State-controlled statutory service is civil service of the State; retrospective reclassification cannot defeat accrued constitutional rights.

A statutory service created, controlled and regulated by the State as a centralized public service was held to constitute a civil service of the State, making its members Government servants. Applying that characterisation, the Court upheld directions based on that status. The Gujarat Panchayats (Third Amendment) Act, 1978 was struck down insofar as it retrospectively reclassified ex-municipal employees and denied them consequential benefits, because the classification had no rational nexus with the legislative object and could not be used to defeat accrued protections under Articles 14 and 311. The earlier declaration of State service status therefore remained effective.

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Issues: (i) Whether the Gujarat Panchayat Service constituted under the Gujarat Panchayats Act, 1961 was a civil service of the State and its members were Government servants. (ii) Whether the Gujarat Panchayats (Third Amendment) Act, 1978 was constitutionally valid in so far as it retrospectively excluded ex-municipal employees from the State service character of the Panchayat Service and denied them consequential benefits.

Issue (i): Whether the Gujarat Panchayat Service constituted under the Gujarat Panchayats Act, 1961 was a civil service of the State and its members were Government servants.

Analysis: The statutory scheme showed that the Panchayat institutions discharged governmental functions under close State control. The State created the service, fixed its cadres, regulated recruitment, transfer, promotion, discipline and conditions of service, and could allocate or reallocate personnel between State service and Panchayat service. The functions entrusted to the Panchayats, the source of funds, the power of the Government to issue directions and inspect, and the centralized character of the service all indicated that the service was not the servant of individual Panchayats but a single State-controlled service.

Conclusion: The Panchayat Service was a civil service of the State and its members were Government servants, and the directions based on that status were rightly affirmed.

Issue (ii): Whether the Gujarat Panchayats (Third Amendment) Act, 1978 was constitutionally valid in so far as it retrospectively excluded ex-municipal employees from the State service character of the Panchayat Service and denied them consequential benefits.

Analysis: The amendment targeted only one class of Panchayat employees, namely ex-municipal employees, and sought to reclassify them retrospectively as servants of Gram and Nagar Panchayats while leaving others similarly situated differently treated. The attempted classification rested only on the source from which employees had originally come, which had no rational relation to the object of the legislation once all had entered a common service and discharged identical functions. Retrospective reclassification could not be used to defeat accrued constitutional protections under Articles 14 and 311 by fictionally rewriting history and nullifying existing rights.

Conclusion: The Third Amendment Act was unconstitutional and void as arbitrary and violative of Articles 14 and 311.

Final Conclusion: The appeal failed and the writ petitions succeeded. The employees retained the benefits flowing from the earlier declaration that the Panchayat Service was a State service, and the retrospective amendment could not displace those rights.

Ratio Decidendi: Where a statutory service is created, controlled and regulated by the State as a centralized public service, its members are Government servants; and a retrospective law cannot, by artificial reclassification, destroy accrued constitutional rights or sustain an unreasonable classification lacking rational nexus with the legislative object.

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