JUDGMENT R.A. Sharma, J. The Zila Parishad Karamchari Sangh, Dhanbad (Respondent No. 1) is a registered society. It filed a writ petition, being C.W.J.C. No. 1969 of 1995 (R), before this Court seeking writ of mandamus/direction upon the respondents, primarily the Deputy Development Commissioner cum Chief Executive Officer, Zila Parishad, Dhanbad, and the Director, Panchayati Raj, Govt. of Bihar Patna, to pay arrears of salary from September, 1994 till date to the employees of the Dhanbad Zila Parishad (hereinafter referred to as the Zila Parishad) and continue to pay the salary from month to month as and when it falls due. There is also a prayer for writ/direction commanding the respondents to deposit the General Provident Fund amount, deducted from the salary of the employees of the Zila Parishad, in their respective accounts along with the contribution of the Zila Parishad with interest. 2. The Zila Parishad in its counter affidavit accepted its liability to pay the salary and to deposit the General Provident Fund amount, but expressed its inability to pay the same on account of paucity of fund. Its case is that it is not getting the grant, loan and its share of cess from the State Government on account of which the salary etc. could not be paid to the employee from 1994-95. The stand of the State Government on the other hand is that 30% grant upto the year 1994-95 has already been released in favour of the Zila Parishad. As regard the payment of the share of the Zila Parishad in the cess collected, it has been stated that the payment of the cess amount has been made as per budgetary allocation upto the year 1991-92. 3. The learned single Judge after considering the affidavits and the materials placed by the parties on the record disposed of the writ petition vide judgment dated 19.7.1996, the relevant part of which is reproduced below :- "Having heard the parties, this Court finds that the Zila Parishad is admittedly entitled for at-least the following amount from respondent State of Bihar, namely, (a) 30% of grant for the years 1995-96 and 1996-97. (b) The share of cess royalty as allotted by the respondent State with respect to Zila Parishad. While grant is to be released by the Directorate of Panchayat Raj; the cess/royalty amount is to be released from the Revenue Department of the State Government. (b) The share of cess royalty as allotted by the respondent State with respect to Zila Parishad. While grant is to be released by the Directorate of Panchayat Raj; the cess/royalty amount is to be released from the Revenue Department of the State Government. It is for the said reason, so that the employees of the Zila Parishad may not suffer and the respondent Zila Parishad may run its business/affairs, in the interest of justice, this Court passed the following orders : (1) The concerned respondents of State Govt. are directed to release 30% of the admitted grant in favour of Zila Parishad, Dhanbad, at-least with respect to the year 1995-96, within a period of one month from the date of receipt/production of a copy of this order. (2) The concerned respondents of State Govt. are directed to release at least 5% of the total due against the head of cess/royalty to which the Zila Parishad, Dhanbad, is entitled upto the year 1991 as shown in Annexure-A dated 23.1.91. Such amount is to be released within a period of two months from the date of receipt/production of a copy of this order. So far as rest of the amount is concerned, against the head of cess/royalty to which the Zila Parishad is entitled, it is expected that the respondent-State will take step for release of the same in near future. (3) The respondent-Zila parishad and its authority are directed to release the arrears of pay to its employees and also deposit the provident fund of the employees, as well as contributory part. Such salary is to be released, including the arrears of its employees; and the provident fund and contributory part is to be deposited, within a period of one month from the date of receipt of one or other aforesaid amount. It is made clear that whatever the amount that will be received by the respondent-Zila Parishad by virtue of this order, the same should be utilised firstly for the purpose of compliance of this order and only thereafter it will be open to the parties to utilise the same for some other purpose." Feeling aggrieved by the judgment of the learned single Judge, two of the respondents to the writ petition, namely, the State of Bihar, through the Chief Secretary, and the Secretary, Revenue and Land Reforms Department, Govt. of Bihar, Patna, have filed this appeal under clause 10 of the Letters Patent challenging only that part of the judgment of the learned single Judge, whereby and whereunder the appellants were directed to release atleast 5% of the total dues against the head of cess/royalty upto the year 1991 within a period of two months from the .date of receipt of a copy of the judgment. The appellants have thus challenged by this appeal only the direction no. (2) contained in the impugned judgment. 4. The learned Advocate General, appearing for the appellants in this appeal, has made the following submissions in support of the appeal :- (i) The Government disbursed the cess amount in accordance with the budgetary allocation and there being no collection of cess amount after 1991-92 on account of the interim orders of the Court, the question of paying such dues thereafter to the Zila Parishad does not arise; (ii) The Zila Parishad is neither a Government Company nor is it a Government Corporation, run and managed by the State Government. The employees of the Zila Parishad are not the employees of the State Government and the State Government is, therefore, not under any obligation to pay their salary. It is a matter between the Zila Parishad and its employees and the learned single Judge, therefore, could not have issued the impugned direction; and (iii) The State Government can neither grant loan nor can it give any grant to the Zila Parishad because there are large number of Corporations, local bodies and statutory authorities, which are also having financial crisis and are seeking funds/loan from the Govt. 5. The learned counsel for the respondents have disputed the above submissions of the learned Advocate General. Mr. S.B. Gadodia, learned counsel appearing for the Zila Parishad, has further argued that the Zila Parishad has not been paid its dues including the cess amount to which it is entitled. He has disputed the case of the appellants to the effect that the Government could not pay the cess dues because the same could not be recovered in view of the interim orders passed by this Court and the apex Court. He has disputed the case of the appellants to the effect that the Government could not pay the cess dues because the same could not be recovered in view of the interim orders passed by this Court and the apex Court. In this connection he has submitted that after the decision of the apex Court in P. Kannadasan vs. State of Tamil Nadu & Ors., AIR 1996 SC 2560 , and the decision of the Division Bench of this Court in Bharat Coking Coal Ltd. The State of Bihar & ars., 1998 (2) PLJR 523 , the Government is free to recover the cess due and in fact it has been doing so and it is now not open to it to withhold the payment of cess due to the Zila Parishad. Mr. Gadodia has also placed before the Court various affidavits exchanged between the parties in support of his submission. 6. Mr. P.K. Prasad, learned counsel for the petitioner-respondents no.1, has placed before this Court the history of the Local Self Govt. and has invited attention of the Court to various documents and affidavits including the letter of the Director, Panchayati Raj, Govt. of Bihar, in order to demonstrate that the Government has not even paid these dues of the Zila Parishad, which have been admitted by the Director of Panchayati Raj himself. 7. Mr. P.D. Agarwal has appeared as amicus curiae to assist the Court. He has invited the attention of the Court to the provisions contained in Chapter IX of the Constitution of India. He has also placed reliance on section 135 of the Bihar Panchayat Raj Act, 1993 (hereinafter referred to as the Act), which deals with the constitution of the Finance Commission for Panchayats. 8. "Local Self Govt." is well known institution, which has been accepted as the appropriate authority to deal with and regulate the local affairs. For this purpose, the local bodies such as Municipal Board, District Board etc. have been established by the statutory enactments. These local bodies do not have the plenary legislative powers. They depend for their powers upon the parent legislation. They exercise such legislative, administrative, financial and taxation powers as are conferred on them by the legislature. Within the limits set out by the legislature, they are free to exercise their power in a manner which serves the purpose for which they have been established. 9. They depend for their powers upon the parent legislation. They exercise such legislative, administrative, financial and taxation powers as are conferred on them by the legislature. Within the limits set out by the legislature, they are free to exercise their power in a manner which serves the purpose for which they have been established. 9. Upto 1991, the dependency of the local bodies on the legislature was almost absolute. But in 1992, Part IX containing Articles 243 to 243-O was inserted in the Constitution of India by the Constitution (Seventy-third Amendment) Act, 1992, making substantial changes with regard to Panchayats, their compositions, powers, duties, functions, funds, source of revenue etc. Similar provisions as regard the Municipalities are contained in Part IX-A, which was inserted in the Constitution of India by the Constitution (Seventy fourth Amendment) Act, 1992. 10. Article 243-B provides for establishment of Panchayats in every State at village, intermediate and district levels. Article 243-C deals with the composition of Panchayats and Article 243-D provides for reservation of seats. Under Article 243-F the life of the Panchayat has been fixed as five years from the date appointed for its first meeting and no longer. 10. Article 243-B provides for establishment of Panchayats in every State at village, intermediate and district levels. Article 243-C deals with the composition of Panchayats and Article 243-D provides for reservation of seats. Under Article 243-F the life of the Panchayat has been fixed as five years from the date appointed for its first meeting and no longer. Article 243-G, which deals with powers, authority and responsibilities of Panchayats, is reproduced below :- "243-G. Powers, authority and responsibilities of Panchayats.-Subject to the provisions of the Constitution, the legislature of a State may, by law, endow the Panchayats with such powers and authority as may be necessary to enable them to function as institutions of self government and such law may contain provisions for the devolution of powers and responsibilities upon Panchayats at the appropriate level, subject to such conditions as may be specified therein, with respect to- (a) the preparation of plans for economic development and social justice; (b) The implementation of schemes for economic development and social justice as may be entrusted to them including those in relation to the matters listed in the Eleventh Schedule." Article 243-H, which gives powers to the Panchayats to impose taxes is also reproduced below :- "243-H. Powers to impose taxes by and Funds of, the Panchayats.- The Lelgislature of a State may, by law :- (a) authorise a Panchayat to levy, collect and appropriate such taxes, duties, tolls and fees in accordance with such procedure and subject to such limits; (b) assign to a Panchayat such taxes, duties, tolls and fees levied and collected by the State Government for such purpose and subject to such conditions and limits; (c) provide for making such grants-in-aid to the Panchayats from the Consolidated Fund of the State; and (d) provide for constitution of such Funds for crediting all moneys received, respectively, by or on behalf of the Panchayats and also for the withdrawal of such moneys therefrom, as may be specified in the law." Article 243-1, which requires constitution of Financial Commission is as under :- "243-1. Constitution of Finance Commission to review financial position.-(1) The Governor of a State shall, as soon as may be within one year from the commencement of the Constitution (Seventy third Amendment) Act, 1992, and thereafter at the expiration of every fifth year, constitute a Finance Commission to review the financial position of the Panchayats and to make recommendations to the Governor as to- (a) the principles which should govern- (i) the distribution between the State and the Panchayats of the net proceeds of the taxes, duties, tolls and fees leviable by the State, which may be divided between them under this Part and the allocation between the Panchayats at all levels of their respective shares of such proceeds : (ii) the determination of the taxes, duties, tolls and fees which may be assigned to, or appropriated by the Panchayats; (iii) the grants-in-aid to the Panchayats from the Consolidated Fund of the State : (b) the measure needed to improve the financial position of the Panchayats; (c) any other matter referred to the Finance Commission by the Governor in the interests of sound finance of the Panchayats. (2) The Legislature of a State may, by law, provide for the composition of the Commission, the qualifications which shall be requisite for appointment as members thereof and the manner in which they shall be selected." There are provisions for audit of account and election to the Panchayats. Article 243-N has laid down that any provision of law relating to Panchayats in force in a State immediately before the commencement of the Constitution (Seventy-third Amendment) Act, 1992, which is inconsistent with the provisions of Part IX shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until the expiration of one year from such commencement, whichever is earlier. Article 243-O bars the interference by Courts in electoral matters. 11. In Anugrah Narain Singh and another VS. State of U.P. & ors., (1996)6 Supreme Court Cases 303, the apex court has with regard to Parts IX and IX-A of the Constitution, observed as under :- ".....Parts IX and IXA of the Constitution were introduced by the Constitution (73rd Amendment) Act, 1992 and (74th Amendment) Act, 1992. By these two parts, it was intended to take democracy to the grass-root level. By these two parts, it was intended to take democracy to the grass-root level. Part IX deals with constitution of Panchayats, composition of Panchayats and holding of regular elections to the Panchayats. Article 243-O contains a bar to interference by Court in electoral matters...." 12. The apex Court in State of U.P. and others etc. vs. Pradhan Sangh Kshettra Samiti and others etc., AIR 1995 SC 1512 , while considering Part IX of the Constitution, has with regard to powers, functions, duties and finance of the Panchayat, observed thus:- "........Article 243-G speaks of powers, functions and responsibilities of the Panchayat to be determined by the legislature of the State. It states that the legislature of a State may by law endow the Panchayats with such powers and authority as may be necessary to enable them to function as institutions of self-government and such law may contain provisions for the devolution of powers and responsibilities upon Panchayats at the appropriate level, subject to such condition as may be specified therein with respect to (a) the preparation of plans for economic development and social justice; and (b) the implementation of schemes for economic development and social justice as may be entrusted to them including those in relation to the matters listed in the Eleventh Schedule. The Eleventh Schedule mentions as many as 29 matters some of which are necessary to be enumerated here to point out that it is only a financially and administratively viable unit which can undertake the schemes of development relating to them. They are : (1) Minor Irrigation, water management and watershed development, (2) Social forestry and farm forestry, (3) Small Scale industries, including food processing industries, (4) Khadi, village and cottage industries, (5) Rural housing, (6) Roads, culverts, bridges, ferries, waterways and other means of communication, (7) Rural electrification, including distribution of electricity, (8) Non-conventional energy sources, (9) Poverty alleviation programme, (10) Education, including primary and secondary schools, (11) Technical training and vocational education, (12) Markets and fairs, (13) Health and sanitation, including hospitals, primary health centres and dispensaries, (14) Women arid child development, (15) Social welfare, including welfare of the handicapped and mentally retarded, and (16) welfare of the weaker sections, and in particular, of the Scheduled Castes and the Scheduled Tribes. Article 243-H speaks of powers that the State legislature may give to the panchayats to levy, collect and appropriate taxes, duties, tolls and fees and also of assigning such of them as are levied and collected by the State Government, to provide for grants-in-aid from the Consolidated Fund of the State and also to provide for the constitution of Funds for crediting all moneys received, respectively by or on behalf of the Panchayats and for the withdrawal of the moneys therefrom. Article 243-1, among others, provides for the constitution of Finance Commission by the Governor of the State to review the financial position of the Panchayats at the end of every five years. Article 243-J requires the State to make law to make provision with respect to the maintenance and auditing of the accounts of the panchayats." 13. In line with Part IX of the Constitution of India, the Act, which provides for establishment of Panchayats at village, intermediate and district levels has been enacted. The Zila Parishad is a Panchayat at the district level which has been dealt with in Chapter V of the Act. Sections 71 and 72 of the Act have laid down the functions and powers of Zila Parishad. From perusal of those two sections, it is apparent that the Zila Parishad has been given vast powers regarding the agriculture, irrigation, ground water resources and watershed development, horticulture, statistics, rural electrifications, distribution of essential commodities, soil conservation, marketing, social forestry, animal husbandry and dairy, minor forest produce, fuel and fodder, fisheries, household and small industries, rural roads and inland waterways, health and hygiene, rural housing, education, social welfare and welfare of weaker section, management and maintenance of the public utility works etc. Section 80 of the Act, which empowers the Zila Parishad to levy tolls, fees and rates, is quoted below :- "80. Section 80 of the Act, which empowers the Zila Parishad to levy tolls, fees and rates, is quoted below :- "80. Taxation.-(1) Subject to such maximum rates as the Government may prescribe, a Zila Parishad may- (a) levy tolls in respect of any ferry established by it or under its management; (b) levy the following fees and rates, namely- (i) fees on the registration of boats or vehicles, (ii) a fee for providing sanitary arrangements at such places of pilgrimage, fairs and me/ as within its jurisdiction as may be specified by the Government by notification, (iii) a fee for licence for fair or mela, (iv) a lighting rate where arrangements for lighting of public streets and places is made by the Zila Parishad within its jurisdiction, and (v) Water rate, where arrangement for the supply of water for drinking irrigation or any other purpose is made by the Zila Parishad within its jurisdiction. (2) The Zila Parishad shall not undertake registration of any vehicle or levy fee therefor and shall not provide sanitary arrangements at place of pirgrimage, fairs and melas within its jurisdiction or levy fee therefor if such vehicle has already been registered by any other authority under any law for the time being in force or if such provision for sanitary arrangement has already been made by any other local authority. (3) The fees or rates and terms and conditions for the imposition thereof shall be such as may be provided by bye-laws. Such bye-laws may provide for exemption from all or any of the tolls, fees or rates in any class or cases." Section 81, which deals with the financial arrangements to Zila Parishad is also reproduced below :- "81. Financial Arrangements to Zila Parishad.-(1) A Zila Paristiad may, subject to the provisions of any law relating to the raising of loans by local authorities for the time being in force, raise from time to time, with the approval of the State Government, loans for the purposes of the Act and create a sinking fund for the repayment of such loans. (2) Notwithstanding anything in this Act, a Zila Parishad may borrow money from the Government or with the previous sanction of the government, from banks or other financial institutions, for furtherance of its objective on the basis of specified schemes as may be drawn up by the Zila Parishad for the purpose." 14. (2) Notwithstanding anything in this Act, a Zila Parishad may borrow money from the Government or with the previous sanction of the government, from banks or other financial institutions, for furtherance of its objective on the basis of specified schemes as may be drawn up by the Zila Parishad for the purpose." 14. The Zila Parishad cannot carry out its functions and duties as mentioned in Article 243-G of the Constitution and sections 71 and 72 of the Act without adequate funds. Its source of revenue, as contained in Section 80, can yield only limited income. It has to depend on loan, grants and other sources of income for performing its statutory functions and duties. Article 243-1 of the Constitution looks after this aspect of the local bodies. It requires the Governor of the State to constitute a Finance Commission within one year from the commencement of the Constitution (Seventy-third Amendment) Act, 1992, in order to review the financial position of the Panchayats and to make recommendations regarding the principles which should govern (i) the distribution between the State and the Panchayats of the net proceeds of the taxes, duties, tolls and fees leviable by the State, (ii) determination of the taxes, duties, tolls and fees which may be assigned to or appropriated by the Panchayats, (iii) grant-in-aid from the consolidated fund of the State to the Panchayats and (iv) the measures needed to impove the financial position of the Panchayats. In line with Article 243-1 is section 135 of the Act, which so far as it is relevant, is also quoted below :- "135. In line with Article 243-1 is section 135 of the Act, which so far as it is relevant, is also quoted below :- "135. Finance Commission far Panchayats.-(1) The Government shall within one year from 24th April, 1993, i.e., not later than 23rd April, 1994 and thereafter on the expiration of every fifty year constitute a Finance Commission to review the financial position of the Zila Parishad, Panchayat Samitis and Gram Panchayats and to make recommendations to the Government with regard to- (a) the principles which should govern, (i) the distribution between the State and the Zila Parishad, Panchayat Samitis and Gram Panchayats and the net proceeds of the taxes, duties and fees leviable by the Government which may be divided between them and allocation between the Zila Parishads, Panchayat Samitis and Gram Panchayats of their respective shares of such proceeds; (ii) the determination of the taxes, duties and fees which may be, assigned to or appropriated by the Zila Parishads, Panchayat Samitis and Gram Panchayats; (iii) the grants-in-aid to Zila Parishads, Panchayat Samitis and Gram Panchayats from the Consolidated Fund of the State; (b) The measure needed to improve the financial position of the Zila Parishads, Panchayat Samitis and Gram Panchayats; (c) any other matter referred to the Finance Commission by the Governor in the interest of sound finance of the Zila Parishads, Panchayat Samitis and Gram Panchayats. (2) The Finance Commission shall consists of a Chairman and two other members. xxx xxx xxx." 16. Pursuant to our order, the appellants have filed an affidavit (5th Supplementary affidavit), in paragraph nos. 4 and 5 of which it has been stated that the State Govt. constituted the State Finance Commission under section 135 of the Act, vide notification dated 24.3.1994 and it was in existence up to 31.12.1996, but it did not make any recommendation in terms of the said section. It has further been stated that the term of the Commission was neither extended nor has it been reconstituted thereafter. 16. After the insertion of Part IX in the Constitution, the Panchayats, as regard their finance, have not been left solely at the mercy of the State Govt. Article 243-1 of the Constitution has provided mechanism to look after their financial matters and the sources of their income. 16. After the insertion of Part IX in the Constitution, the Panchayats, as regard their finance, have not been left solely at the mercy of the State Govt. Article 243-1 of the Constitution has provided mechanism to look after their financial matters and the sources of their income. The State has although enacted the Act in line with Part IX of the Constitution and has also enforced it but it has failed to implement it in true spirit. Even though the Finance Commission was constituted by the State Govt. in 1994 and it remained in existence upto 1996, but it did not make any recommendation in terms of Article 243-1 of the Constitution, read with section 135 of the Act. The Government has neither extended the term of the old Commission nor has it constituted any other Finance Commission. The result is that there is no principle/norms on the basis of which the net proceeds of taxes, duties, tolls and fees leviable by the State can be divided between the State and the Panchayats. The same is the position with regard to assignment to and appropriation by the Panchayats of the taxes, dues, tolls and fees and the grant-in-aid to them from the consolidated fund of the State. In the absence of any such guiding principle having been laid down by the Finance Commission, the Panchayats are not getting their due shares from the State Govt., which is allocating the funds to them almost on ad hoc basis from year to year. This is clear from Annexure-R2/C to the affidavit filed by the Zila Parishad in this appeal on 10/11.8.98. The grant given by the Government to the Zila Parishad from 1990-91 to 1997-98 as contained in the said Annexures is as under:- Receipts (i) Grants of State Govt. 1990-91 2,76,62,464,00 1991-92 3,01,51,671.00 1992-93 90,324.00 1993-94 1,25,890.00 1994-95 14,55,495.00 1995-96 2,40,110.00 1996-97 8,32,900.00 1997-98 21,83,947.00 The aforementioned annexure shows that due to want of funds the Zila Parishad is not executing any development scheme after 1994-95 and the funds at its disposal are hardly adequate to meet its running and establishment expenses. 17. The resultant position is that the Panchayat is almost financially bankrupt and for all practical purposes it has become a sick Institution incapable of performing the functions/ duties assigned to it by and under the Constitution and the Act. 17. The resultant position is that the Panchayat is almost financially bankrupt and for all practical purposes it has become a sick Institution incapable of performing the functions/ duties assigned to it by and under the Constitution and the Act. It is hardly of any practical utility to the people because it is neither executing any development scheme nor is it in a position to render service to them. This is not the situation contemplated by the Constitution of India and the Act. The object of Part IX of the Constitution is establishment of Panchayats at three levels capable of effectively performing their functions and discharging their duties assigned to them by and under the Constitution and the Act. As, for performing their functions and discharging their duties, the Panchayats need funds, Article 243-1 of the Constitution was enacted to look after their financial matters and to ensure them adequate funds. The Constitution never intended establishment of sick Panchayats incapable of performing their constitutional and statutory duties. 18. Functions and duties assigned to the Panchayats by and under Article 243-G of the Constitution and Sections 71 and 72 of the Act are primarily the functions and duties of the Government. The Government is, therefore, duty bound to see that the Panchayats do perform their functions and duties properly and effectively and if for any reason they do not do so, it has sufficient power under the Act to take appropriate action. But the State Government has not only failed to take appropriate action to improve the working of the Panchayats, but has also failed to discharge its constitutional and statutory obligation under Article 243-1 of the Constitution, read with section 135 of the Act. It, therefore, cannot escape the liability for the state of affairs in which the Panchayats have been placed. 19. Allocation of funds and giving of grants-in-aid to the local bodies is primarily the function of the State Government, which has to be performed in accordance with the principle and the norm laid down by the Finance Commission constituted under Article 243-1, read with section 135 of the Act. In this respect there is complete failure on the part of the State Government. The matter regarding allocation of funds and grant-in-aid which ought to have been decided at the level of the State Govt. In this respect there is complete failure on the part of the State Government. The matter regarding allocation of funds and grant-in-aid which ought to have been decided at the level of the State Govt. has been left to be agitated by means of writ petition under Article 226 of the Constitution. 20. The petitioner respondent no.1 in paragraph 17' of its writ petition has referred to a letter dated 30.8.1993, written by the Deputy Development Commissioner, Dhanbad, to the State Government for immediate release of rupees ten crores in favour of the Zila Parishad. In that letter it has been stated that Rs. 2,50,92,82,381.00 (Rupees two arab fifty crores ninety-two lacs eighty-two thousand three hundred eighty one) is the balance of the share amount of the Zila Parishad in the cess collected upto 1991-92, which has to be paid to it by the Government. A true copy of this letter has been filed as Annexure-10 to the writ petition. The respondents to the writ petition have neither denied the averments made in paragraph 17' of the writ petition nor have they challenged the correctness of the contents of the aforesaid letter. In paragraph 3' of the IPA there is reference to Paragraph 17' of the writ petition and the aforementioned letter dated 30.8.1993. But neither the averments of the said paragraph nor the contents of the aforesaid letter have been denied by the appellants. What has been stated on their behalf in Paragraph 4' of the LPA is that according to section 9(2) of the Bihar Cess (Amendment) Act, 1981, the Zila Parishads can be paid upto 20% for the cess collected, which is the maximum limit upto which the State Government can pay the cess amount to them, but• it is not the fixed rate/percentage at which the payment of cess is to be made to them. It has further been stated that the Zila Parishads were paid the cess amount proportionately out of the budgetary allocation. However, the correctness of the Zila Parishad's dues payable by the Government as shown in the aforesaid letter dated 30.8.1993 has not been disputed. 21. In Paragraph nos. 8 and 10 of the counter-affidavit filed in the writ petition on behalf of appellants no.2, who was impleaded as respondent no.4. However, the correctness of the Zila Parishad's dues payable by the Government as shown in the aforesaid letter dated 30.8.1993 has not been disputed. 21. In Paragraph nos. 8 and 10 of the counter-affidavit filed in the writ petition on behalf of appellants no.2, who was impleaded as respondent no.4. to the said writ petition, which contains the reply of paragraph 17' of the writ petition, it has been stated that "according to provisions laid down in the Cess Act of 1880 and Cess Act (amended) of 1981, mines cess was collected, and from this collected amount a fixed sum was provided in the budget to be allotted to the different Zila Parishad, and from this amount proportional allotment was made to different Zila Parishad by Revenue and Land Reforms Department. "In Paragraph 4' of the supplementary-affidavit sworn by the Commissioner-cum Secretary, Revenue and Land Reforms Department, Government of Bihar, filed in this appeal it has been stated that "out of the said annual budgetary provisions made, the entire amount provided for in the budget was regularly paid to all Zila Parishad including Dhanbad proportionately in accordance with the collections made district-wise". In Paragraph 5' of the another supplementary affidavit filed on behalf of the appellants in this appeal similar averments to the effect that "budgetary allocation is made for the whole of the State of Bihar and the Revenue Department disburse the same to different Zila Parishad so far as possible on the basis of the collection made by the concerned district proportionately in the preceding year of the allotment" have been made. Neither in the counter-affidavit filed in the writ petition nor in the affidavit filed in this appeal by and on behalf of the appellants year-wise collection of the cess amount from the district of Dhanbad has been disclosed. It has also not been stated therein as to what was proportion/percentage on the basis of which allocation of cess amount has been made to the Zila Parishad. 22. The Zila Parishad in paragraph 10' of its counter-affidavit filed in the writ petition has mentioned that the Director of Panchayati Raj, Govt. of Bihar, vide his letter dated 23.1.1990 addressed to the State Government has stated that the cess dues to be paid to the Zila Parishad till then were Rs. 1,84,26,22,391.00 (Rupees one arab eighty four crores twenty-six lacs twenty two thousand three hundred ninety one). of Bihar, vide his letter dated 23.1.1990 addressed to the State Government has stated that the cess dues to be paid to the Zila Parishad till then were Rs. 1,84,26,22,391.00 (Rupees one arab eighty four crores twenty-six lacs twenty two thousand three hundred ninety one). A true copy of the said letter has been filed as Annexure-A to the counter-affidavit. In Paragraph "11' of the said counter affidavit, the Zila Parishad has also referred to the aforementioned letter dated 30.8.1993 written by the Deputy Development Commissioner, Dhanbad, to the Government, wherein it is mentioned that the balance of the share amount of the Zila Parishad in the cess collected upto 1991-92 is Rs. 2,50,92,82,381.00 (Rupees two arab fifty crores ninety-two lacs eighty-two thousand three hundred eighty one), which has to be paid by the Government. This letter has been filed as Annexure-'B' to the counter-affidavit. The aforesaid two letters have also been filed by the respondent no. 1 along with one of its application filed in this appeal, but the same have not been denied or disputed by the appellants. 23. Pursuant to our order dated 15.7.1998 the Zila Parishad has filed an affidavit on 10/11.8.1998 in this appeal, in paragraph 5' of which reference has been made to the audit reports for the years 1990-91 to 1993-94. In paragraph 6' of the said affidavit it has been stated that according to the said audit reports about rupees two hundred fifty-one crores are the outstanding dues as upto 31.3.1992 payable by the State Government to the Zila Parishad. There is no reply to the said affidavit filed by and on behalf of the appellants. 24. There is no denial of the averments regarding the arrears of cess dues of the Zila Parishad to be paid by the State Government as contained in paragraph 17' of the writ petition and the letters dated 23.1.1990 and 30.8.1993, written by the Director, Panchayati Raj, Govt. of Bihar, and the Deputy Development Commissioner, Dhanbad, respectively, to the State Government. The Director of Panchayati Raj, Govt. of Bihar was impleaded as respondent no. 6 to the writ petition and counter affidavit and supplementary counter-affidavit have been filed on his behalf. But Paragraph 17' of the writ petition and the contents of the aforesaid letters have not been disputed in those affidavits. The Director of Panchayati Raj, Govt. of Bihar was impleaded as respondent no. 6 to the writ petition and counter affidavit and supplementary counter-affidavit have been filed on his behalf. But Paragraph 17' of the writ petition and the contents of the aforesaid letters have not been disputed in those affidavits. In Paragraph 4' of the LPA and the supplementary-affidavit filed in this appeal on behalf of the appellants, it has been stated that the Zila Parishad are entitled to payment of cess at the rate prescribed by the Government upto the ceiling of 20% under section 9 of the Bihar Cess (Amendment) Act, 1981. On this basis it has been submitted that 20% is the outer limit upto which payment of the cess can be made to the Zila Parishad but what was the percentage/rate at which the amount of cess to be paid to the Zila Parishad was fixed by the State Govt. has not been stated. What is stated is that the amount provided for in the budgetary allocation was regularly paid to all Zila Parishads. The appellants have also filed a Chart along with affidavit showing year-wise allocation of the cess amount to the Zila Parishad. But it has not been stated that the arrears of cess as shown in the two letters written by the Director, Panchayati Raj, Govt. of Bihar, and the Deputy Development Commissioner, Dhanbad, dated 23.1.1990 and 30.8.1993, respectively, are not factually correct. The appellants have not even denied by filing affidavit in reply to the affidavit of the Zila Parishad filed in this appeal pursuant to this Court's order in which it has been stated that according to the audit reports the State Govt. has to pay about rupees two hundred fifty-one crares to the Zila Parishad for the period upto 30.3.1992. The Government has also not disclosed the year-wise collection of the cess amount from the district of Dhanbad and proportion/ percentage of the cess so collected on the basis of which allocation has been made to the Zila Parishad. The cess amount has to be allotted in accordance with the Cess Act, as amended by the Bihar Cess (Amendment) Act, 1981. Allocation of the cess amount to other Zila Parishad is the statutory obligation of the State Government. The cess amount has to be allotted in accordance with the Cess Act, as amended by the Bihar Cess (Amendment) Act, 1981. Allocation of the cess amount to other Zila Parishad is the statutory obligation of the State Government. When the allocation of the fund is challenged in the court it becomes the duty of the Government to place full facts and all materials on record of the case. In the instant case we find that the Government has not placed all relevant facts and materials before the Court. The Government cannot succeed merely by saying that the allocation of the cess amount to the Zila Parishad has been made proportionately out of the amount allocated for the purpose. The inference drawn and the findings recorded by the learned single Judge to the effect that the Government is still to pay cess/royalty amount to the Zila Parishad cannot, therefore, be said to be bad. The first submission made on behalf of the appellants is rejected. In this connection it may be mentioned that after the Cess Act was declared ultra vires by the Court, the Parliament intervened and enacted the Cess and other Taxes on Minerals (Validation) Act, 1992, validating imposition and collection of the cess and certain other taxes. Although this Court in Tata Iron and Steel Co. Ltd. and another vs. Union of India and others, 1996 (1) PLJR 404 , upheld the validity of the Validation Act, but declared that although the taxes collected prior to 4.4.1991 are not required to be refunded but the State does not have power to recover the outstanding dues of the tax after 4.4.1991. Against this judgment we are informed that the State has tiled SLP before the apex Court. The same Validation Act was also challenged before the apex Court, in P. Kannadasan vs. State of Tamil Nadu & Ors., AIR 1996 S.C. 2560 (supra), wherein it was declared that the Validation Act has validated both the imposition and the collection of the Tax. Accordingly, it was observed that it is open to the Government to recover the outstanding dues of the tax even after 4.4.1991. Accordingly, it was observed that it is open to the Government to recover the outstanding dues of the tax even after 4.4.1991. Thereafter, the matter again came up before this Court in Bharat Coking Coal Ltd. vs. The State of Bihar & others, 1998 (2) PLJR 523 (supra), wherein the Division Bench following the law laid down by the apex Court in P. Kannadasan vs. State of Tamil Nadu and others (supra) has reiterated that the Government is free to recover the old cess which became due before 4.4.1991 even after the said date and the law laid down by the apex Court in the aforementioned case will be binding inspite of the fact that the SLP has been filed against the decision of the Division Bench of this Court in Tata Iron and Steel Co. Ltd. & anr. vs. Union of India & others (supra). The Government is, therefore, free to recover the outstanding dues of the cess even after 4.4.1991. This position has been admitted by the appellants. The Zila Parishad, therefore, will be entitled to its share in the cess amount collected even after 4.4.1991, which has not yet been paid. The Government is bound to pay the same to it forthwith. 26. It is true that the employees of the Zila Parishad are not the State Government's employees and the State is not liable to pay their salary. But no body is demanding payment of salary to the employees of the Zila Parishad by the State Government. What is demanded from the State is the allocation of funds, grant-in-aid and the share in the cess amount to which the Zila Parishad is entitled. The further plea of the Government that it can neither grant any loan nor can give any grant in-aid to the Zila Parishad, because other local bodies, Corporations and statutory authorities are also facing similar financial crisis and if any payment is made to the Zila Parishad, similar demand may be made by others is not worth acceptance. The Panchayats have been reduced to the stage of financial bankruptcy because of the act and omission of the Govt. in not performing its constitutional and statutory duties. The Zila Parishad is not demanding charity. It wants its share in cess/royalty. It is also entitled to its share in tax, toll, duties and grant-in-aid from the consolidated fund of the State. in not performing its constitutional and statutory duties. The Zila Parishad is not demanding charity. It wants its share in cess/royalty. It is also entitled to its share in tax, toll, duties and grant-in-aid from the consolidated fund of the State. The Government cannot avoid its liability by saying that in absence of Finance Commission there are no principle on the basis of which the Zila Parishad can be allotted various funds. The last two submissions of the learned counsel for the appellants are also rejected. 27. This appeal has been filed by the State against the direction no. (2) contained in the impugned judgment, whereby and whereunder the appellants have been directed to release at-least 5% of the total dues against the head of cess/royalty to which the Zila Parishad is entitled upto the year 1991 as shown in Annexure-A dated 31.1.1990 within a period of two months of the production of a copy of the judgment. Other directions contained in the impugned judgment have not been challenged. Even this Court on 15.12.1991 has passed the following interim order in this appeal against the appellants :- "We also notice that there is no order of stay passed by this Court and, therefore, the Zila Parishad must pay to its employees their wages and allowances as directed by the learned Single Judge. The direction made by the learned Judge against the State of Bihar must also be complied with so that whatever has been directed to be paid by the State of Bihar to the Zila Parishad is paid promptly and without further delay." Inspite of the said order passed by this Court the Govt. does not appear to have paid any amount to the Zila Parishad in terms of the impugned judgment. 28. does not appear to have paid any amount to the Zila Parishad in terms of the impugned judgment. 28. In this connection it may further be mentioned that petitioner respondent no.1 has also filed a contempt petition before this Court against the Government for not complying with the directions contained in the impugned judgment in which on 16.12.1997 this Court by the following order again required the Government to take action and pay the amount pursuant to the impugned judgment within a period of eight weeks :- "The operation of the judgment and order of the learned single Judge in CWJC No. 1969 of 1995 (R) dated 18.7.1995 has not been stayed by this Court and, therefore, there is no reason why the authorities concerned, including the State of Bihar, should not act in accordance with the said judgment. The opposite parties, therefore, appear to be in contempt. However, in view of the pendency of the writ petition and this contempt application, we grant them some latitude and direct that the necessary action be taken by the State of Bihar pursuant to the judgment and order of this Court within a period of eight weeks from today." 29. Inspite of the fact that the impugned judgment has not been stayed and on the other hand this Court vide aforesaid two orders passed in this appeal and the contempt petition has directed the State Government to pay the dues to the Zila Parishad in accordance with the impugned judgment, the Government does not appear to have paid any thing although about two and half years have passed after the impugned judgment was delivered. There is thus deliberate defiance of this Court's orders by the Government. 30. There is also no plausible explanation for not complying with the impugned judgment and the aforesaid two orders passed by this Court in this appeal and the contempt petition. 31. For the reasons given above, this appeal is liable to be dismissed but due to lapse of time the time fixed by the learned single Judge in the impugned judgment for payment has to be re-fixed and appropriate directions in connection therewith and also with regard to discharge of constitutional and statutory obligation by the appellants have to be issued. 32. This appeal is according, dismissed. 32. This appeal is according, dismissed. The appellants are directed to pay 25% of the total outstanding dues against the head of cess/royalty, as shown in the letter dated 23.1.1990 of the Director, Panchayati Raj, Govt. of Bihar to the Zila Parishad within one month from the date of production of the copy of this judgment before them. The balance cess amount as shown in the letters dated 23.1.1990 and 30.8.1993, written by the Director, Panchayati Raj, Government of Bihar, and the Deputy Development Commissioner, Dhanbad, respectively, shall be paid by the appellants to the Zila Parishad within a period of two months thereafter. The appellants will further pay the due share of the Zila Parishad in the cess collected after 1.4.1991 within the same period of two months. If 30% of grant for the period from 1995-96 to the current year has not been paid by the appellants in terms of the impugned judgment so far, the same shall also be paid by them within a period of one month from the date of production of the copy of the judgment to the Zila Parishad. The Zila Parishad is directed to pay the arrears of salary to its employee immediately after receipt of the fund from the Government. It will continue to pay in future the salary of its employees regularly every month as and when it falls due. It will also deposit the requisite amount in the provident fund account of its employees at the earliest. The appellants are further directed to constitute a Finance Commission in terms of Article 243-1 of the Constitution, read with section 135 of the Act, within a period of one month from the date of production of the copy of this judgment before them. The Commission shall lay down the principles in terms of Article 243-1 of the Constitution, read with section 135 of the Act for the period 1994 to date and place the same before the State Government for action in accordance with law, as far as possible within a period of three months from the date of its constitution. For this purpose the Commission will be free to summon any paper, document and record from the State Government and the State Government will supply the same immediately after such a requisition is received. For this purpose the Commission will be free to summon any paper, document and record from the State Government and the State Government will supply the same immediately after such a requisition is received. In this connection, the Zila Parishad as well as the petitioner-respondent no.1 will have liberty to make representations before the Finance Commission and if such representations are made the same shall also be considered while laying down the principles in terms of Article 243-1 of the Constitution, read with section 135 of the Act. 33. A copy of this judgment shall be placed on the record of M.J.C. No. 632 of 1996 (R), which will be listed after six weeks. No cost. A.K. Prasad, J.-I agree.