we do not think the matter is open to question. ( 12 ) A Notification has been issued on 8th November, 1996 Under Section 4 (2) of the Karnataka punchayat Raj Act, 1993 by the Deputy Commissioner, Bidar, declaring that certain panchayat areas are not in existence with effect from the date mentioned in the Notification. It is therefore contended that a Notification under Section 4 (2) (e) of the Karnataka Panchayat Raj Act had not been issued earlier and the Notification impugned in the Writ Petition is bad in law on the footing that the same areas cannot be in a Panchayat as well as a Municipality. ( 13 ) THE scope of Notification issued under Sections 3 and 4 of the Karnataka Municipal corporations Act, 1976 has been considered by this Court in SURENDRA BABU v. STATE OF karnataka AIR1996 Kant 339 , AIR1996 KAR 339 , ILR1996 kar 1797 , 1996 (3 )Karlj168 vis-a-vis provisions in Panchayat Raj Act have been considered in W. P. No. 39913/95 connected with B. KRISHNAPPA v. STATE W. A. No. 4036/95 DD. 28. 11. 95. 28. 11. 95. The provisions in the Karnataka Municipal Corporation Act and the Karnataka municipalities Act in this regard are pari materia. The effect of the said decision in krishnappa's case is also considered in SURENDRA BABU's case. We have examined the scope of Notification that could be issued under Sections 3 and 4 of the Municipalities Act. The principles stated therein are applicable to the present case as well. ( 14 ) NOW as a fact it is stated that Panchayat has ceased to exist prior to the issue of Notification. If that is so, there is no impediment for issue of Notification under Municipalities Act at all. The argument that the area in question falls both in a Panchayat and a Municipality is not well founded. Hence, we find no substance even in the argument advanced on the basis of notification issued on 8. 11. 1996. All other contentions are covered by the decision in surendra BABU's case. ( 15 ) THEREFORE, we do not find substance in any of the contentions urged on behalf of the petitioners and hence the Petitioners shall stand dismissed.