JUDGMENT G.S. Singhvi, A.C.J. - The petitioners, some of the whom are ex-Councillors, some are employees of Nagar Panchayat, Badhni Kalan, District Moga and others are residents of Badhni Kalan, have filed this petition for quashing Notification dated 28.12.2001 (Annexure P.6), vide which the State Government denotified Nagar Panchayat, Badhni Kalan by rescinding Notification No. 277-3R-88/14998 dated 23.8.1998 (Annexure P-1). 2. There is no dispute between the parties that vide notification dated 23.8.1988, issued under Section 241 of the Punjab Municipal Act, 1911 (for short, the Act), the State Government declared the local area comprising village Badhni Kalan to be notified area for the purposes of the said Act. However, the Notified Area Committee started functioning only in May, 1993 when the government provided staff for that purpose and also appointed an Administrator. Subsequently, the State Government issued notification No. 10/64/93-2LG-III/1068 dated 1.2.1994 under Section 248 of the Act for term of three years. In November, 1994, a duly elected body took over the management of Nagar Panchayat, Badhni Kalan. After about five years, the State Government appointed Sub Divisional Magistrate, Nihanlsinghwala as the Administrator of Nagar Panchayat, Badhni Kalan vide notification dated 20.1.2000 issued under Section 14(1)(ii) of the Act. In May, 2000, the State Government notified general elections for six Municipal Councils and 29 Nagar Panchayats, including Nagar Panchayat, Badhni Kalan. For this purpose, notification No. 3/21/99/MEO/FA/1585 dated 12.5.2000 was issued by the Local Government Department, but just after 4 days, the State Government issued Notification No. 3/21/99/MEO/EA/1685 dated 16.5.2000 for exclusion of Nagar Panchayat, Badhni Kalan from the list annexed to Notification dated 12.5.2000. 3. In the meanwhile. Regional Deputy Director, Ferozepur sent memo dated 20.4.2000 (Annexure P-3) to the Executive Officer, Nagar Panchayat, Badhni Kalan to give munadi and collect objections from the public within 15 days regarding de-notification of Nagar Panchayat, Badhni Kalan. In all, 13 representations were submitted by the residents including Annexure A-14 to which some of the petitioners were signatories. They opposed denotification of Nagar Panchayat by contending that it would be highly determental to public interest. The representations were called for hearing in the month of November, 2001 and in pursuance of the decision taken by the Principal Secretary, Local Government Department, the impugned notification was issued. 4. They opposed denotification of Nagar Panchayat by contending that it would be highly determental to public interest. The representations were called for hearing in the month of November, 2001 and in pursuance of the decision taken by the Principal Secretary, Local Government Department, the impugned notification was issued. 4. The petitioners have challenged the denotification of Nagar Panchayat, Badhni Kalan on the following grounds :- (a) The State Government does not have the jurisdiction, power or authority to denotfy the Nagar Panchayat constituted under the Act. (b) The decision to denotify Nagar Panchayat, Badhni Kalan is arbitrary and tainted by mala fides and is also vitiated due to violation of rule of Audi alteram partem. 5. In order to substantiate their plea that de-notification of Nagar Panchayat would be detrimental to public interest, the petitioners have averred in paragraph 12(B) of the writ petition, as under :- "That the impugned action of the Government is though wholly without jurisdiction but is also arbitrary as well. It was a fully grown up Municipal Committee, which has been abolished/denotified with a stroke of pen. The provisions such as Sections 10 and 244 which were existing in the 1911 Act prior to amendment for de-notification, have already been struck down by this Honble Court. Now in the amended Act, there is absolutely no provision for denotification of a Municipal Committee. The Government has only been clothed with the powers of constituting a Municipal Committee/Nagar Panchayat and has no powers absolutely to denotify the same. Number of development works had been carried out in the area of the Nagar Panchayat, Badhni Kalan and other development works were going on. Even the budget of the Nagar Panchayat has been showing an increasing graph. A fully grown up committee and which was giving maximum developments in the area has been denotified, without there being any power for the same with the Government. The action is arbitrary and violative of the provisions of Articles 14 and 16 of the Constitution. The development works/budges are quoted hereunder:- (a) Roads completed in 4 years with an amount of Rs. The action is arbitrary and violative of the provisions of Articles 14 and 16 of the Constitution. The development works/budges are quoted hereunder:- (a) Roads completed in 4 years with an amount of Rs. 17 lacs approximately : - from Weigh Bridge Mathura Dass to house of Ajmer Singh; - from Lopo Chowk to house of Swaranjit Singh; - from house of Swarnjit Singh to Government Girls Senior Secondary School Badhni Kalan; - from Roundabout of above Girls School to house of Balwinder Singh; - from Dharamshala Danapatti to Bhangu Niwas; - from Som Di Chakki to Durga Mandir; - from shop of Tirloki Nath to house of Kaka Bhalla; - from Sharif Gate to house of Mathura Dass (b) Drains completed with an amount of Rs. 6.5 lacs approximately - from Weigh Bridge Mathura Dass to house of Ajmer Singh; - from Shiv Mandir to Raouke Road; - Back side of Royal Place Ward No. 10; - Back side of Girls Senior Secondary School; - from house of Satpal M.C. to Sham Sunder house - Soolanpatti wali gali; (c) Bricks paving and concrete cement flooring : - from Gali Shavinder Puri to Noble Gate; - Post office wali Gali; - from house of Satpal M.C. to house of Chaman Lal; - from house of Major Singh to Bhargu Niwas (Karam Singh); - Gali Malkiat Singh Wali Ward No. 2; - Darshan Nambardar Wali Gali, Ward 4.5 No. 5; (d) Office building of Nagar Panchayat constructed with cost of Rs. 4, 5 lacs approximately : (e) Street light (Sodium vapour lamp) 35 points on Moga-Barnala road with a cost of Rs. 5 lacs approximately. (ii) Development works going on Following development works in the area of Nagar Panchayat, Badhni Kalan with a cost of Rs. 8.5 lacs are going on :- - Construction of road, State Bank of Patiala to Gill Tent House; - Construction of road, Raouke Road to house of Ajmer Singh, M.C. - D.B. paying at Gali Gurdev Singh to house of Sadhu Singh; - C.C. flooring from house of Darshan Joshi to house of Prem Kumar; - Construction of culvert near Market Committee office; - Construction of Ramp near patwarkhana; - Construction of culvert near house of Rajinder Kaur, M.C. - Construction of drain and culvert near Food Supplies office. (iii) The budget of the Nagar Panchayat has shown a rising graph. (iii) The budget of the Nagar Panchayat has shown a rising graph. For the convenience of this Honble Court, the budget of different years is mentioned below :- Sr. No. Year Rs. in lacs approximately 1. 1993-94 12.00 2. 1994-95 16.00 3. 1995-96 16.00 4. 1996-97 18.00 5. 1997-98 23.00 6. 1998-99 26.00 7. 1999-2000 32.00 8. 2000-2001 42.00 9. 2001-2002 43.00" 6. In the written statement filed on behalf of the respondent, it has been averred that by virtue of Section 4(6) of the Act, as amended by the Punjab Municipal Amendment Act, 1994, every area which was constituted as a notified area under Section 241 of the Act immediately before commencement of the Amending Act, automatically became a transitional or a smaller urban area and a municipality would be deemed to have been constituted under the Act for that area and, therefore, the provisions of amended Section would be deemed to be applicable to the Notified Area Badhni Kalan. According to the respondent, the State Government had received various representations from the residents of Badhni Kalan for the denotification and/or continuation of Badhni Kalan as Nagar Panchayat and after inviting objections and hearing the representationsist, it was decided to denotify the Nagar Panchayat. The respondent has denied the petitioners assertion that opportunity of hearing was not given to them. In reply to para 12(B) of the writ petition, the respondent has averred as under :- "12(B) Denied being incorrect. The Honble Supreme Court of India negatived the decision of Honble Punjab & Haryana High Court in the case of Sub- Divisional Officers Mehar Singh (1989) of Punjab Legal Reports and Statutory 550. Thus, the State Government is legally competent to denotify the Nagar Panchayat Badhni Kalan is as established principle of law. The rest of the averments made are denied for want of knowledge because it relates to the Nagar Panchayat Badhni Kalan which has not been impleaded as party." 7. The petitioners have filed replication reiterating their plea that the State Government does not have the jurisdiction to denotify Nagar Panchayat, Badhni Kalan and that the impugned decision is vitiated due to violation of the rules of natural justice. The petitioners have filed replication reiterating their plea that the State Government does not have the jurisdiction to denotify Nagar Panchayat, Badhni Kalan and that the impugned decision is vitiated due to violation of the rules of natural justice. They have further averred that the sole purpose of denotifying the Nagar Panchayat is to benefit the traders and while taking final decision in the matter, the concerned authority did not take into consideration the interests of the residents. Along with the replication, the petitioners have annexed copies of representations/protest letters sent by the residents of the area against the denotification of the Nagar Panchayat. They also filed an additional affidavit of petitioner No. 1 along with C.M. No. 7122 of 2002. In paragraph 2 of his affidavit, Shri Kamaljit Singh has made the following statement :- "2. That the following objectors from Annexure A-14 are also the petitioners in the present writ petition :- Sr. No. Petitioner No. Particulars 1. 22 Darshan Singh son of Shri Binder Singh 2. 27 Saudagar Singh son of Shri Kartar Singh 3. 32 Mangal Singh son of Shri Sahib Singh 4. 36 Gurpreet Singh son of Shri Puran Singh 5. 52 Deepak Bhalla son of Shri Purshotam Lal 6. 61 Gurdarshan Singh son of Shri Bikkar Singh." 8. We have heard learned counsel for the parties and perused the record. We have also gone through the file produced by the learned Deputy Advocate- General. 9. 36 Gurpreet Singh son of Shri Puran Singh 5. 52 Deepak Bhalla son of Shri Purshotam Lal 6. 61 Gurdarshan Singh son of Shri Bikkar Singh." 8. We have heard learned counsel for the parties and perused the record. We have also gone through the file produced by the learned Deputy Advocate- General. 9. The question as to whether the rules of natural justice are required to be observed by the State Government and opportunity of hearing has to be given to the residents of the particular local area before notifying it as Nagar Panchayat or Municipality or denotifying an existing Nagar Panchayat or including the particular area in the existing Nagar Panchayat or excluding some area from the Nagar Panchayat must be treated as settled by virtue of the judgments of the Supreme Court in Baldev Singh and others v. State of Himachal Pradesh and others, AIR 1987 SC 1239 and of this Court in M/s. Vee Kay Oils Private Limited v. State of Punjab and others, 1994(3) Recent Revenue Reports 196; C.W.P. No. 10611 of 1998 - Sukhdev Singh and others v. State of Punjab and others; C.W.P. No. 6803 of 1999 - Samsher Singh and others v. State of Punjab and others, decided on 17.5.2000 along with three other connected petitions and C.W.P. No. 334 of 1999 - Inder Singh and others v. State of Punjab and others, decided on 30.5.2000. 10. In Baldev Singhs case (supra), their Lordships of the Supreme Court interpreted Section 256 of Himachal Pradesh Municipal Act, 1968 which is pari materia to Section 4 of the Act and held as under :- "Citizens of India have a right to decide, what should be the nature of their society in which they live - agrarian, semi-urban or urban, Admittedly, the way of life varies, depending upon where one lives. Inclusion of an area covered by a Gram Panchayat within a notified area would certainly involve civil consequences. In such circumstances, it is necessary that people who will be affected by the change should be given an opportunity of being heard, otherwise they would be visited with serious consequences like loss of office in Gram Panchayats, an imposition of a way of life, higher incidence of tax and the like. In such circumstances, it is necessary that people who will be affected by the change should be given an opportunity of being heard, otherwise they would be visited with serious consequences like loss of office in Gram Panchayats, an imposition of a way of life, higher incidence of tax and the like. It is true that Section 256 does not in clear terms provide a right of hearing but the settled position of law is that where exercise of a power results in civil consequences to citizens, unless the statute specifically rules out the application of natural justice, the rules of natural justice would apply. Therefore, before the notified area is constituted in terms of Section 256, the people of the locality should be afforded an opportunity of being heard and the administrative decision by the State Government should be taken after considering the views of the residents. Denial of such opportunity is not in consonance with the scheme of the Rule of Law governing our society. However, the hearing contemplated need not be oral and can be by inviting objections and disposing them of in a fair way." 11. In Vee Kay Oils Private Limiteds case (supra), a Division Bench relied on the ratio of Baldev Singhs case (supra) and held that the notification issued under Section 5(1) for inclusion of village in the Municipal limits of Ahmedgarh was liable to be quashed on the ground that the affected parties were not given opportunity of hearing. 12. In the light of the proposition of law laid down in the above-mentioned decisions, we may now examine whether the impugned notification is vitiated due to violation of the rules of natural justice. In the writ petition, it has been averred that before the taking final decision on the issue of de- notification of Nagar Panchayat, the State Government did not give opportunity of hearing to those who were opposed to the proposal of de-notification. The respondent has tried to controvert this by stating the proposed de- notification of the Nagar Panchayat. However, their stand is falsified by the averments contained in paragraph 2 of the affidavit of petitioner No. 1 filed with C.M. No. 7122 of 2000 and copy of representation Annexure P14. The respondent has tried to controvert this by stating the proposed de- notification of the Nagar Panchayat. However, their stand is falsified by the averments contained in paragraph 2 of the affidavit of petitioner No. 1 filed with C.M. No. 7122 of 2000 and copy of representation Annexure P14. The record produced by the learned Deputy Advocate General does not contain any document from which it can be inferred that the Principal Secretary, Local Government Department had heard those, who had filed objections against the proposed de-notification of Nagar Panchayat, Badhni Kalan. 13. During the course of hearing, we enquired from the learned Deputy Advocate General whether any record was maintained by the office of Principal Secretary, Local Government Department, Punjab about the hearing of objections. In reply, Mrs. Charu Tuli candidly stated that no record was prepared by the concerned office about the attendance of those who had appeared for personal hearing and there is nothing in the file to show that representations were given opportunity of hearing. In view of the above, we hold that the decision of the State Government to denotify Nagar Panchayat, Badhni Kalan is violative of the rules of natural justice and is also contrary to law laid down by the Supreme Court in Baldev Singhs case (supra) and by this Court in Vee Kay Oils Private Limited (supra). 14. We are also inclined to accept the petitioners plea that the impugned order decision is wholly arbitrary and is totally devoid of reasons. A perusal of the record produced by the learned Deputy Advocate General reveals that after giving the so-called opportunity of hearing to those who were in favour of de-notification, the Principal Secretary, Local Government Department recorded the following note :- "Heard. The persons have requested for de-notification. The necessary steps be taken to denotify. Sd/- Rajesh Chhabra/23.11" 15. It is not clear from the record whether the file was put up before the Minister Incharge, Local Government Department, but this much is crystal clear that before taking final decision on the issue of de-notification of Nagar Panchayat, Badhni Kalan, the concerned officer did not even bother to go through the contents of the representations submitted by the residents. It is not clear from the record whether the file was put up before the Minister Incharge, Local Government Department, but this much is crystal clear that before taking final decision on the issue of de-notification of Nagar Panchayat, Badhni Kalan, the concerned officer did not even bother to go through the contents of the representations submitted by the residents. He also did not examine the justification or otherwise to denotify the Nagar Panchayat and totally overlooked the fact that development of the area had received a great fillip during the tenure of Nagar Panchayat. Thus, there is no escape from the conclusion that the impugned decision is wholly arbitrary and vitiated due to non-application of mind. In view of the above conclusion, we do not consider it necessary to deal with the other points raised by the petitioners. In the result, the writ petition is allowed. Notification Annexure P-6 is declared illegal and quashed. However, liberty is given to the State Government to take fresh decision in the matter after giving opportunity of hearing to the residents and complying with the procedure prescribed under the Act. Petition allowed.