G.S. Singhvi, J. - Whether notification No. 8/58/99-2LGIII/8222 dated 2.7.1999 issued by the Government of Punjab under Sections 4(1) and 4(2) of the Punjab Municipal Act, 1911 (as amended by Act No. 11 of 1994) (hereinafter referred to as 'the 1911 Act') read with Section 19 of the Punjab General Clauses Act, 1898 (hereafter referred to as 'the 1898 Act') denotifying Nagar Panchayat, Bhikhiwind is liable to be nullified on the ground of violation of the rule of audi alteram partem and also on the ground that it is ultra vires to the power of the State Government is the question which arises for determination in this petition filed by 40 residents of Bhikhiwind. 2. Though, the pleadings are rather voluminous, the relevant facts lie in a narrow compass. Vide notification No. 10/5/93-2GIII/172 dated 10.11.1.1993 issued under section 241 of the 1911 act, the Government of Punjab declared the local area comprising Village Bhikhiwind, District Amritsar to be a notified area for the purpose of the said Act. After 10 days, notification No. 10/5/93-2GIII/173 dated 20.1.1993 was issued by the State Government under Section 242(1)(f) of the 1911 Act extending the provisions of the various sections enumerated therein to the Notified Area Committee, Bhikhiwind. In this manner, Village Bhikhiwind was converted into Nagar Panchayat. After 6 years and about 4 months, the Principal Secretary to Government, Punjab, Local Government Department issued notice Annexure P.8/A dated 18.6.1999 under Section 14(1) of the 1911 Act requiring Nagar Panchayat, Bhikhiwind to show cause as to why it may not be dissolved in view of the report dated 10.5.1999 of the Regional Deputy Director. Vide memo No. 8/58/99-288(3)/6016 dated 18.5.1999, the Regional Deputy Director, Local Government Department, Amritsar directed that the notice be served upon all the members of Nagar Panchayat. On receipt of the said notice, a special meeting of Nagar Panchayat, Bhikhiwind was held on 26.5.1999 under the Chairmanship of its President. In that meeting, it was resolved to contest the notice and a detailed resolution was passed controverting the charges contained in the memo served along with the show cause notice. However, no further action was taken pursuant to the notice dated 18.5.1999. Instead, the Principal Secretary to Government of Punjab, Local Government (sic) Panchayat, Bhikhiwind. 3. The petitioners have challenged the impugned notification on the following grounds : (i) after the amendment of the 1911 Act by the Punjab Municipal (Amendment) Act (Act No. 11 of 1994), the government does not have the power to denotify the Nagar Panchayat and, therefore, the notification dated 2.7.1999 is liable to be declared as nullity; (ii) Section 13 of the 1998 Act is not available to the government for denotifying a duly notified Nagar Panchayat; (iii) the notification issued by the government is liable to be nullified because no action-oriented notice and opportunity of hearing was given either to Nagar Panchayat, Bhikhiwind or its members or the members of public; (iv) the impugned notification is vitiated by mala fides because it is an end product of the pressure exerted by those who are to pay lacs of rupees as arrears of octroi etc. to the Nagar Panchayat. 4-5. The official as well as the non-official respondents have defended the government's decision to denotify Nagar Panchayat, Bhikhiwind by stating that under Sections 4(1) and 4(2) of the 1911 Act read with Section 19 of the 1898 Act, the State Government has the power to do so. They have not controverted the assertion made in the petition that no order was passed by the Principal Secretary to Government of Punjab, Local Government Department, in pursuance of the notice dated 18.5.1999 issued by him under Section 14(1) of the 1911 Act proposing dissolution of the Nagar Panchayat. But, they have tried to justify the issuance of the impugned notification by contending that this was done after giving full opportunity of hearing to the affected parties. In paragraphs 2 and 7 of the written statement filed by them, the official respondents have averred that show cause notice detailing the allegations regarding house tax loss, recovery and non-recovery, bad sanitation, street lights, regular encroachments, dislocated water supply, conditions of road etc. was given to the Notified Area Committee but there were no substantial denial thereof and, in fact, all the elected representatives had appeared before the authority concerned and accepted the allegations as correct. 6. In the written statement filed on behalf of the non-official respondents, as objection has been raised to the maintainability of the writ petition on the ground that it has been filed at the instance of the employees who are responsible for an extremely sorry state of affair of the Nagar Panchayat and further the impugned decision has been taken by the government on the representations Annexures R.2/1 and 2/2 submitted by the elected representatives as well as members of the public. 7. We have heard learned counsel for the parties. Section 10(1) and (3) of the 1911 Act, as it stood before the amendment of the 1911 Act by Punjab Act No. 11 of 1994, Sections 4(1) and 4(2) and 14 of the 1911 Act, as they stand after amendment and section 10 of the 1898 act, on which learned counsel for the parties have placed reliance, read as under : "Section 10(1) to (3) of the 1911 Act. 10. Power to withdraw Municipal Area altogether from operation of this Act. (i) Where in the opinion of the State Government, there are reasons to indicate that the continuance of a publication of this Act is (sic) or that the existence of any municipality is either rendered unnecessary or it is otherwise inexpedient that the municipality should continue to exist it may, by notification, stating the reasons thereof, declare its intention to withdraw from the operation of this Act the area of the municipality constituted thereunder; (2) Any inhabitant of the municipality in respect of which a notification has been published under sub-section (1) may, should object thereto, submit has objections in writing to the State Government within six weeks from the publication of the notification in the official Gazette; and the State Government shall take such objections into consideration; (3) When six weeks from the publication of the notification under sub-section (1) have expired, and the State Government has considered and pass orders on the objections if any, submitted under sub-section (2), the State Government may, by notification, withdraw the area of the municipality from the operation of this Act; "Section 4(1) and (2) of the 1911 Act. Section 4 : Specification of local areas to be smaller urban area or transitional areas and constitution of Municipal Councils and Nagar Panchayats. (1) The State Government may, having regard to population of the area, the density of the population therein, the revenue generated for local administration the percentage of employment in non-agricultural activities, the economic importance or such other factors, as it may deem fit, specify by notification in the official Gazette, any area to be transitional area or a smaller urban area for the purposes of this Act; Provided that no military cantonment or any part thereof shall be included in such transitional area or a smaller urban area : Provided further that such an urban area or part thereof, as the State Government may, having regard to the size of the area and municipal services being provided or proposed to be provided by an industrial establishment, specify to be industrial township shall not form part of a transitional area or a smaller urban area. (2) Where an area is specified as a transitional area or as a smaller urban area under sub-section (1), the State Government may, by notification in the official Gazette, constitute for the transitional area so specified a Nagar Panchayat and for the smaller urban area so specified a Municipal Council of the first class, second class or third class; Provided that the State Government may, after consulting the Municipal Council by notification change its classification from one class to another. xx xx xx" "Section 14 of the 1911 Act. 14. Dissolution of municipalities. (1) If in the opinion of the State Government a Municipality is not competent to perform its duties or persistently makes default in the performance of duties imposed on it by or under this Act or any other law for the time being in force, or exceeds or abuses any of its powers, the State Government may, by an order publish along with reasons thereof, in the official Gazette, dissolve such municipality; Provided that a municipality shall be given a reasonable opportunity of being heard before its dissolution. (2) when a municipality is dissolved under sub-section (1) - (i) all members of the municipality shall vacate their offices forthwith; (ii) all powers and duties of the municipality during its dissolution shall be exercised and performed by such person or authority, as the State Government may, by notification, appoint in this behalf; and (iii) all property in possession of the municipality shall be held by the State Government. (3) Upon dissolution of a municipality under sub-section (1) the State Government shall re-constitute a municipality as specified under Section 12 and election to reconstitute such municipality shall be completed before the expiration of a period of six months from the date of dissolution; Provided that where the remainder of the period for which dissolved municipality would have continued as less than six months, it shall not be necessary to hold any election under this sub-section for reconstituting the municipality for such period. (4) The municipality reconstituted upon the dissolution of the existing municipality before the expiration of its duration, shall continue only for the remainder of the period for which the dissolved municipality would have continued under Section 13 had it not been so dissolved." "Section 19 of the 1898 Act. 19. Where, by any Punjab Act, a power to issue notification or make orders, rules or bye-laws is conferred then that power includes a power exercisable in the like manner and subject to the like sanction and condition if any to add to, amend, vary or rescind any notifications, orders, rules or bye-laws issued or made." 8. A careful analysis of the provisions quoted above shows that under section 10 of the 1911 act (unamended), the State Government was expressly empowered to withdraw particular municipal area altogether from operation of the 1911 Act but after the coming into force of punjab act no. 11 of 1994, vide which Section 10 has been omitted, no such power is available to the government. However, by virtue of amended Section 14, the State Government has been vested with the power to order dissolution of a municipality on one of the grounds set out in sub-section (1) thereof subject to the following conditions : (i) the municipality concerned is given reasonable opportunity of being heard; and (ii) the State Government has to reconstitute the municipality and hold election of the reconstituted municipality before expiry of a period of six months from the date of dissolution provided that the remainder of the period for which dissolved municipality would have continued is more than of months. 9. What has been done in this case is that after receipt of the report of the Regional Deputy Director, Local Government, Amritsar containing findings that Nagar Panchayat, Bhikhiwind has failed to perform its duties in accordance with law and that there have been several cases of abuse of power and non- performance, the Principal Secretary to Government of Punjab, Local Government Department, issued notice dated 18.5.1999 under Section 14(1) of the 1911 Act requiring it to show cause against the proposed dissolution but, instead of passing an order in furtherance of that notice, the officer concerned issued the impugned notification under Sections 4(1) and 4(2) of the 1911 Act and Section 19 of the 1898 Act. 10. The respondents have not given any explanation as to why the Principal Secretary, Local Government Department after issuing notice under Section 14(1) proposing dissolution of the Nagar Panchayat resorted to the mechanism of denotification. Their failure to do so lends credibility to the assertion of the petitioners that the impugned notification has been issued with an oblique motive to help those who have to pay lacs of rupees to Nagar Panchayat, Bhikhiwind by way of octroi and taxes. We, therefore, hold that the exercise of power by the government under Sections 4(1) and 4(2) of the 1911 Act and Section 19 of the 1898 Act is vitiated by arbitrariness and mala fides. 11. We are further of the view that denotification of the Nagar Panchayat without any possibility of its revival as envisaged by Section 14(3) in the case of dissolution is liable to be nullified because the impugned decision was taken without giving notice and opportunity of hearing to the Nagar Panchayat, its members and other persons likely to be affected by such decision. The assertion made by the official respondent in paragraphs 2 and 7 of the written statement about the issuance of notices to the members of the Nagar Panchayat and the alleged admission of charges by them is clearly misleading and cannot be made basis for upholding the notification dated 2.7.1999 because copy of the notice proposing denotification of Nagar Panchayat, Bhikhiwind, the reply, if any, filed by the Nagar Panchayat or its members have not been placed on the record of the case. Not only this, even the dates of the notice and the reply have also not been disclosed by respondent No. 1. The date on which the representatives of the Nagar Panchayat are alleged to have appeared before the Principal Secretary and admitted the charges has not been disclosed to the Court. To us, it appears that reference to the reply etc., made in the written statement of respondent No. 1, relates to the show cause notice issued under Section 4(1) of the 1911 Act and not to any notice issued under Sections 4(1) and 4(2) of the 1911 Act and Section 19 of the 1898 Act. 12. No doubt, Sections 4(1) and 4(2) of the 1911 Act and 19 of the 1898 Act do not expressly require issuance of notice to the Nagar Panchayat, its members and other persons likely to be affected by the decision of denotification, but having regard to the grave adverse consequences of such decision/order/notification, the requirement of compliance with the rule of hearing will have to be read as implicit in the very nature of the power exercised by the government and there cannot be any justification to import the theory of implied exclusion of natural justice in a case like this. 13. In S.L. Kapoor v. Jagmohan and others, AIR 1981 SC 136, a three Judges Bench of the Supreme Court declared as nullity the supersession of Municipal Committee, New Delhi on the ground of non-observance of natural justice. Some of the observations made in that decision are : "The principles of natural justice know of no exclusionary rule dependent on whether it would have made any difference if natural justice had seen observed. The non-observance of natural justice is itself prejudice to any man and proof of prejudice independently of proof of denial of natural justice is unnecessary. It ill comes from a person who has denied justice that the person who has been denied justice is not prejudiced...... The requirements of natural justice are met only if opportunity to represent is given in view of proposed action. The demands of natural justice are not met even if the very person proceeded against has furnished the information on which the action is based, if it is furnished in a casual way or for some other purpose. The person proceeded against must know that he is being required to meet the allegations which might lead to a certain action being taken against him..... The New Delhi Municipal Committee was never put on notice of any action proposed to be taken under Section 238 of the Punjab Municipal Act and no opportunity was given to the Municipal Committee to explain any fact or circumstance on the basis of which that action was proposed. If there was any correspondence between the New Delhi Municipal Committee and any other authority about the subject matter or any of the allegations, if information was given and (sic) it was for entirely different purposes." In Swadeshi Cotton Mills etc. v. Union of India etc., AIR 1981 SC 818, the Supreme Court, while interpreting Section 18-AA of the Industries (Development and Regulation) Act, 1951, held that even in cases requiring emergent action hearing at pre-decisional stage must be given to the affected party. 14. In our opinion, the proposition laid down in the above noted decision deserves to be applied to this case because no action-oriented notice and opportunity of hearing was given to the Nagar Panchayat, its members and the persons likely to be affected adversely by denotification of the Nagar Panchayat. 15. In view of the above conclusion, we do not consider it necessary to decide the question as to whether in the purposed exercise of its power under Sections 4(1) and 4(2) of the 1911 Act read with Section 19 of 1898 Act, the government can denotify a Nagar Panchayat and leave it open to be decided in some other case. 16. For the reasons mentioned above, the writ petition is allowed. Notification dated 2.7.1999 is declared illegal and quashed. As a consequence, the status of Nagar Panchayat, Bhikhiwind shall stand restored with retrospective effect. It is, however, made clear that this judgment will not preclude the competent authority from passing order in furtherance of the notice issued under Section 14(1) of the 1911 Act or any other provision of law. Copy of this order be given dasti on payment of the fee prescribed for urgent applications. Petition allowed.