' SYED SHABBAR RAZA RIZVI, J.---According to the learned counsel for the petitioner, District Council, Bahawalpur held its special meeting on 30-6-2008 to approve the Annual Budget of year 2008-09.
The said meeting took place on 30-6-2008 and the Annual Budget was approved by the Council Minutes and copies of approved budget were sent to the D.C.O. EDO(F&P) and Secretary, Local Government and Community Development, signed by Sardar Umair Abdullah Khan Dahar, Niab Zila Nazim/Convener, Zila Council, Bahawalpur. The Secretary is arrayed in the caption of the instant writ petition as respondent No,1, DCO as respondent No,2, EDO(F&P) as respondent No,3 and District Officer (F&P) as respondent No,4 and they shall be referred to (hereinafter) as respondents.
2. Following submission of the Annual Budget statement by the petitioner to the above respondents, respondent No,2 also wrote a letter dated 4-7-2008 to respondent No,1 and gave the details of the Annual Budget statement which is reproduced as under:-- "Zila Nazim, Bahawalpur, presented the said draft Budget in the special session of Zila Council, Bahawalpur, held on 30-6-2008 (F/A). The Zila Council, Bahawalpur, constituted a Budget Committee and referred the draft Budget to it for scrutiny. The Budget Committee in its meeting held on 30-6-2008 scrutinized the said draft budget and following recommendations were made to the Council for approval (F/B):--
(i) Salary portion of Non-Development Budget for the year 2008-09, may be approved.
(ii) Non-salary portion of Non-Development Budget for the year 2008-09, may be approved with condition that 40% cut on the non-salary budget of Nazim, DCO EDOs and DOs Offices may be imposed.
(iii) Funds allocated for M&R for the District Government Building amounting to Rs,25.000 million may be transferred from Non- Development Budget to Development Budget.
(iv) New schemes duly finalized by DDC may be rejected. But development schemes recommended by the Budget Committee of Council may be approved.
(v) No scheme of M&R of District Roads may be executed without prior approval of the Zila Council.
(vi) The District Coordination Officer, Bahawalpur, may be directed that development schemes recommended by the Budget Committee of Council and approved by the Zila Council may be got cleared from the District Development Committee, within fifteen days and present report of the DDC before the houses.
' The Zila Council, discussed the Budget Estimates in the light of recommendations of Budget Committee, and following decisions were taken (F/C):--
(i) Budget Estimates (Salary and Non-Salary) for the year 2008-09 approved partially as recommended by the Budget Committee of the Zila Council.
(ii) Zila Council rejected Development Schemes (New) presented before the House by the District Administration duly finalized by the DDC in its meeting held on 25-6-2008 as required under Rule 57(1) of the Punjab District Governments (Budget) Rules, 2003.
(iii) Budget Committee constituted by the House presented a list of new development schemes identified by the members of the Zila Council, Bahawalpur. Council approved the said list of new Development Schemes.
(iv) House transferred the M&R funds allocated in the budget for the Building Sector amounting to Rs,25.000 million to Development Budget.
' Out of 421 schemes prepared by the Budget Committee and approved by the Council, 380 schemes are relating to road sector, out of which 181 schemes are construction of Pavement, Soiling and Drains, which do not came under the preview of the District Government. Neither the executing agencies prepared the estimates of the said schemes nor the DDC has finalized. Only schemes mentioned at S.Nos.381 to 421 of the list of schemes prepared by the Budget Committee are recommended by the DDC."
3. Another letter was written by respondent No.2 to respondent No,1 on 28-7-2008 referring to earlier two letters dated 8-7-2008 and 14-7-2008. The respondent No,2 reminded respondent No,1 that already District council granted approval to the budget estimates for the financial year 2008-09 and also pointed out inquiry which was referred to Punjab Local Government Commission. The respondent No,2 further apprised respondent--- "But according to the provisions of the Punjab Local Government, 2001, as reproduced above the Government has to prepare, approve and authenticate the budget of District Government, Bahawalpur for the full year. In view of the facts mentioned above, it is therefore requested that either:--
(i) Budget estimates of the District Government, Bahawalpur, for the year 2008-09, already sent to the Local Government and Community Development Department, Punjab, Lahore, may kindly be approved being competent authority as envisaged in Rule 112(6 & 7) of the Punjab Local Government Ordinance, 2001 or
(ii) Meanwhile District Government, Bahawalpur, may kindly be allowed to make expenditure in excess of eight per cent under various heads in accordance with the budgetary provisions of the preceding financial year, on monthly basis till the approval of the budget estimates of the District Government, Bahawalpur, for the financial year 2008-09."
4. The learned counsel drew attention of the court that in the letters of respondent No,2 addressed to respondent No,1, no violation of any rule or provisions of the Ordinance, 2001 was pointed out in the preparation of the budget by the District Council, despite that respondent No,1 issued the impugned notification presenting a different budget than passed by the District Council on 31-7- 2008 whcih is appended as Annex-E with the instant writ petition.
5. The learned counsel contends that once budget is approved by the District Council, within stipulated period or extended period, section 112(7) would not be applied. According to proviso of subsection (3) of section 112 of the PLGO, 2001, if any violation of any rule wag committed by the District Council or otherwise any irregularity was committed, the Government could have asked District Council to rectify the fault but could not invoke subsection (7) of section 112 of the PLGO, 2001. The learned counsel also referred to reply submitted on behalf of respondents Nos. 2, 3 and 4 and pointed out para. 2 of the said reply that the draft budget was placed before the Zila Council on 30-6-2008 for approval by the Zila Nazim, Bahawalpur. He also referred to sub-para. (d) of para.3, according to which, the members of the council could not approve at their own development projects without the prior scrutiny of the Head of the Office and District Development Committee. Section 127 of PLGO, 2001 made it obligatory for the District Government to carry its function in accordance with provisions of PLGO, 2001. The learned counsel also referred to sub- paras (g), (h), (i) and para. 5 of the report, wherein it was stated that respondent No.2 was competent to refer to budget passed by the District Council to respondent No,1 for information and necessary action under section 112(7) of the PLGO, 2001. Lastly, the learned counsel submitted that subsection (4) of section 112 of PLGO, 2001, was also not applicable in the facts of the instant case.
6. According to the learned Advocate General Punjab, budget submitted by the petitioner/District Council was not complete as the District Council failed to reserve amount for maintenance and rehabilitation purposes. According to the learned Advocate General Punjab, the District Council slashed non-development budget heavily relating to day to day expenses and contingency plans.
According to him, even salary requirement were not met by the District Council in the budget, approved by the District Council.
7. The learned Advocate-General, Punjab contended that processing of development schemes/projects was not done as provided under rule 31 of the Punjab District Government and Tehsil Municipal Administration (Budget) Rules, 2003 (hereafter to be called as Rules of 2003). The learned Advocate General also contended that only 37 development schemes were included suggested by DCO in the approved budget of the District Council, all other schemes were rejected, 41 schemes were substituted by the District Nazim.
8. Mian Abdul Manan, learned advocate for the petitioner categorically denied 40% cut of non- development funds. Nazim of Zila Council present in the court submitted that no cut was made as far as salaries are concerned. He also added that some expenditure was cut relating to the D.C.O.
Office and Nazim's Office but no reduction was made to any other non-development expenditure.
9. The impugned Notification No, SO.D-II(LG)9-3/04, dated 31-7-2008 purportedly issued under subsection (7) of section 112 of the PLGO, 2001. Likewise the impugned letter No,EDO(F&P)BWP/1- 2/2007/2787, dated 4-8-2008 issued from DCO, Bahawalpur to District Accounts Officer Bahawlapur was issued in pursuance of above mentioned impugned notification dated 31-7-2008.
Thus, both these documents derive their authority from section 112 of the PLGO, 2001. In the above circumstances, in depth and careful reading of section 112 of PLGO, 2001 is required. For convenience, section 112 of PLGO, 2001 is reproduced as under:- "112. Approval of budgets.---(1) Following the presentation of the provincial budget, but before the commencement of the next financial year, each Nazim shall, present the budget for approval by the respective Council before the beginning of such financial year: Provided that the charged expenditure may be discussed but shall not be voted upon by the Council.
(2) When a Local Government assumes office for the first time, it may within ten weeks present to the respective council, a budget for the remaining part of the financial year for approval.
(3) The budget of a Local Government, shall be approved by simple majority of the total membership of the respective Council: Provided that the Government may review approved budget of the local government and if found contrary to the budget rules, may require the concerned local government to rectify it.
(4) A budget shall not be approved if---(a) the sums required to meet estimated expenditures exceed the estimated receipts; and (b) the constraints specified in section 119 have not been complied with.
(5) No other business shall be taken up by a Council during the budget session.
(6) In case a budget is not approved by a Council before the commencement of the financial year to which it relates, the concerned Local Government shall spend money under various heads in accordance with the budgetary provisions of the preceding financial year for a period not exceeding thirty days on pro-rata basis: Provided that a Local Government shall not spend funds or make commitments for any expenditure, under any demand for grant or appropriation, in excess of eight per cent of the amount budgeted in the preceding year within thirty days.
(7) In case the budget is not passed within the extended period as specified in subsection (6), the budget shall be prepared, approved and authenticated by the Government for the full year.
(8) After approval by the Council, the respective Nazim shall authenticate by his signature a Schedule specifying the---(a) grants made or deemed to have been made by the District Council, Tehsil Council Town Council or Union Council; and (b) the several sums required to meet the expenditure charged upon the District Fund, Tehsil Fund, Town Fund or Union Local Fund.
(9) The Schedule so authenticated shall be laid before the Council, but shall not be open to discussion or vote thereon.
(10) The Schedule so authenticated shall be communicated to the respective accounts Officials as specified in section 114 of this Ordinance.
(11) At any time before the expiry of the financial year to which a budget relates, a revised budget for the year shall be prepared by a Local Government and approved by the respective Council. "
10. Under subsection (1) every Nazim is required to present the budget for approval before the commencement of the next financial year before the respective council. Under subsection (2) charge expenditure may be discussed but shall not be voted upon by the council. When a local government assumes office for the first time, it may within 10 weeks present to respective council, a budget for the remaining part of the financial year for approval. Under subsection (3) budget of a local government shall be approved by simple majority of the total membership of the respective council; provided that the government may review approved budget of a local government and if found contrary to the budget rules, may require the concerned local government to rectify it. It may be pointed out at this stage that budget rules means Rules of 2003 and this proviso was added into the original enactment PLGO, 2001, subsequently on 9-7-2005. Two more pre-requisite conditions are mentioned in subsection (4).According to which, a budget shall not be approved if sums required to meet estimated expenditures exceed the estimated receipts; and the constraints specified in section 119 have not been complied with. These two constraints mentioned in subsection (4) were the only fetters on the approval of budget prior to the enactment of proviso to subsection (3).
11. Proviso to subsection (3) did not exist in the original enactment as rules were made in 2003, whereas the original enactment had come into existence in 2001. Therefore, after the enactment of Rules in 2003, the proviso had to be added in 2005 i,e, on 9-7-2005.
12. For further convenience, section 112 can be divided into three parts. First part spans over subsections (1) to (5) and second part is covered by subsections (6) and third part relates to subsection (7). Subsections (8) to (11) follow outcome of above three parts. First part has nexus with budget passed before the commencement of the financial year, whereas, second part relates to budget which is not passed before the commencement of the financial year but within extended period of 30 days. Subsection (7) relates to third part when budget is neither passed before the commencement of the financial year nor during the extended period.
13. Coming back to the controversy, subject matter of the instant writ petition, Zila Council, Bahawlapur approved its budget for financial year 2008-09 on 30-6-2008. It may be pointed out that financial year commences from 1st July of every year. Thus, subsections (6) and (7) of section 112 of the PLGO, 2001 do not apply to the instant case as case of the petitioner falls in the 1st part of section 112. Subsection (6) begins A with the following words:-- "In case a budget is not approved by a Council before the commencement of the financial year to which it relates."
' Under subsection (6) in case a budget is not approved before the commencement of the financial year, the concerned local government is allowed to spend money under various heads in accordance with budgetary provisions of the preceding financial year for a period, not exceeding 30 days, on pro-rata basis, provided that a local government shall not spend funds or make commitment for any expenditure, under any demand for grant or appropriation in excess of 8% of the amount budgeted in the preceding year, within 30 days. In other words, subsection (6) allows a local government to spend money in the above mentioned limits for 30 days. This period of 30 days may also be called as an extended period. In case the District Council fails to pass the budget in the above mentioned 30 days/extended period, the budget shall be prepared, approved and authenticated by the Government for the full year. It also means that the concerned Council shall be totally ousted for the purpose of passing budget in the above circumstances. It may be reiterated that in the instant case budget was passed/approved on 30-6-2008, therefore, subsections (6) and (7) are not applicable and the Provincial Government was not authorized to play any role. This court has already held in another case that "a bare reading of above reproduced provisions leave no doubt that unless concerned Government fails to approve or pass the budget, Local Government or the Provincial Government does not figure for the purpose of approving or passing the budget, "Abdul Qayyum Khan v. Government of the Punjab, 2007 YLR 1407.
Therefore, it is also made clear and held that subsection (7) or 3rd part has nexus with subsection (6), 2nd part, and not with 1st part i,e, with subsections (1) to (5). In other words section 112 contemplates three situations; firstly approval of the budget by a Local Council before commencement of next financial year i,e, before 1st July of every year; secondly, approval of budget by a Local Council within extended period; thirdly, approval and authentication of budget by the Provincial Government in case of failure of a Local Council to approve the budget within extended period of 30 days. It also means that this power is not available to the Provincial Government in case a Local Council approves a budget disregarding rules of 2003 or provisions of subsection (4) of section 112. In the latter case, the Provincial Government can review the budget and also can require a Local Council to rectify the budget accordingly.
14. According to the learned Advocate-General, Punjab the budget was passed by the Zila Council in disregard of rules and provisions of subsection (4), even if that is believed the Government could have reviewed the approved budget and could have required the Zila Council, Bahalwalpur to rectify it as provided under subsection (3) of section 112 of the PLGO, 2001. I categorically asked the learned Advocate General., Punjab whether there was any letter form the Government whereby District Council/District Nazim was cautioned and apprised of non- observance of any rule of Rules, 2003 or any provision of subsection (4) of section 112 of the PLGO, 2001, the learned Advocate- General very candidly said: "No". The contention of the learned Advocate-General noted in paras 6 and 7 are also negated by the letters of respondent No,2 dated 4-7-2008 and 28-7-2008, addressed to respondent No, 1.
15. In the above circumstances, it is very difficult to attribute any negligence or violation of any rule or provisions of subsection (4) of section 112 to the petitioner. Likewise, as discussed in the preceding paras, second and 3rd part of section 112 i,e, subsections (6) and (7) are not attracted in the facts and circumstances of present case. Consequently, there was no occasion for the respondents to issue impugned Notification No,SO.D-II(LG)9-3/04, dated 31-7-2008 by the Secretary, Government of the Punjab, LG & CD Department and letter dated 4-8-2008 by the D.C.O.
Bahawalpur to the District Accounts Officer, Bahawalpur. It is apparent that respondents have exercised powers which do not vest in them in the above circumstances and they attempted to interfere and usurp the powers of District Council including the petitioner. This Court has already held in another case that the provisions relating to the budget are of mandatory nature. No institution of Local Government or any Government can function unless it has financial independence. The Punjab Local Government Ordinance, 2001 is unequivocal in its language as far as these powers of the local councils are concerned. A reference may be made to a judgment of this Court, Zila Nazim Kasur v. Government of the Punjab 2008 CLC 81.
16. According to the Hon'ble Supreme court of Pakistan, "the local council are the first tier of the democratic process and since generally they perform municipal functions, the general public is vitally interested in their existence and performance. They are sine qua non for strengthening the democratic process (Zulfiqar Ali Babu v. Government of the Punjab PLD 1997 SC 11). The Constitution of Pakistan itself provide under Article 140-A as under:-- "Each Province shall, by law, establish a local government system and devolve political, administrative and financial responsibility and authority to the elected representatives of the local government."
16. Resultantly, this writ petition is allowed and both the instruments i,e, Notification dated 31-7-2008 and letter of D.C.O. Dated 4-8-2008 are annulled and declared unlawful, without lawful authority and of no legal effect.