Anil K. Narendran, J.

1. ICR(WA)No.1 of 2025 is one registered pursuant to a reference order dated 20.12.2021 of a Division Bench of this Court in W.A.No.1503 of 2019, which was one filed by the 14th respondent in W.P.(C)No.35055 of 2016, invoking the provisions under Section 5(i) of the Kerala High Court Act, 1958, challenging the judgment dated 12.02.2019 of the learned Single Judge in that writ petition, which was one filed by respondents 1 to 5 herein, invoking the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India seeking a writ of mandamus commanding the 1st respondent therein, i.e., the Secretary, Navaikulam Grama Panchayat, not to grant further permit/consent to establish M-sand plant and metal crusher unit in the land possessed by respondents 12 to 15 therein, situated at Palavacodu in Navaikulam Grama Panchayat; and a writ of mandamus commanding the 2nd respondent therein, i.e., the Chief Secretary, Government of Kerala, to obtain a report from the officers responsible for granting permit to establish M-sand plant and metal crusher unit in the land possessed by respondents 12 to 15 therein, comprised in Sy.Nos.245/3, 245/4, 245/9, 245/10, 250/15 and 250/26 of Navaikulam Village, Varkala Taluk, Thiruvananthapuram district and take appropriate direction to cancel the permit/consent issued by respondents 2 to 9.

                  1.1. By the judgment dated 12.02.2019 of a learned Single Judge of this Court, W.P.(C)No.35055 of 2016, along with the connected matter, i.e., W.P.(C)No.22117 of 2018, was disposed of, leaving open the liberty of the writ petitioners to approach the Secretary of Navaikulam Grama Panchayat, if the 1st and 2nd respondents in W.P.(C)No.22117 of 2018 are conducting any activity in violation of the building permit secured by them and other than in accordance with law. In the judgment dated 12.02.2019, the learned Single Judge had made it clear that, if any application for category change is submitted by the said respondents or any other applications under the provisions of the Kerala Panchayat Raj Act, 1994, or the Kerala Panchayat Building Rules, 2011, the Secretary of the Grama Panchayat shall issue notice to the writ petitioners, respondents 1 and 2 in W.P.(C)No.22117 of 2018 and only thereafter, any decision shall be taken on such applications. W.P.(C)No.22117 of 2018 was also against the constructions carried out by the party respondents in connection with M-sand and metal crusher unit in the property in question.

                  1.2. On 24.06.2019, when W.A.No.1503 of 2019 came up for admission along with W.A.No.1371 of 2019 filed against the judgment dated 12.02.2019 in W.P.(C)No.22117 of 2018, a Division Bench of this Court admitted the writ appeals on file and issued notice to the party respondents in both the writ appeals, who were not represented by counsel.

                  1.3. On 20.12.2021, when W.A.No.1503 of 2019 came up for consideration, a Division Bench of this Court passed a reference order to consider whether the decision of a Full Bench of this Court in Tomy Thomas v. State of Kerala [2019 (3) KLT 987] requires reconsideration. By that order, Registry was directed to place the matter before the Hon’ble the Chief Justice for constitution of a Full Bench. Paragraphs 10 to 12 of the reference order read thus;

                  “10. After the amendment, the Full Bench declared the Panchayats to be totally denuded of the powers to refuse a permission sought for establishment of a factory, workshop, workplace, etc., under Section 233. We cannot but notice the oft-quoted proposition that the power to grant necessarily implies a power to refuse. We would also notice a circumstance where the unit sought to be established is of such a nature that none of the competent authorities specified under sub-section (4) can accede to such an establishment, by whatsoever reason of nuisance or pollution. Even then, it cannot be said that the Panchayat can only make a grant with conditions which conditions may not necessarily abate or avert the concerns of public health or environmental depredation. The Full Bench made the said declaration specifically by reason of the deletion of 'refusal' from the provision conferring power to grant. With due respect, in our opinion, even if that power was not specifically conferred, it was implied in the power to grant.

                  11. Under Section 233, a new provision, sub-section (2A) has been added, which requires the Secretary to acknowledge the application filed in the appropriate form with supporting documents and immediately inform the applicant about any defect in such applications, including the absence of a required document and allow the applicant to rectify the defect within, but not later than five days. Sub-section (3), though amended, is substantially the same with respect to the objections to be placed as a report before the Village Panchayat after an enquiry by the Secretary. The amended provisions require the Village Panchayat to consider the application, the report of the Secretary and of such authorities as specified in sub-section (4); which authorities are identical to those in the unamended provision. In fact, there could be found an anomaly in the unamended Section 233 insofar as sub-section (3) empowers the Village Panchayat to grant absolutely or conditionally or refuse the permission after considering the report of the Secretary and then by sub-section (4) requiring also the consideration of the reports of the various authorities. The amended provision takes care of the anomaly, but does not denude the Panchayat of the power to refuse, since the same is implied in the power to grant.

                  12. As per the amended provision, the Secretary has to not only enquire and report on any objection but has also to obtain the reports of authorities enumerated under sub-section (4) and also consider them before finalising the report to the Village Panchayat. If the Village Panchayat, as per amended Rule 12(3), is again of the opinion that the construction or establishment is objectionable by reason of high density of population or the causation of nuisance, then an expert opinion has to be called for from the concerned Department with regard to the determination of the nuisance and its abatement. If abatement is possible, then the Village Panchayat cannot sit over it and has to necessarily grant the permission with conditions and stipulations for ensuring such abatement as advised by the expert body. The grant or refusal shall also be within the time stipulated in the Rules, failing which the applicant would be entitled to carry on with his activity, deeming the permission under Section 233 of the Act of 1994. Hence, according to us, prior to amendment, even if the authorities under sub-section (4) conceded to the establishment sought for under Section 233, the Village Panchayat had the power to refuse such permission on the basis of the objections pointed out by the Secretary. After the amendment, which obviously was in promotion of establishment of industries, there is a definite time frame for the various stages of processing the application and the ultimate grant with or without conditions, which also implies refusal in a contingency on valid grounds. There is also a mandate that when the abatement of nuisance, as pointed out by the Secretary or which occurs to the Village Panchayat on a consideration of the various reports under sub-section (4), is possible, then the Village Panchayat is obliged to grant the permission under Section 233 with such conditions as required by the expert body to abate or avert the nuisance. However, this does not denude the power of the Panchayat to refuse permission, which not only is implied in the power to grant but also would be in consonance with the functioning of the Panchayat as a self-government institution, as envisaged in the Constitution. In the above circumstance, we direct the Registry to place the matter before the Hon'ble the Chief Justice for constitution of a Full Bench to consider whether Tomy Thomas v. State of Kerala [2019 (3) KLT 987] requires a re-consideration.”

                  1.4. Based on the orders of the Hon’ble Chief Justice on the administrative side, the Registry has placed the matter before this Full Bench, which was later numbered as ICR(WA)No.1 of 2025.

2. ICR W.P.(PIL)No.6 of 2026 is registered based on the order of reference dated 11.02.2026 of a Division Bench of this Court in W.P.(PIL)No.61 of 2025.

                  2.1. W.P.(PIL)No.61 of 2025 has been filed by the petitioner therein, invoking the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India, to strike down Section 2 of the Kerala Investment Promotion and Facilitation (No.2) Act, 2018, making amendment to Section 232 of the Kerala Panchayat Raj Act, 1994, to the extent it takes away the power of the Grama Panchayat to refuse to issue or to revoke the licence for any factory, workshop, workplace, etc., and creates absurdity; to strike down sub-section (3) of Section 233 of the Kerala Panchayat Raj Act as unconstitutional, to the extent it does not allow the Panchayat to refuse licence for any factory, workshop, workplace, etc., and sub-section (4) of Section 233 to the extent it does not specify for a contingency of refusal of licence by the Village Panchayat; to strike down sub-rule (3) of Rule 12 of the Kerala Panchayat Raj (Issue of Licence to Factories, Trades, Entrepreneurship Activities and other Services) Rules, 1996, as unconstitutional, to the extent it does not contemplate or provide for a refusal by the Panchayat to grant or issue permission for the construction of a factory, workshop or workplace; to declare that the Panchayat is not bound to grant licence for factories, trades, entrepreneurship activities, etc., under Section 233 of the Kerala Panchayat Raj Act; to issue a writ of mandamus directing the Panchayat to refrain from issuing licence under Section 233 to respondents 14 and 15 for operating the Hot and Mix Plant (Asphalt Plant); a writ of certiorari quashing Exts.P2, P3, P4 and P5 as unjust, illegal and arbitrary; to declare that respondents 14 and 15 are not entitled to conduct the Hot and Mix Plant (Asphalt Plant) in survey No.991/1, 2, 3 of Nellanad Village, Nellanad Grama Panchayat, Thiruvananthapuram district; and a writ of mandamus directing respondent No.13 to see that respondents 14 and 15 are not operating the Hot and Mix Plant (Asphalt Plant).

                  2.2. On 26.06.2025, when W.P.(PIL)No.61 of 2025 came up for admission, the learned Special Government Pleader was directed to file a counter affidavit. On 11.02.2026, when the said writ petition came up for consideration along with W.A.Nos.2264 and 2356 of 2025, the learned Advocate General drew to the attention of the Division Bench the reference order dated 20.12.2021 in W.A.No.1503 of 2019, and the Division Bench observed that the matter requires consideration by a Larger Bench since the constitutionality of Section 233 of the Kerala Panchayat Raj Act, is presently pending consideration before a Full Bench.

                  2.3. On 23.03.2026, when ICR W.P.(PIL)No.6 of 2026 came up for consideration before a Larger Bench, the matter was directed to be placed before the Full Bench already constituted to consider the reference order in W.A.No.1503 of 2019, i.e., ICR (WA)No.1 of 2025.

3. We heard arguments of the learned counsel for the petitioners in ICR W.P.(PIL)No.6 of 2026, arising out of W.P.(PIL)No.61 of 2025, the learned counsel for the petitioner in ICR(WA)No.1 of 2025, arising out of W.A.No.1503 of 2019, the learned counsel for respondents 1 to 5 in ICR(WA)No.1 of 2025, the learned Additional Advocate General for the State and official respondents, the learned Standing Counsel for Navaikulam Grama Panchayat for the 6th respondent in ICR(WA)No.1 of 2025 and also the learned Standing Counsel for Nellanad Grama Panchayat for respondents 7 and 8 in ICR W.P.(PIL)No.6 of 2026.

                  3.1. The learned counsel for the petitioner in ICR W.P.(PIL)No.6 of 2026 contended that the judgment of the Full Bench in Tomy Thomas [2019 (3) KLT 987] is one rendered without reference to Article 40 of the Constitution of India, which enshrines one of the Directive Principles of State Policy, to endow Village Panchayats with powers and authority to enable them to function as units of self-government, and also the provisions in Part IX of the Constitution of India, inserted by the Constitution (Seventy-third Amendment) Act, 1992, including Article 243-G. In W.P.(PIL)No.61 of 2025, the petitioners, who are residents of Nellanad Grama Panchayat, have sought for a relief to strike down Section 2 of the Kerala Investment Promotion and Facilitation (No.2) Act, 2018 as unconstitutional, to the extent it takes away the power of the Panchayat to refuse to issue or to revoke the licence for any factory, workshop, workplace, etc., and also Rule 12(3) of the Kerala Panchayat Raj (Issue of Licence to Factories, Trades, Entrepreneurship Activities and other Services) Rules, 1996, as amended by the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Amendment Rules, 2017. The learned counsel referred to various decisions on the above legal issues.

                  3.2. The learned counsel for the appellant in ICR (WA)No.1 of 2025 contended that the Kerala Investment Promotion and Facilitation (No.2) Act, 2018, was enacted by the State Legislature to give effect to certain proposals of the Government of Kerala to avoid delay in granting various licences, permissions, approvals, clearances required under various enactments and to provide for other matters connected therewith or incidental thereto. After taking note of the object sought to be achieved by enacting the Act of 2018, the Full Bench in Tomy Thomas [2019 (3) KLT 987] laid down the law on the point, which cannot be said to be one laid down without taking note of the provisions in Article 40 as well as the provisions contained in Part IX of the Constitution of India, including Article 243-G. In U.P. Gram Panchayat Adhikari Sangh v. Daya Ram Saroj [(2007) 2 SCC 138], the Apex Court made it clear that the Seventy-third Amendment of the Constitution is not a basic feature of the Constitution. Article 40 cannot be said to qualify as a basic feature of the Constitution.

                  3.3. The learned Standing Counsel for Navaikulam Grama Panchayat, for the 6th respondent in ICR (WA)No.1 of 2025, and the learned Standing Counsel for Nellanad Grama Panchayat for respondents 7 and 8 in ICR W.P.(PIL)No.6 of 2026 contended that the Full Bench decision in Tomy Thomas [2019 (3) KLT 987] is one rendered without taking note of the constitutional provisions in Article 40, which enshrines one of the Directive Principles of State Policy, to endow Village Panchayats with powers and authority to enable them to function as units of self-government, and also that contained in Part IX of the Constitution of India, inserted by the Constitution (Seventy-third Amendment) Act, 1992, including Article 243-G. The learned counsel for respondents 1 to 5 in ICR(WA)No.1 of 2025 has also addressed arguments in similar lines. The learned Standing Counsel for Navaikulam Grama Panchayat relied on the decision of the Apex Court in State of U.P. v. Pradhan Sangh Kshettra Samiti [(1995) Supp. 2 SCC 305], wherein it was noticed that the Seventy-third Constitutional Amendment was made to give effect to the provisions of Article 40. The learned Standing Counsel also relied on the decision of a Division Bench of this Court in C.M.Z. Musliar v. Aboobacker [1988 (1) KLT 136], wherein it was held that the conferment of statutory powers must be construed as impliedly authorising everything which could fairly and reasonably be regarded as incidental or consequential to the power itself.

                  3.4. The learned Additional Advocate General contended that the judgment of the Full Bench in Tomy Thomas [2019 (3) KLT 987] is one rendered without reference to Article 40 of the Constitution of India, which enshrines one of the Directive Principles of State Policy, to endow Village Panchayats with powers and authority to enable them to function as units of self- government, and also the provisions in Part IX of the Constitution of India, inserted by the Constitution (Seventy-third Amendment) Act, 1992, including Article 243-G. The conferment of statutory powers on the Village Panchayat must be construed as implying authority for everything that could fairly and reasonably be regarded as incidental or consequential to the power itself.

4. Constitution of India - Part IV of the Constitution of India sets forth the Directive Principles of State Policy. Article 40 provides for the organisation of Village Panchayats. Article 40 provides that the State shall take steps to organise Village Panchayats and endow them with such powers and authority as may be necessary to enable them to function as units of self-government.

                  4.1. The Constitution (Seventy-third Amendment) Act, 1992, was enacted by the Parliament for insertion of Part IX after Part VIII of the Constitution of India and for addition of the Eleventh Schedule after the Tenth Schedule to the Constitution, which came into force on 24.04.1993.

                  4.2. In the Statement of Objects and Reasons of the Constitution (Seventy-third Amendment) Act, 1992, it is stated that Article 40 of the Constitution of India, which enshrines one of the Directive Principles of State Policy, lays down that the State shall take steps to organise Village Panchayats and endow them with such powers and authority as may be necessary to enable them to function as units of self-government. In light of the experience of the last forty years and the shortcomings observed, it is considered that there is an imperative need to enshrine in the Constitution certain basic and essential features of Panchayat Raj Institutions to impart certainty, continuity and strength to them. Accordingly, it is proposed to add a new part relating to Panchayats in the Constitution to provide for, among other things, Gram Sabha in a village or group of villages; the constitution of Panchayats at the village and intermediate level; etc. The Statement of Objects and Reasons of the Constitution (Seventy-third Amendment) Act, 1992, reads thus;

                  “Statement of Objects and Reasons of the Constitution (Seventy-third Amendment) Act, 1992.

                  The Statement of Objects and Reasons accompanying the Constitution Amendment Bill was as follows:-

                  1. Though the Panchayat Raj Institutions have been in existence for a long time, it has been observed that these institutions have not been able to acquire the status and dignity of viable and responsive people’s bodies due to a number of reasons including absence of regular elections, prolonged supersessions, insufficient representation of weaker sections like Scheduled Castes, Scheduled Tribes and women, inadequate devolution of powers and lack of financial resources.

                  2. Article 40 of the Constitution, which enshrines one of the Directive Principles of State Policy, lays down that the State shall take steps to organise Village Panchayats and endow them with such powers and authority as may be necessary to enable them to function as units of self-government. In the light of the experience in the last forty years and in view of the shortcomings which have been observed, it is considered that there is an imperative need to enshrine in the Constitution certain basic and essential features of Panchayat Raj Institutions to impart certainty, continuity and strength to them.

                  3. Accordingly, it is proposed to add a new part relating to Panchayats in the Constitution to provide for, among other things, Gram Sabha in a village or group of villages; constitution of Panchayats at the village and intermediate level, if any, and the offices of Chairpersons of Panchayats at such levels; reservation of seats for Scheduled Castes and Scheduled Tribes in proportion to their population for membership of Panchayats and office of Chairpersons in Panchayats at each level; reservation of not less than one-third of the seats for woman; fixing tenure of 5 years for Panchayats and holding elections within a period of 6 months in the event of supersession of any Panchayat; disqualification for membership of Panchayats; devolution by the State Legislature of powers and responsibilities upon the Panchayats with respect to the preparation of plans for economic development and social justice and for the implementation of development schemes; sound finance of the Panchayats by securing authorisation from State Legislatures for grants-in-aid to the Panchayats from the Consolidated Fund of the State, as also assignment to, or appropriation by, the Panchayats of the revenues of designated taxes, duties, tolls and fees; setting up of a Finance Commission within one year of the proposed amendment and thereafter every 5 years to review the financial position of Panchayats; auditing of accounts of the Panchayats; powers of the State Legislatures to make provisions with respect to election to Panchayats under the superintendence, direction and control of the Chief Electoral Officer of the State; application of the provision of the said part to Union Territories; excluding certain States and areas from the application of the provisions of the said part; continuance of existing laws and Panchayats until one year from the commencement of the proposed amendment and barring interference by Courts in electoral matters relating to Panchayats.

                  4. The Bill seeks to achieve the aforesaid objectives.”

                  (underline supplied)

                  4.3. In State of U.P. v. Pradhan Sangh Kshettra Samiti [(1995) Supp. 2 SCC 305], a Two-Judge Bench of the Apex Court noticed that the Constitution (Seventy-third Amendment) Act, 1992 came into force on 24.04.1993 to give effect to one of the Directive Principles of State Policy, viz., Article 40 of the Constitution of India, which directs the State to organise village panchayats as units of self-government. On the coming into force of the said Constitutional Amendment, the Legislature of a State was required to take steps to organise Village Panchayats on the lines of the provisions of the said Constitutional Amendment, by making law or amending the existing law suitably. Article 40 of the Constitution neither defines ‘Village’ nor provides guidelines for organising Village Panchayats. Article 40 only requires that Village Panchayats, howsoever organised, be equipped with such powers and authority as may be necessary to enable them to function as units of self-government. When Article 40 speaks of Village Panchayats as units of self-government, it has in view the organisation of the lowest level units of self-governance in the hierarchy of self-governing, democratic, policy-making and administrative units. In other words, Article 40 envisages Village Panchayats as the base democratic institutions of a pyramid of democratically organised and functioning self-governing units. This being so, while organising the Village Panchayats, what is necessary to be kept in mind is (a) that the Village Panchayats are to be the self-governing units at the lowest end of the democratic polity, (b) that being self-governing units, those who are governed   by the said units and for whose benefit they are going to operate,  will have either a direct or an elective indirect representation in them; (c) that they will have an effective say in the conduct of their affairs including its plans, policies and programmes and their  execution; and (d) that thus they will have not only a sense and  satisfaction of participation but also an experience in the governance of their own affairs. As long as the Village Panchayats  are organised to achieve these objectives, the requirements of Article 40 of the Constitution have to be complied with in letter and spirit.

                  4.4. In U.P. Gram Panchayat Adhikari Sangh v. Daya Ram Saroj [(2007) 2 SCC 138], a Two-Judge Bench of the Apex Court noticed that it cannot be said that the Seventy-third Amendment of the Constitution is the basic feature of the Constitution. Article 40 of the Constitution cannot be said to qualify as a basic feature of the Constitution. The Seventy-third Amendment Act was enacted under Article 368 and, therefore, cannot be said to be a basic feature of the Constitution. It is an enabling provision, whereby the State is empowered to eliminate, modify or cancel it by exercising power under the enabling provision. Article 243-G is an enabling provision, which enables   the Panchayats to function as institutions of self government and  such law may contain provisions for the devolution of powers and responsibilities upon Panchayats, subject to such conditions as may be specified therein, with respect to 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 enabling provisions are further subject to the conditions as may be specified. Therefore, it is for the State Legislature to consider legal conditions and make the law accordingly.

                  4.5. Clause (d) of Article 243 defines ‘Panchayat’ as an institution (by whatever name called) of self-government constituted under Article 243-B for the rural areas. Clause (e) of Article 243 defines ‘Panchayat area’ as the territorial area of a Panchayat. Article 243-B provides for the constitution of Panchayats. As provided in clause (1) of Article 243-B, there shall be constituted in every State, Panchayats at the village, intermediate and district levels in accordance with the provisions of Part IX. As per clause (2) of Article 243-B, notwithstanding anything in clause (1), Panchayats at the intermediate level may not be constituted in a State having a population not exceeding twenty lakhs.

                  4.6. Article 243-C provides for the composition of Panchayats. As provided in clause (1) of Article 243-C, subject to the provisions of Part IX, the Legislature of a State may, by law, make provisions with respect to the composition of Panchayats. As per the proviso to clause (1), the ratio between the population of the territorial area of a Panchayat at any level and the number of seats in such Panchayat to be filled by election shall, so far as practicable, be the same throughout the State. As provided in clause (2), all the seats in a Panchayat shall be filled by persons chosen by direct election from territorial constituencies in the Panchayat area and, for this purpose, each Panchayat area shall be divided into territorial constituencies in such manner that the ratio between the population of each constituency and the number of seats allotted to it shall, so far as practicable, be the same throughout the Panchayat area. Clauses (3) to (6) of Article 243-C deal with various aspects relating to the composition of Panchayats.

                  4.7. Article 243-E provides for the duration of Panchayats. As provided in clause (1) of Article 243-E, every Panchayat, unless sooner dissolved under any law for the time being in force, shall continue for five years from the date appointed for its first meeting and no longer. Clauses (2) to (4) of Article 243-E deal with various aspects relating to the duration of Panchayats. Article 243-F provides for the disqualifications for membership.

                  4.8. Article 243-G provides for the powers, authority and responsibilities of Panchayats. As provided in Article 243-G, 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.

                  4.9. Article 243-H provides for the powers to impose taxes by, and funds of, the Panchayats; Article 243-I provides for the constitution of a Finance Commission to review financial position; Article 243-J provides for the Audit of accounts of Panchayats; and Article 243-K provides for elections to the Panchayats. As provided in clause (1) of Article 243-K, the superintendence, direction and control of the preparation of electoral rolls for, and the conduct of, all elections to the Panchayats shall be vested in a State Election Commission consisting of a State Election Commissioner to be appointed by the Governor. Clauses (2) to (4) of Article 243-K deal with various aspects relating to elections to the Panchayats. Article 243-L provides for application to Union Territories; Article 243-M provides that Part IX does not apply to certain areas; Article 243-N provides for continuance of existing laws and Panchayats; and Article 243-O provides for bar to interference by courts in electoral matters.

5. The Kerala Panchayat Raj Act, 1994 (Act 13 of 1994) was enacted by the State Legislature, as per the mandate of clause (1) of Article 243-G of the Constitution of India, to replace the enactments relating to Panchayats and district councils by a comprehensive enactment, for securing a greater measure of participation of the people in planned development and in local governmental affairs, by constituting village, block and district Panchayats; and to endow such Panchayats with such powers and authority to enable them to function as institutions of self- government. The preamble of the said Act reads thus;

                  “Whereas it is expedient to replace the present enactments relating to Panchayats and district councils by a comprehensive enactment to establish a three-tier Panchayat Raj System in the State in line with the Constitution (Seventy-third Amendment) Act, 1992, for securing a greater measure of participation of the people in planned development and in local governmental affairs, by constituting village, block and district Panchayats;

                  And endow such Panchayats with such powers and authority to enable them to function as institutions of self-government;

                  And entrusting such Panchayats the preparation of plans and implementation of schemes for economic development and social justice, including the implementation of schemes in relation to the matters listed in the Eleventh Schedule to the Constitution.” (underline supplied)

                  5.1. Clause (xxv) of Section 2 of the Act defines 'Panchayat' to mean a Village Panchayat, a Block Panchayat or a District Panchayat. Clause (xxvi) of Section 2 of the Act defines 'Panchayat area' to mean the area within the territorial jurisdiction of a Panchayat. Chapter III of the Act deals with the constitution of Panchayats at different levels. Section 4 of the Act deals with the power of the Government to constitute and specify the name and headquarters of Panchayat. As per sub-section (1) of Section 4, the Government shall, by notification in the Gazette, constitute with effect from such date as may be specified in the notification, (a) a Village Panchayat for each village or for group of villages; (b) a Block Panchayat at intermediate level; and (c) a District Panchayat for each District Panchayat area and specify the names and headquarters of such Panchayats. Sub-sections (2) and (3) of Section 4 deal with various aspects relating to the Government’s powers to constitute and specify the name and headquarters of Panchayats.

                  5.2. Section 5 of the Act deals with incorporation and administration of Panchayats. As per sub-section (1) of Section 5, every Panchayat shall be a body corporate by the name of the Panchayat specified in the notification issued under Section 4, shall have perpetual succession and a common seal, and shall, subject to any restriction or qualification imposed by or under this Act or any other law, be vested with the capacity of suing or being sued in its corporate name, of acquiring, holding and transferring property, movable or immovable, of entering into contracts, and of doing all things necessary, proper or expedient for the purposes for which it is constituted. As per sub-section (2) of Section 5, a District Panchayat, a Block Panchayat and a Village Panchayat shall exercise such powers, perform such functions and duties and shall have such responsibilities and authorities as are provided by or under this Act or any other law for the time being in force.

                  5.3. Chapter XIV of the Act deals with provisions relating to Members and President of Panchayats. Section 156 deals with the functions of the President and Vice-President. As per sub-section (1) of Section 156, save as otherwise expressly provided by or under this Act, the executive power for the purpose of carrying out the provisions of this Act and the resolution passed by a Panchayat shall vest in the President thereof, who shall be directly responsible for the due fulfilment of the duties imposed upon the Panchayat by or under this Act. Sub-sections (2) to (6) of Section 156 deal with various aspects relating to the functions of the President and Vice-President.

                  5.4. Chapter XX of the Act deals with public safety, convenience, health and waste management. The heading ‘Dangerous and Offensive Trades and Factories’ before Section 232 of the Act was substituted as ‘Industries, Factories, Trades, Entrepreneurship Activities and other services’ by the Kerala Investment Promotion and Facilitation (No.2) Act, 2018, which came into force on 20.10.2017. Prior to the said amendment, in Section 232, sub-sections (2) to (5) and the Explanation were omitted by the Kerala Panchayat Raj (Amendment) Act, 2017 (Act 18 of 2017), which came into force on 01.06.2017. By sub-section (1) of Section 3 of Act 18 of 2017, the Kerala Panchayat Raj (Amendment) Ordinance, 2017 was repealed. As per sub-section (2) of Section 3 of the said Act, notwithstanding such repeal, anything done or deemed to have been done or any action taken or deemed to have been taken under the principal Act, as amended by the said Ordinance, shall be deemed to have been done or taken under the principal Act, as amended by Act 18 of 2017.

                  5.5. The Kerala Investment Promotion and Facilitation (No.2) Act, 2018, was enacted by the State Legislature to give effect to certain proposals of the Government of Kerala to avoid delay in granting various licences, permissions, approvals, clearances required under various enactments and to provide for other matters connected therewith or incidental thereto. Section 2 of the said Act deals with the amendments in the Kerala Panchayat Raj Act, 1994; Section 3 deals with amendments in the Kerala Municipality Act, 1994; Section 4 deals with amendments in the Kerala Industrial Single Window Clearance Boards and Industrial Township Area Development Act, 1999; Section 5 deals with amendments in the Kerala Ground Water (Control and Regulation) Act, 2002; and Section 6 deals with amendments in the Kerala Lifts and Escalators Act, 2013.

                  5.6. Section 232 of the Kerala Panchayat Raj Act, as it stood prior to its amendments by the Kerala Panchayat Raj (Amendment) Act, 2017 and the Kerala Investment Promotion and Facilitation (No.2) Act, 2018, reads thus;

                  “232. Purpose for which places may not be used without a licence.- (1) The Village Panchayat may notify that no place in the Panchayat area shall be used for any of the purposes specified in the rules made in this behalf being purposes which in the opinion of Government, are likely to be offensive or dangerous to human life or health or property, without a licence issued by the Secretary and except in accordance with the conditions specified in such licence:

                  Provided that no such notification shall take effect until the expiry of thirty days from the date of its publication.

                  (2) Notwithstanding anything contained in the Abkari Act, 1077 (1 of 1077) or in any other law for the time being in force, no person shall without previous permission in writing of a Village Panchayat and otherwise than in accordance with the conditions specified in the permission, establish an abkari shop within a Village Panchayat area;

                  (3) While granting permission to establish an abkari shop near an educational institution or place of worship, the distance limit prescribed in the Abkari Act for the time being in force or the rules framed thereunder shall be complied with and the Village Panchayat shall not grant permission to establish an abkari shop within the said distance limit.

                  (4) A Village Panchayat shall be competent, in the interest of public peace or morality or on the grounds of convenience or nuisance, to order the shifting of an abkari shop from the place where it is situated to another or its closing within a period not exceeding fifteen days, as may be directed in this behalf.

                  (5) Notwithstanding anything contained in this Section, the provisions of sub-sections (2) to (4) shall not be applicable to any abkari shop existing on 25th November, 2012, the date of commencement of the Kerala Panchayat Raj (Fourth Amendment) Ordinance, 2012 (63 of 2012) or, subject to all existing legal provisions, for re-establishing the toddy shops existing on the said date, in the area within the boundaries allotted for establishing them.

                  Explanation.- “Abkari shop” means a toddy shop or a foreign liquor shop or a foreign liquor retail shop or an establishment having FL-9 licence or a bar hotel, under the Abkari Act, 1077 and the rules made thereunder.

5.7. Section 233 of the Kerala Panchayat Raj Act, as it stood prior to its amendment by the Kerala Investment Promotion and Facilitation (No.2) Act, 2018, reads thus;

                  “233. Permission for the construction of factories and the installation of machinery.- (1) No person shall, without the permission of the Village Panchayat and except in accordance with the conditions specified in such permission,

                  (a) construct or establish any factory, workshop or workplace in which it is proposed to employ steam power, water power or of other mechanical power or electrical power; or

                  (b) install in any premises any machinery or manufacturing plant driven by any power as aforesaid, not being machinery or manufacturing plant exempted by the provisions of this Act or the rules made thereunder.

                  (2) An application for permission under sub-section (1) shall be submitted to the Village Panchayat addressed to the Secretary in such form and with such details as prescribed.

                  (3) The Secretary shall, as soon as may be after the receipt of the application, enquire and report to the Village Panchayat as to whether the establishment of the factory, workshop or workplace or other installation of machinery or manufacturing plant for which permission is applied for is objectionable by reason of density of population in the neighbourhood and the possibility to cause nuisance or pollution and the Village Panchayat after having considered the application and the reports of the Secretary, and of such other authorities as specified in sub-section (4) may as expeditiously as possible, at any rate within sixty days,

                  (a) grant the permission either absolutely or subject to such conditions as it thinks fit to impose; or

                  (b) refuse the permission for the reasons to be recorded.

                  (4) Before granting or refusing permission under sub-section (3), the Village Panchayat shall obtain and consider,

                  (a) a report of the Inspector of Factories appointed under the Factories Act, 1948 (Central Act 63 of 1948) or of an officer of the Industries Department not below the rank of an Industries Extension Officer having jurisdiction over the area regarding the adequacy of ventilation, light, etc., and sufficiency of the height and size of the rooms and doors and the suitability of exits to be used in case of fire in the plan of factories, workshop, workplace or premises if they came within the purview of the Factories Act, 1948 (Central Act 63 of 1948) and such other matters as may be prescribed;

                  (b) a report of the District Medical Officer regarding the possibility of nuisance or pollution if the connected load of the machinery proposed to be installed exceeds 25 HP or if the nature of the machinery and installation are such that it may cause nuisance or pollution; and

                  (c) a report of the Divisional Fire Officer or any other officer authorised by him regarding the adequacy of fire prevention and firefighting measures planned if the proposed industry involves the use of high-tension power or inflammable or explosive materials:

                  Provided that, no report under clause (b) shall be called for in respect of any industry if the applicant produces a declaration recommended by an officer of the Industries Department authorised in this behalf or by the Kerala State Pollution Control Board to the effect that such industry would not cause pollution.

                  (5) The grant of permission under this section, -

                  (a) shall be subject to the conditions to be observed in respect of the replacement of machinery, the levy of fees and to such restrictions and conditions as may be prescribed;

                  (b) shall not be deemed as exempted from observing the provisions contained in Sections 235-F and 235-H or 235-P and 235-Q.”

                  5.8. Section 233A of the Kerala Panchayat Raj Act, as it stood prior to its amendment by the Kerala Investment Promotion and Facilitation (No.2) Act, 2018, reads thus;

                  “233-A. Abatement of nuisance caused by factory, workshop, etc.- (1) Where any factory, workshop, workplace or machinery causes, in the opinion of the Village Panchayat, nuisance by reason of a particular kind of fuel being employed or by reason of the noise or vibration created, or effluent discharged or by reason of noxious odour, smoke or dust emitted, the Secretary may direct the person in charge of such factory, workshop, workplace or machinery for the abatement of such nuisance within a reasonable time to be specified for that purpose.

                  (2) The Village Panchayat may, if required, obtain expert opinion with regard to the determination of the nuisance or its abatement, at the cost of the owner or person in charge of the factory, workshop, workplace or machinery concerned.

                  (3) Where there has been wilful default in carrying out a direction given under sub-section (1) or where in the existing circumstances the abatement of nuisance is found impracticable, the Secretary may prohibit the working of the factory, workshop, workplace or machinery till such time the person concerned takes necessary steps to the satisfaction of the Secretary for the abatement of the nuisance.”

                  5.9. Section 2 of the Kerala Investment Promotion and Facilitation (No.2) Act, 2018, which deals with the amendments made in the Kerala Panchayat Raj Act, 1994 (Act 13 of 1994), read thus;

2. Amendment of Act 13 of 1994. - In the Kerala Panchayat Raj Act, 1994 (13 of 1994),

                  (1) in Section 232,

                  (a) for the heading “DANGEROUS AND OFFENSIVE TRADES AND FACTORIES” before the said section, the heading “INDUSTRIES, FACTORIES, TRADES, ENTERPRISES, ACTIVITIES AND OTHER SERVICES”

                  shall be substituted;

                  (b) in sub-section (1), the words “being purposes which in the opinion of Government is likely to be offensive or dangerous to human life or health or property” shall be omitted;

                  (2) in Section 233,

                  (a) in sub-section (2), after the word “Secretary”, the words “or officer authorised by the Secretary” shall be inserted;

                  (b) after sub-section (2), the following sub-section shall be inserted, namely:

                  “(2A) The Secretary or officer authorised by him shall, issue an acknowledgement to the applicant, on receipt of application along with the supporting documents in the form, as may be prescribed, and shall verify the application and all supporting documents on the spot itself, and if any supporting document is not found attached along with the application, the Secretary or officer authorised by him shall immediately inform the applicant in writing the list of missing documents and allow the applicant to submit the missing documents as early as possible, but not later than five days from the date of receipt of the application.”;

                  (c) for sub-section (3), the following sub-section shall be substituted, namely:

                  “(3) the Secretary or the officer authorised by him shall, as soon as may be, after the receipt of the application enquire and report to the Village Panchayat as to whether the establishment of the factory, workshop or workplace or other installation of machinery or manufacturing plant for which permission is applied for is objectionable by reason of density of population in the neighbourhood and possibility to cause nuisance or pollution and the Village Panchayat, after having considered the application and the reports of the Secretary and of such other authorities as specified in sub-section (4) may, as expeditiously as possible, within thirty days, grant the permission either absolutely or subject to such conditions as it thinks fit to impose.”

                  (d) in sub-section (4),

                  (i) after the words “before granting”, the words “or refusing” shall be omitted;

                  (ii) for the words “Village Panchayat”, the word “Secretary” shall be substituted;

                  (iii) in clause (b), after the words “a report of the District Medical Officer”, the words “in case the applicant is a hospital, clinic, para-medical institution, clinical laboratories or other healthcare institution,” shall be inserted;

                  (e) after sub-section (5), the following sub-section shall be inserted, namely:

                  “(6) If any order, on an application for permission under this section is not communicated to the applicant within thirty days from the date of receipt of application by the Secretary, the application shall be deemed to have been allowed for the period required in the application subject to the Act, rules and bye laws and all conditions which would have been imposed and if any violation is noticed later, the Secretary shall have the power to cancel the licence after giving a show cause notice to the applicant stating the reason for such cancellation and after examining the submission if any, made within the time specified in the said notice and on such cancellation the Secretary may impose a penalty on the applicant for an amount not exceeding rupees five lakhs.”;

                  (3) in Section 233A,

                  (a) in sub-section (1), for the words "Village Panchayat" the word “Secretary” shall be substituted;

                  (b) for sub-section (2), the following sub-section shall be substituted, namely:

                  “(2) The Secretary may obtain expert opinion from the departments concerned, with regard to the determination of the nuisance or its abatement, at the cost of the owner or person in charge of the factory, workshop, workplace or machinery concerned and such report shall be furnished, as soon as possible, but not later than fifteen days of reporting of such nuisance.”

6. Section 232 of the Kerala Panchayat Raj Act, after its amendments by the Kerala Panchayat Raj (Amendment) Act, 2017 and the Kerala Investment Promotion and Facilitation (No.2) Act, 2018, reads thus;

                  “232. Purpose for which places may not be used without a licence.- (1) The Village Panchayat may notify that no place in the Panchayat area shall be used for any of the purposes specified in the rules made in this behalf, without a licence issued by the Secretary and except in accordance with the conditions specified in such licence:

                  Provided that no such notification shall take effect until the expiry of thirty days from the date of its publication.”

6.1. Section 233 of the Kerala Panchayat Raj Act, after its amendment by the Kerala Investment Promotion and Facilitation (No.2) Act, 2018, reads thus;

                  “233. Permission for the construction of factories and the installation of machinery.- (1) No person shall, without the permission of the Village Panchayat and except in accordance with the conditions specified in such permission,-

                  (a) construct or establish any factory, workshop or workplace in which it is proposed to employ steam power, water power or of other mechanical power or electrical power; or

                  (b) install in any premises any machinery or manufacturing plant driven by any power as aforesaid, not being machinery or manufacturing plant exempted by the provisions of this Act or the rules made thereunder.

                  (2) An application for permission under sub-section (1) shall be submitted to the Village Panchayat addressed to the Secretary or officer authorised by the Secretary in such form and with such details as prescribed.

                  (2A) The Secretary or officer authorised by him shall, issue an acknowledgement to the applicant, on receipt of application along with the supporting documents in the form, as may be prescribed, and shall verify the application and all supporting documents on the spot itself, and if any supporting document is not found attached along with the application, the Secretary or officer authorised by him shall, immediately inform the applicant in writing the list of missing documents and allow the applicant to submit the missing documents as early as possible, but not later than five days from the date of receipt of application.

                  (3) the Secretary or the officer authorised by him shall, as soon as may be, after the receipt of the application enquire and report to the Village Panchayat as to whether the establishment of the factory, workshop or workplace or other installation of machinery or manufacturing plant for which permission is applied for is objectionable by reason of density of population in the neighbourhood and possibility to cause nuisance or pollution and the Village Panchayat, after having considered the application and the reports of the Secretary and of such other authorities as specified in sub-section (4) may, as expeditiously as possible, within thirty days, grant the permission either absolutely or subject to such conditions as it thinks fit to impose.

                  (4) Before granting permission under sub-section (3), the Secretary shall obtain and consider.

                  (a) a report of the Inspector of Factories appointed under the Factories Act, 1948 (Central Act 63 of 1948) or of an officer of the Industries Department not below the rank of an Industries Extension Officer having jurisdiction over the area regarding the adequacy of ventilation, light, etc., and sufficiency of the height and size of the rooms and doors and the suitability of exits to be used in case of fire in the plan of factories, workshop, workplace or premises if they came within the purview of the Factories Act, 1948 (Central Act 63 of 1948) and such other matters as may be prescribed:

                  (b) a report of the District Medical Officer in case the applicant is a hospital, clinic, para-medical institution, clinical laboratories or other healthcare institution, regarding the possibility of nuisance or pollution if the connected load of the machinery proposed to be installed exceeds 25 HP or if the nature of the machinery and installation are such that it may cause nuisance or pollution; and

                  (c) a report of the Divisional Fire Officer or any other officer authorised by him regarding the adequacy of fire prevention and firefighting measures planned if the proposed industry involves the use of high-tension power or inflammable or explosive materials:

                  Provided that, no report under clause (b) shall be called for in respect of any industry if the applicant produces a declaration recommended by an officer of the Industries Department authorised in this behalf or by the Kerala State Pollution Control Board to the effect that such industry would not cause pollution.

                  (5) The grant of permission under this section,-

                  (a) Shall be subject to the conditions to be observed in respect of the replacement of machinery the levy of fees and to such restrictions and conditions as may be prescribed;

                  (b) Shall not be deemed as exempted from observing the provisions contained in section 235 (F) and 235 (H) or 235 (P) and 235 (Q).

                  (6) If any order, on an application for permission under this section is not communicated to the applicant within thirty days from the date of receipt of application by the Secretary, the application shall be deemed to have been allowed for the period required in the application subject to the Act, rules and bye laws and all conditions which would have been imposed and if any violation is noticed later, the Secretary shall have the power to cancel the licence after giving a show cause notice to the applicant stating the reason for such cancellation and after examining the submission if any, made within the time specified in the said notice and on such cancellation the Secretary may impose a penalty on the applicant for an amount not exceeding rupees five lakhs.”

                  6.2. Section 233A of the Kerala Panchayat Raj Act, after its amendment by the Kerala Investment Promotion and Facilitation (No.2) Act, 2018, reads thus;

                  “233-A. Abatement of nuisance caused by factory, workshop, etc.- (1) Where any factory, workshop, workplace or machinery causes, in the opinion of the Secretary, nuisance by reason of a particular kind of fuel being employed or by reason or the noise or vibration created, or effluent discharged or by reason of noxious odour, smoke or dust emitted, the Secretary may direct the person in charge of such factory, workshop, workplace or machinery for the abatement of such nuisance within a reasonable time to be specified for that purpose.

                  (2) The Secretary may obtain expert opinion from the departments concerned, with regard to the determination of the nuisance or its abatement, at the cost of the owner or person in charge of the factory, workshop, workplace or machinery concerned and such report shall be furnished, as soon as possible, but not later than fifteen days of reporting such nuisance.

                  (3) Where there has been wilful default in carrying out a direction given under sub-section (1) or where in the existing circumstances the abatement of nuisance is found impracticable, the Secretary may prohibit the working of the factory, workshop, workplace or machinery till such time the person concerned takes necessary steps to the satisfaction of the Secretary for the abatement of the nuisance.”

7. A comparative chart showing the amendments made to Sections 232, 233 and 233A of the Kerala Panchayat Raj Act, by the Kerala Investment Promotion and Facilitation (No.2) Act, 2018, is as follows;

                 

                

                 

                 

                 

                

                 

8. After the promulgation of the Kerala Investment Promotion and Facilitation Ordinance, 2017 (22 of 2017) by the Governor, amending various Acts, including the Kerala Panchayat Raj Act, 1994, to avoid delay in granting various licences, permission, approvals and clearances required under various enactments, the Government amended the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, 1996, by the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Amendment Rules, 2017. By Rule 2(2) of the Amendment Rules, 2017, the short title of the Rules was amended as the Kerala Panchayat Raj (Issue of Licence to Factories, Trades, Entrepreneurship Activities and other Services) Rules, 1996.

                  8.1. By Rule 2(3) of the Amendment Rules, 2017, Rule 3 of the 1996 Rules was substituted as follows;

                  “3. Description of Trades, Services and Factories.- The Government may, for the purpose of Section 232, specify in the First Schedule appended to these rules, the matters which, in the opinion of the Government, shall be classified as factories, trades, entrepreneurship activities and other services.”

                  8.2. By Rule 2(5) of the Amendment Rules, 2017, after Rule 5 of the 1996 Rules, Rule 5A was inserted as follows;

                  "5A. The Secretary or the officer authorised by him shall issue an acknowledgment to the applicant on the receipt of application along with the supporting documents in Form No.I appended to these rules. The Secretary or the Officer authorised by him shall immediately on receipt of the application, verify the application and all the supporting documents on the support and if any supporting document required is not attached with the application, the Secretary or the Officer authorised by him shall immediately inform the applicant regarding the details of the missing document, if any, and allow the applicant to submit the missing document at the earliest but not later than three days from the date of receipt or application."

                  8.3. By Rule 2(6) of the Amendment Rules, 2017, a proviso was added to Rule 6 of the 1996 Rules. Rule 6, after its amendment by Rule 2(6) of the Amendment Rules, 2017, reads as follows;

                  “6. In the case of application, decision has to be taken by the President.- The President may by order in writing and subject to such restrictions and regulations as he thinks fit, issue such licence or in public interest refuse to issue the same. In the case of refusal of licence the reasons for such refusal shall be mentioned in such order.

                  Provided if the application is submitted along with the requisite clearance from other Departments stipulated under these rules for grant of licence along with the fee specified in the Schedule II, the President shall issue the licence applied for within seven days from the date of receipt of the application along with the requisite clearances.”

                  8.4. By Rule 2(7) of the Amendment Rules, 2017, Rule 10 of the 1996 Rules was substituted as follows;

                  "10. Renewal of Licence.- A licence issued under these rules shall be renewed on payment of the fee specified under Schedule II along with a self-certificate from the applicant within thirty days before the end of one year."

                  8.5. By Rule 2(8) of the Amendment Rules, 2017, Rule 12 of the 1996 Rules was amended. A comparative chart showing the amendments made to Rule 12 of the 1996 Rules by Rule 2(8) of the Amendment Rules, 2017, is as follows;

                 

                 

                 

                 

                

                 

                 

                  8.6. By Rule 2(9) of the Amendment Rules, 2017, Rule 13 of the 1996 Rules was amended. By clause (a) of Rule 2(9), in sub-rule (1) of Rule 13, the words "Village Panchayat" were substituted with the words "Secretary"; by clause (b) of Rule 2(9), to sub-rule (1), a proviso was added; and by clause (c) of Rule 2(9), in sub-rule (2) of Rule 13, the words "Village Panchayat may" were substituted with the word "Secretary shall". Rule 13 of the 1996 Rules, as amended by the Amendment Rules, 2017, reads thus;

                  “13. The Village Panchayat may issue direction for abatement of nuisance caused by steam or other power.-

                  (1) Where the nuisance caused is due to noise or vibration created in any factory, workshop or workplace in which steam power, water power or other mechanical power or electricity is used, the Secretary may issue such directions as it thinks fit for the abatement of such nuisance within a reasonable time to be specified for the purpose.

                  Provided before issue of such directions the secretary shall obtain expert opinion from the department concerned regarding the extent of nuisance caused due to noise, vibration created in any factory, workshop or workplace in which steam power, water power or other mechanical power or electricity is used and the conditions to be imposed for abatement of such nuisance.

                  (2) Where there has been wilful default in carrying out such directions or where abatement is found impracticable, the Secretary may, after consultation with the department concerned,-

                  (a) prohibit the use of the particular kind of fuel; or

                  (b) restrict the noise or vibration by prohibiting the works in the factory, workshop or workplace between 9.30 in the night and 5.30 in the morning.”    (underline supplied)

                  8.7. We notice that the Kerala Panchayat Raj (Licensing of Enterprises) Rules, 2025 were notified by the State vide G.O.(P)No.46/2025/LSGD dated 14.08.2025, in supersession of the Kerala Panchayat Raj (Issue of Licence to Factories, Trades, Entrepreneurship, Activities and other Services) Rules, 1996.

9. In Manjapra Grama Panchayat v. State of Kerala [1996 (2) KLT 719], in the writ petition filed by Manjapra Grama Panchayat, the challenge was against an order dated 15.06.1995 of the Deputy Director of Panchayats, Ernakulam, and the order dated 26.03.1996 of the Government confirming the order of the Deputy Director of Panchayats, directing the Panchayat to issue licence to the 5th respondent to start a metal crusher unit. Before the learned Single Judge, the learned counsel for the 5th respondent contended, inter alia, that as per Rule 12 of the Kerala Panchayats (Licensing of Dangerous and Offensive Trades and Factories) Rules, 1963, the Panchayat is the original authority and if the original authority's order is reversed by the appellate authority, the original authority ceases to be a person aggrieved.

                  9.1. In Manjapra Grama Panchayat [1996 (2) KLT 719], the learned Single Judge noticed that the Parliament enacted the Constitution (Seventy-third Amendment) Act, 1992, to give effect to one of the Directive Principles of State Policy, namely, Article 40 of the Constitution of India, which directs the State to organise Village Panchayats as units of self-government. After the Constitution (Seventy-third Amendment) Act, 1992, the Central Government required the States to take steps to make law or amend existing law suitably. The State Government thought that, instead of amending the existing Kerala Panchayats Act, it would be better to enact a new Panchayats Act incorporating provisions in accordance with the Constitution (Seventy-third Amendment) Act, 1992. Accordingly, the State Legislature enacted the Kerala Panchayat Raj Act, 1994, to replace the present enactment relating to Panchayats and District Councils with a comprehensive enactment to secure greater participation of the people in planned development and in local governmental affairs, by constituting village, block and district Panchayats. It was also intended to endow such Panchayats with such powers and authority to enable them to function as institutions of self- government.

                  9.2. In Manjapra Grama Panchayat [1996 (2) KLT 719], the learned Single Judge noticed further that the new Act, i.e., the Kerala Panchayat Raj Act, 1994, was enacted with the object of entrusting such Panchayats with the preparation of plans and implementation of schemes for economic development and social justice, including implementation of schemes in relation to matters listed in the Eleventh Schedule to the Constitution of India. The Kerala Panchayat Raj Act came into force on 23.04.1994. As per Section 166 of the Act, the Village Panchayat has a duty to meet the requirements of the Village Panchayat area in respect of matters enumerated in the Third Schedule. Maintenance of public tanks, digging of tube wells for drinking water, and wells for irrigation and water supply and maintenance, reclaiming of unhealthy localities and upkeep of environmental hygiene and creating awareness for the same, licensing of dangerous and offensive trades, control of unauthorised building constructions and land utilisation, providing washing ghats in rivers and tanks and providing separate ghats for bathing cattle, maintenance of waterways and public canals are some of the mandatory functions to be discharged by the Village Panchayat. The Village Panchayats are also bound to attend to functions like improvement of agriculture and establishment of model agricultural farms, improvement of the cultivation and distribution of vegetables, fodder and medicinal plants, crop development programmes for optimum utilisation of land and increasing the production, management and proper use of water for irrigation, construction of field channels and field bothies with the co- operation of the farmers, licensing of small-scale industries and workshops, establishment and management of small-scale industrial estates, preservation and improvement of public health, etc. In other words, the Kerala Panchayat Raj Act has given the Panchayats considerable powers to enable them to function as institutions of self-government.

                  9.3. In Manjapra Grama Panchayat [1996 (2) KLT 719], on the facts of the case at hand, the learned Single Judge noticed that the application preferred by the 5th respondent was for the purpose of setting up a metal crusher unit and the same was objected to by the general public. Permission was sought for setting up the metal crusher unit at Karingalikadu Padam. It is evident from the application submitted by the 5th respondent in 1993 that the property was surrounded on the east by a water channel and paddy field, south by paddy field, west by paddy field and north by Angamali-Manjapra Road. In the application, the 5th respondent has pointed out that there was no dwelling house within 200 metres. However, in Ext. P4 application made for the purpose of setting up the metal crusher unit, the 5th respondent has clearly misdescribed the boundaries of the property, as evident from the application itself. The Panchayat considered the said application after taking into account various objections filed by the people of the locality, who are mostly agriculturists. Panchayat Committee found that the objections raised by the people of the locality are genuine. Committee passed a resolution No.17 dated 02.08.1994 rejecting the request of the 5th respondent. The existence of the bathing ghat, lift irrigation pump house, pond, etc., and the possibility of atmospheric and water pollution, etc., were among the reasons for rejecting the application. Panchayat also felt that, if the licence is granted, it will affect the nearby paddy fields. Under these circumstances, the Panchayat felt that the application could not be allowed.

                  9.4. In Manjapra Grama Panchayat [1996 (2) KLT 719], the learned Single Judge observed that if a no objection certificate is obtained from the Pollution Control Board and/or from the District Medical Officer of Health, it does not mean that the Panchayat should automatically give licence to an applicant. Even under the Kerala Panchayat (Licensing of Dangerous and Offensive Trades and Factories) Rules, 1963, while entertaining an application for establishment of factory, workplace, etc., the Panchayat needs only to consult and shall have due regard to the opinion of the District Medical Officer of Health or any authority authorised by him as per Rule 12 of the said Rules. That does not mean the Panchayat should grant a licence automatically as soon as a no objection certificate is obtained from the District Medical Officer of Health. The Panchayat itself has various duties and obligations under the Kerala Panchayat Raj Act. The question as to whether setting up a metal crusher unit would affect the maintenance of public tanks, washing ghats, tanks, or nearby paddy fields, etc., is a matter for the Panchayat to decide. In other words, over and above the powers vested in the Pollution Control Board under Pollution Control laws and the powers vested in the District Medical Officer of Health under the Travancore-Cochin Public Health Act, the Panchayat itself has statutory duties and obligations under the Kerala Panchayat Raj Act. The mere fact that the District Medical Officer of Health and the Pollution Control Board have issued no objection certificates does not mean the Panchayat should grant a licence to an applicant. In other words, the Panchayat itself could independently consider whether setting up a metal crusher unit within its area would affect the people of the locality. In other words, the Panchayat has such powers and duties to enable it to function as an institution of self-government.

                  9.5. In Manjapra Grama Panchayat [1996 (2) KLT 719], the learned Single Judge noticed the decision in Karunagappally Grama Panchayat v. State of Kerala [1996 (1) KLT 419], wherein it was held that the legal concept envisaged in Section 5 of the Kerala Panchayat Raj Act makes the position clear that the Panchayat is a body corporate. It can sue or be sued. In that position, the Panchayat cannot be denuded of the right to move under Article 226 of the Constitution of India when any of its legal rights is infringed by the authorities, including the Government. Therefore, if an order of the Deputy Director of Panchayats is adverse to the Panchayat, it is always open to it to challenge it before the Government or even before this Court.

10. In Action Council v. Benny Abraham [2001 (2) KLT 690], a Division Bench of this Court, in the context of Sections 232 and 233 of the Kerala Panchayat Raj Act, 1994 and Rules 6 and 12 of the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, 1996, noticed that Section 233 of the Act read with Rule 12 of the Rules deals with the initial stage in the matter of setting up of an industrial unit. There, the Act uses the expression ‘permission’ and the Rule also generally, except under Rule 12(3)(c) and (d), uses the expression ‘permission’. It may be seen from the scheme of Rule 12 that even at the time of granting permission, the rules provide for consideration of certain relevant factors. Generally, those relevant factors include no objection from the Pollution Control Board, Public Health Authority, Factories Inspector, Fire Officer and other concerned statutory authorities. Once permission is given, an entrepreneur is entitled to proceed with the installation of the machinery, and then under the relevant laws in the matter of control of pollution ‘consent’ has to be obtained. The question of issuing licence arises only thereafter.

                  10.1. In Benny Abraham [2001 (2) KLT 690], the Division Bench observed that a combined reading of Section 233 of the Act and Rule 12 of the Rules would indicate that an industry which is notified as likely to be offensive or dangerous to human life or health or property can function in a Panchayat but with licence issued by the Panchayat. Panchayat is also entitled to specify in the licence necessary conditions to be followed. Rule 6 of the Rules, as issued in 1996, empowers the President of the Panchayat to refuse licence in the interest of the public. When the Act provides for industrial use of a place in a Panchayat with licence and subject to conditions imposed in the licence with a view to protecting human life or health or property, is it open to the Panchayat or its President to arbitrarily refuse to grant permission/licence by merely stating that it would be against the interest of the public? The Division Bench held that the Panchayat or its President is certainly not clothed with unbridled power under the Act and the Rules. Once it is possible to protect the interest of the public, meaning thereby, protecting human life or health or property by specifying appropriate conditions in the licence, it will not be open to deny permission/licence to an industry, unless of course there is a valid industrial policy decision taken by the Panchayat regarding ban on certain types of industry, industrial zoning, etc.

                  10.2. In Benny Abraham [2001 (2) KLT 690], on the question of who should assess the likelihood of offence or danger to human life, health or property and suggest preventive measures, the Division Bench held that these are areas requiring expert opinion. The Kerala State Pollution Control Board, District Medical Officer and authorities in the concerned field, such as the Factories Inspector, Explosives Director, Geologist, Fire Officer, etc., are some such experts. Those experts and other statutory agencies also discharge their duties to clear a project only in the interest of the public. Protection of human life or health or property is certainly to be given prime consideration by those agencies. But once, on such consideration, clearance is given, then the Panchayat/President shall not, except for policy decisions as indicated above, deny permission/licence to an industry. After all, an industry in a Panchayat is also in the public interest. And, in any case, once permission has been granted to install machinery and all safeguards directed by the Panchayat have been provided, the Panchayat/President will not be justified in taking an unreasonable stand that it has decided in the public interest not to grant any licence.

                  10.3. In Benny Abraham [2001 (2) KLT 690], the Division Bench held that once the authorities competent to assess public interest in the respective fields of human life, health and property forward a clearance certificate suggesting appropriate preventive measures in the matter of setting up a notified industry, and other concerned agencies also express their positive opinion, the only area left for consideration as far as Panchayat/ President, unless bound by a valid policy decision, is to issue necessary permission/licence. The statutory indication under the Act and the Rules in the matter of permission/ licence is only that it shall not be offensive or dangerous to human life, health or property. Hence, if an entrepreneur produces sufficient positive certification from the competent authorities, the Panchayat/ President is liable to act on it and issue the permission/licence unless bound by valid policy reasons. The judgment in Manjapra Grama Panchayat [1996 (2) KLT 719] was rendered on the basis of the Rules issued in 1963, where the Panchayat was required only to consult and have due regard to the opinion of the District Medical Officer and other authorities. That is not the situation in the Rules issued in 1996. The Division Bench clarified the decision in Manjapra Grama Panchayat [1996 (2) KLT 719] as stated above. Paragraphs 7 to 9 of the decision read thus;

                  “7. In Manjapra Grama Panchayat v. State of Kerala [1996 (2) KLT 719], a learned single Judge of this Court has taken the view that “if a no objection certificate is obtained from the Pollution Control Board/or from the District Medical Officer of Health, it does not mean that Panchayat should automatically give licence to an applicant…….”. “The mere fact that District Medical Officer of Health and Pollution Control Board have issued no objection certificates does not mean that Panchayat should give licence to an applicant. In other words, Panchayat itself could independently consider as to whether by setting up a metal crusher unit within its area, it would affect the people of the locality”. It may be seen that in the said decision the learned single Judge was considering only a position under Rule 12 of the rules, at the stage of application for permission to establish a workplace and install machinery thereon. Even then it has to be seen that the scope of enquiry by the District Medical Officer and Pollution Control Board and other statutory authorities is to see whether an industrial unit, if established, would be offensive or dangerous to human life, health or property. Once the competent experts give their clearance with regard to those aspects, the Panchayat has certainly to rely on those materials. Based on such opinion, it is open to the Panchayat to specify appropriate conditions in the licence. With great respect, we are of the view that the decision of the learned single Judge requires clarification.

                  8. True, as held by the learned Single Judge “Panchayat itself could independently consider as to whether by setting up a metal crusher unit within its areas, it would affect the people of the locality. In other words, Panchayat has got such powers and duties to enable it to function as institutions of self-government”. But it has to be seen that Sections 232 and 233(1) of the Act and the Rules vested in a Panchayat/President power coupled with duty. Under legal parlance, power means the capacity to affect the rights of others. So, in any authority vested with powers, there is a corresponding duty. As observed by the Apex Court in Commissioner of Police v. Gordhandas [AIR 1952 SC 17] (Para 10) “Public authorities cannot play fast and loose with the powers vested in them, and persons to whose detriment orders are made are entitled to know with exactness and precision what they are expected to do or forbear from doing and exactly what authority is making the order”. Under the Act, unless otherwise notified or decided, there is no prohibition in setting up an industry. A person of ordinary intelligence has a right to get his application for a new industry considered in accordance with law. The exercise of powers is not discretionary but imperative in such circumstances. That is what is held by the Apex Court in Commissioner of Police v. Gordhandas [AIR 1952 SC 17] “An enabling power of this kind conferred for public reasons and for the public benefit is, in our opinion, coupled with a duty to exercise it when the circumstances so demand. It is a duty which cannot be shirked or shelved nor be evaded…..” In other words, as public authorities, there is no absolute discretion vested in the Panchayat/President in the matter of issuing permission/licence to an industry. Sir William Wade & Christopher Forsyth in the Administrative Law, 7th Edition, at page 392 dealing with discretion stated thus:

                  “A man making his will may, subject to any rights of his dependants, dispose of his property just as he may wish. He may act out of malice or a spirit of revenge, but in law this does not affect the exercise of his power. In the same way a private person has an absolute power to allow whom he likes to use his land, to release a debtor, or, where the law permits, to evict a tenant, regardless of his motives. This is unfettered discretion. But a public authority may do none of these things unless it acts reasonably and in good faith and upon lawful and relevant grounds of public interest.”

                  According to the very same author, “In a system based on the rule of law, unfettered Governmental discretion is a contradiction in terms”. We have no hesitation to hold that once the authorities competent to assess public interest in the respective fields of human life, health and property forward a clearance certificate suggesting appropriate preventive measures in the matter of setting up a notified industry, and other concerned agencies also express their positive opinion, the only area left for consideration as far as Panchayat/President, unless bound by a valid policy decision is required, is to issue necessary permission/ licence. The decision of the learned single Judge in Manjapra Grama Panchayat [1996 (2) KLT 719] is clarified as above.

                  9. It needs no elucidation that unless the power of the Panchayat/President is thus understood, it would amount to an infraction of the fundamental freedom guaranteed under Article 19(1)(g) of the Constitution of India. The provisions of the Act under Sections 232 and 233 read with the Rules are not too vague to be understood by an ordinary man. Thus, having understood from the statute what is prohibited and what is permitted and having taken steps in furtherance of what is permitted and what is not prohibited, the authorities cannot arbitrarily deny permission/licence; that would amount to violation of Article 19(1)(g), which is subject only to reasonable restriction. That reasonable restriction, which in fact is a limitation on the enjoyment of a right, shall not be arbitrary or excessive and beyond what is required in the interest of the public. The statutory indication under the Act and Rules in the matter of permission/licence is only that it shall not be offensive or dangerous to human life, health or property. Hence, if an entrepreneur produces sufficient positive certification from the competent authorities, then the Panchayat/President is liable to act on the same and issue the permission/licence unless bound by valid policy reasons. As a matter of fact, the judgment in Manjapra Grama Panchayat [1996 (2) KLT 719] is rendered on the basis of the Rules issued in 1963, where the Panchayat was required only to consult and have due regard to the opinion of the District Medical Officer and other authorities. That is not the situation in the Rules issued in 1996. Viewed from that angle also, the decision in Manjapra Grama Panchayat [1996 (2) KLT 719], with great respect, requires clarification as stated above.”

11. The decision of the Division Bench in Benny Abraham [2001 (2) KLT 690] was reversed by a Three-Judge Bench of the Apex Court in Action Council v. Benny Abraham [(2002) 9 SCC 493]. The question considered by the Three-Judge Bench in Civil Appeal No.3160 of 2002 was whether the High Court, in exercise of its power under Article 226 of the Constitution of India, was justified in interfering with the order of the Panchayat concerned refusing to grant licence for installing a metal crusher machine within the Panchayat in exercise of powers under Rules 6 and 12 of the Kerala Panchayat (Licensing of Dangerous and Offensive Trade and Factories) Rules, 1996. The Three-Judge Bench observed that it is no doubt true that the entrepreneur had obtained the necessary ‘no-objection certificate’ from the environmental authorities. But the Panchayat, on consideration of the matter, was of the opinion that the decision not to grant permission to install the metal crusher machine would be in the interest of the public and it ascribed four reasons as to why the Panchayat came to the conclusion that it would not be in the public interest to grant such licence. All those reasons are germane to the issue and cannot be held to be arbitrary or fictitious. Having regard to the parameters prescribed by the Apex Court in exercising power under Article 226 of the Constitution of India against an order of a statutory authority, the Three-Judge Bench concluded that the Division Bench of the High Court seriously erred in law in issuing the impugned direction. The Three-Judge Bench, in the facts and circumstances of the case at hand, viewed that the Panchayat was fully justified in refusing to grant licence to the entrepreneur. In the aforesaid premises, the judgment of the Division Bench in Benny Abraham [2001 (2) KLT 690] was set aside, and the civil appeal was accordingly allowed.

12. In Bosco Antony v. State of Kerala [2007 (4) KLT 526], a Division Bench of this Court was dealing with a writ petition seeking police protection to run a toddy shop. The petitioner was granted Ext.P1 licence to run Toddy Shop No.43 at Garudanmoola in Cherpu Excise Range, for the abkari year 2007– 08. The licence was granted in respect of a building bearing Door No.X/181 of Thannyam Grama Panchayat. When the petitioner tried to start business in the shop, respondents 9 and 10 and their supporters started causing obstruction. Therefore, the petitioner submitted Ext.P2 representation before the Police, seeking protection for running the shop. Since the police did not extend any help, the petitioner filed the writ petition.

                  12.1. In Bosco Antony [2007 (4) KLT 526], before the Division Bench, the learned counsel for the petitioner pointed out that earlier there were express provisions under sub-sections (2), (3) and (4) of Section 232 of the Kerala Panchayat Raj Act, 1994, concerning the grant of permission for running toddy shops within the jurisdiction of a Grama Panchayat. Since those provisions were later deleted with effect from 24.03.1999, the learned counsel pointed out that the above Rules, insofar as they concern toddy shops, have no efficacy. The Division Bench noticed that, as long as Ext.P1 licence remains in force, the petitioner may be entitled to  run  the  shop,  subject  to  satisfying  other  statutory requirements, if any. To run any business included in Schedule I of the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, 1996, a licence under the said Rules is required. “Abkari Shops - Storing and Selling” is item No.139 in Schedule I of the said Rules. So, the petitioner is bound to obtain a licence under the said Rules to run the shop. Even in the absence of sub-sections (2), (3) and (4) of Section 232 of the Kerala Panchayat Raj Act, the remaining provisions contained in sub-section (1) of Section 232 support the inclusion of abkari shops under the Schedule to the Rules. Therefore, the Division Bench held that, even though the petitioner has got Ext.P1 licence, he can run the toddy shop in the Panchayat area only after getting a licence under the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, 1996, from the said Panchayat.

13. In Gem Granites v. Deputy Superintendent of Police and others [2008 (1) KLT 937], a Division Bench of this Court was dealing with a writ petition filed under Article 226 of the Constitution of India, praying that the police may be directed to grant protection to the quarrying operations in the petitioner's property, for which it has obtained a quarrying lease from the Director of Mining and Geology, as evident from Exts.P1 and P2, nder the provisions of the Kerala Minor Mineral Concession Rules, 1967. The respondents resisted the writ petition, contending that the petitioner does not have the statutory licences/clearances under other relevant statutes and, therefore, was not entitled to do any quarrying. But, according to the petitioner, once it has got the lease under the Kerala Minor Mineral Concession Rules, nothing more is required to run the quarry.

                  13.1. In Gem Granites [2008 (1) KLT 937], before the Division Bench, the point raised for consideration was whether the petitioner, who has got the necessary permission under the Kerala Minor Mineral Concession Rules to extract granite, which is a minor mineral, is entitled to run the quarry without obtaining the necessary licence from the Grama Panchayat under the provisions of the Kerala Panchayat Raj Act, 1994, and the Rules framed thereunder. Before the Division Bench, the learned Senior Counsel for the petitioner submitted that once the petitioner has got a licence under the Kerala Minor Mineral Concession Rules, which are framed under the Mines and Minerals (Regulation and Development) Act, 1957, no other licence is required from the local Grama Panchayat for conducting the quarrying operations. The Division Bench found this contention manifestly untenable for the following reasons. The Mines and Minerals (Regulation and Development) Act is framed by the Parliament to provide for the development and regulation of mines and minerals, as evident from its preamble. The provisions of the said Act deal with the general restrictions on undertaking prospecting and mining operations. The Act also provides for obtaining a prospecting licence or a mining lease in respect of lands that vest in the Government. Provisions are also made concerning development of minerals. The power to frame Rules concerning minor minerals is conferred on the State Government under Section 15 of the Act. Section 14 of the Act says that Sections 5 to 13 will not apply to minor minerals. The Mines and Minerals (Regulation and Development) Act is concerned only with the development of mines and minerals. The Kerala Panchayat Raj Act is framed to secure a greater measure of participation of the people in planned development and local governmental affairs by constituting Village, Block and District Panchayats. Section 232 of the said Act deals with the purposes for which places may not be used without a licence. As per sub-section (1) of Section 233, no person shall, without the permission of the Village Panchayat and except in accordance with the conditions specified in such permission, construct or establish any factory, workshop or workplace. The Rules framed under Section 232 are the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, 1996. The First Schedule to the said Rules contains the matters in relation to which a licence is required. Item 100 of Schedule 1 to the said Rules is “Granite, kadappa stone, mosaic, marble - cutting, storing, polishing, preparing, sculpturing or selling.” So, granite cutting is one of the purposes for which a licence is required under the above Rules.

                  13.2. In Gem Granites [2008 (1) KLT 937], on the facts of the case at hand, the Division Bench noticed that it is an admitted position that the petitioner is cutting granite blocks. The petitioner is using heavy machinery for the same. The petitioner is also using electrical energy generated by heavy generators. Admittedly, the petitioner has not obtained permission from the Panchayat to start the above workplace using mechanical and electrical energy, under sub-section (1) of Section 233 of the Kerala Panchayat Raj Act. Under sub-section (1) of Section 233 read with Section 232, the petitioner is bound to obtain a licence under the 1996 Rules. Admittedly, the petitioner has not obtained the same. But the above lapses on the part of the petitioner are sought to be justified by the learned Senior Counsel saying that since the petitioner has got a lease for mining under the Kerala Minor Mineral Concession Rules, it need not take any licence/permission from the local Grama Panchayat under the Kerala Panchayat Raj Act or the Rules framed thereunder. The Division Bench found that the provisions of the Kerala Panchayat Raj Act and the Rules framed thereunder, and those of the Mines and Minerals (Regulation and Development) Act and the Rules framed thereunder, operate in different fields and they occupy different areas. One, inter alia, concerns the well-being of the people of the Grama Panchayat by regulating dangerous and offensive trades. If a dangerous or offensive trade takes place at a mine or a quarry, a permit or licence is required, notwithstanding the lease granted under the Mines and Minerals (Regulation and Development) Act and the Rules framed thereunder. So, a licence/permission under one Act is not a substitute for a licence/permission under the other Act. Therefore, the Division Bench rejected the petitioner's contention in this regard as untenable. The Division Bench noticed that the above view is supported by the decision of the Division Bench in C.A. Industries v. Kummanode Poura Samithi [1995 (2) KLT The Division Bench concluded that for running its establishment, which is evidently a workplace where heavy machinery and electricity are used, the petitioner must get the required permission under Section 233 of the Panchayat Raj Act from the local Grama Panchayat. Therefore, without the necessary permission/licences, the petitioner is not entitled to operate its quarry or mine. So, in the absence of any legal right to run its establishment, the petitioner cannot seek any police protection for the same.

14. In Kadaplamattom Grama Panchayat v. Johny Roy [2013 (3) KLT 1053], a Division Bench of this Court was dealing with W.A.No.250 of 2012 filed by Kadaplamattom Grama Panchayat challenging the judgment of the learned Single Judge in W.P.(C)No.16033 of 2011, directing the Secretary of the Grama Panchayat to reconsider an application filed by the respondent therein for licence under the provisions of Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules 1996, and to pass orders on the application for licence to operate a quarry, without reference to the resolution passed by the Panchayat. The writ petitioner challenged Exts.P7 and P8. Ext.P7 is an intimation dated 03.06.2011 issued by the Secretary of the Grama Panchayat intimating the petitioner that his application for licence to conduct quarrying operation in Sy.No.294/4 in Ward No.IX was rejected on account of a decision taken by the Grama Panchayat in its meeting held on 30.04.2011. Ext.P8 is the minutes of the meeting of the Grama Panchayat referred to by the Secretary in Ext.P7. As per Ext.P8 resolution, the Panchayat Committee considered the complaints of the people in the locality in respect of the grant of licence for new quarries, and it was resolved not to grant licence to new quarries as it would affect the health of the people in the locality, the agricultural operations in the locality and also the water source in the neighbourhood. On the basis of the rival contentions, the learned Single Judge found that Exts.P1 to P6 would show that the petitioner has complied with all statutory requirements for the issue of licence by the Panchayat. The Secretary of the Panchayat is the statutory authority to issue licence. Exts.P7 and P8 would show that the Secretary has not applied his mind to the matter relating to the grant of licence. According to the learned Single Judge, the Secretary acted only on the decision of the Panchayat Committee, which is bad in law. The Panchayat filed R.P.No.10 of 2011 to modify the judgment of the learned Single Judge to the extent of permitting it to take action under Section 233 of the Kerala Panchayat Raj Act and the Rules framed thereunder. However, the said review petition was dismissed on the ground that the same contentions were urged before the court during the hearing of the writ petition and since the same was considered there was no necessity to consider the review petition.

                  14.1. In Kadaplamattom Grama Panchayat [2013 (3) KLT 1053], the Division Bench noticed that in W.A.No.250 of 2012, the Village Panchayat took a common decision not to grant any fresh license for conducting quarries because of objections from the local residents. It passed a resolution not to grant permission to any person in future to operate a quarry. Whether such a decision can be taken by the Panchayat is the question. No doubt, while considering an application under sub-section (3) of Section 233 of the Kerala Panchayat Raj Act, the Village Panchayat can consider whether granting such permission is objectionable on account of the density of population in the area or the possibility of causing nuisance or pollution. On the facts of the case at hand, the Division Bench found that, on complaints given by the people of the locality, a resolution was already passed by the Panchayat, and when the petitioner submitted an application for a quarry licence, he was informed by the Secretary that, in view of the resolution by the Panchayat Committee, the licence cannot be issued. Having gone through the various provisions, especially Sections 232 and 233 of the Act and the Rules framed thereunder, i.e., the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, 1996, the Division Bench took a view that when a composite application is submitted by a person under Sections 232 and 233, a decision to grant a licence or permission under Section 233 is to be taken by the Village Panchayat and the decision to issue license under Section 232 is to be taken by the Secretary. If the Panchayat decides not to grant permission under Section 233, the Secretary cannot separately consider the application under Section 232 read with the 1996 Rules. However, if an application is submitted only under Section 232 of the Act read with the 1996 Rules, and permission under Section 233 is not required, the Secretary is competent to consider the application and pass appropriate orders. That apart, in matters coming under Rule 12(3)(d) of the 1996 Rules, the power is conferred on the Secretary.

                  14.2. In Kadaplamattom Grama Panchayat [2013 (3) KLT 1053], the Division Bench found that the Village Panchayat can of course pass resolutions as permitted by the provisions of the Panchayat Raj Act, 1994, and the Rules framed thereunder, i.e., the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, 1996. Section 166(1) read with the Third Schedule relates to the functions of the Panchayat. The mandatory and other functions enumerated in the Third Schedule do not empower the Panchayat to take a decision as stated in Ext.P8. Where a person files an application to establish a factory, workplace, or other establishment, the Panchayat cannot summarily reject it by stating that it has taken a policy decision not to permit any such establishment in the Panchayat area. The Panchayat is not vested with such authority under Sections 166(1), 232, 233 of the Act or under the 1996 Rules. Apart from that, a decision like Ext.P8 will affect the constitutional right of an individual to carry on business or trade and put his property to the best advantage. The Panchayat will have to consider each application on its own merits and decide whether permission could be granted or not. However, if the application is filed for establishing a unit which does not come under Section 233 of the Act and if it comes only under Section 232 or under Rule 12(3)(d) of the 1996 Rules, the licence is to be issued only by the Secretary. In the light of the specific conferment of power on the Secretary to issue a licence in regard to establishments coming purely under Section 232 of the Act read with the 1996 Rules, even if it is stated in the rules that the President is empowered to issue such a licence, the rules have to be read as if the power is vested under Rules 6, 7, 8 and 11 on the Secretary of the Village Panchayat.

                  14.3. In Kadaplamattom Grama Panchayat [2013 (3) KLT 1053], before the Division Bench, the respondent-petitioner in W.P.(C)No.16033 of 2011, placed strong reliance on Ext.P1 resolution of the Panchayat to indicate that the Panchayat has already issued licence under Section 233 of the Act, and therefore a different opinion is not possible. It was contended that what remains is only a licence under Section 232 of the Act. The Division Bench found that Ext.P1 is only a decision taken by the Panchayat regarding certain complaints from people in the locality. It was resolved that there is no material to indicate any health hazard in operating a quarry and storing explosives. It was decided to place the matter before the District Collector for permission to store explosives and for quarrying on the condition that the respondent shall produce all relevant documents and licence from  the Panchayat. Therefore, obtaining licence from the Panchayat was a precondition in Ext.P1 decision. The said decision was not based on an enquiry as contemplated under Section 233 of the Act. Hence, the petitioner cannot place reliance on Ext.P1 decision and avoid an enquiry under Section 233 of the Act. Therefore, in W.A. No. 250 of 2012, the Division Bench modified the judgment of the learned Single Judge to the following extent:

                  “The respondent's application for licence under Section 233 of the Act and Rule 12 of the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, 1996 shall be considered and decided by the appellant/Village Panchayat without reference to Ext.P8 resolution, and if approved, the Secretary shall further consider whether licence under Section 232 read with the 1996 Rules could be issued in favour of the petitioner.”   15. In Ramapuram Grama Panchayat v. St. Basil Industries India (P) Ltd. and others [2016 (2) KLT 219], the contention raised on behalf of the appellant Grama Panchayat before the Division Bench was that, when the Panchayat has taken a conscious decision to reject the licence on various grounds, there was no reason for the learned Single Judge to have overlooked the said reasons merely for the reason that the petitioner had obtained  all  other  licence/permission  from  other  statutory authorities. It was argued that under the Kerala Panchayat Raj Act, it is for the local authority to consider whether an industrial unit can be permitted to operate in a particular Panchayat. When the Sub-committee of the Panchayat has, after conducting a site inspection, formed an opinion that permitting operation of the quarry will be disadvantageous to the people in the locality and it will affect the water source in the locality, the learned Single Judge should not have interfered with the said findings made by the Panchayat Committee. It was also argued that obtaining environmental clearance was not a substitute for the decision of the Panchayat in the matter. When the Panchayat is given the right to issue a permit for establishing a unit, another authority cannot take away that right by granting permission to set up the unit. The consideration made by the Panchayat for permitting establishment of the unit under Section 233 of the Act is entirely different from the manner in which other authorities consider issues. Pollution and density of population are matters the Panchayat must consider under Section 233 of the Act, and when it took a decision based on the materials available, there was no reason for the learned Single Judge to interfere. The learned counsel for the appellants also placed reliance on the decision of a Division Bench in Gem Granites [2008 (1) KLT 937] and the decision of the Apex Court in Benny Abraham [(2002) 9 SCC 493].

                  15.1. In Ramapuram Grama Panchayat [2016 (2) KLT 219], on the factual issues involved in the matter, the Division Bench noticed that the question is whether Exts.P6 and P7 warrant interference. In fact, the learned Single Judge observed only that all the reasons stated by the Panchayat pertained to environmental  issues,  which  are  already  covered  by  the environmental clearance granted in favour of the petitioner. Ext.P6 is a communication by which the Secretary had informed the petitioner regarding the rejection of the permit. Ext.P7 is the decision of the Grama Panchayat, in which the Panchayat has stated 20 reasons. Reasons 1 to 4 relate to the environmental clearance granted by the State Environment Impact Assessment Authority, which apparently was not the jurisdiction of the Panchayat. With reference to reasons 5 to 8, the Panchayat has relied on no expert opinion from any competent authority, yet it has formed such an opinion on its own. Apparently, the Panchayat Sub Committee was not constituted with expert bodies, nor did it seek assistance from any experts in the field. Reasons 9 to 17 and 20 also relate to environmental issues.

                  15.2. In Ramapuram Grama Panchayat [2016 (2) KLT 219], on the question as to whether reasons 5 to 8, 18 and 19 come within the area of consideration of the Panchayat in terms of Section 233 of the Act, the Division Bench noticed that in terms of sub-section (3) of Section 233, the Secretary has to enquire and report to the Village Panchayat as to whether the establishment of the factory, workshop or workplace or other installation of machinery or manufacturing plant is objectionable by reason of density of population in the neighbourhood and the possibility to cause nuisance or pollution. The report has to be submitted to the Village Panchayat. The Village Panchayat will have to consider the report of the Secretary and such other authorities as specified under sub-section (4) of Section 233, which indicates that the Village Panchayat shall obtain and consider a report of the Inspector of Factories or of an officer of the Industries Department if it comes within the purview of the Factories Act, 1948, a report of the District Medical Officer regarding the possibility of nuisance or pollution if the connected load of machinery proposed to be installed exceeds 25 HP or if the nature of machinery and installation are such that it may cause nuisance or pollution and a report of the Divisional Fire Officer regarding adequacy of fire prevention and firefighting machines planned, if the proposed industry involves use of high tension power or inflammable or explosive materials. However, no report from the District Medical Officer shall be called for if the applicant produces a declaration recommended by an officer of the Industries Department or Kerala State Pollution Control Board to the effect that such industry would not cause pollution. In terms of sub-section (5), the grant of permission will be subject to such restrictions and conditions as may be prescribed.

                  15.3. In Ramapuram Grama Panchayat [2016 (2) KLT 219], as far as sub-section (4) of Section 233 of the Kerala Panchayat Raj Act is concerned, the Division Bench noticed that the petitioner himself has produced various documents, which include consent to operate from the Kerala State Pollution Control Board. The consent is granted on certain conditions, as per the Air (Prevention and Control of Pollution) Act, 1981 as well. The consent was valid till 31.12.2015. The fact that the consent was issued under the Air (Prevention and Control of Pollution) Act, 1981, and the Environment Protection Act, 1986, indicates that the allegation of the unit causing pollution is baseless. First, unless the unit is established and functioning, the Panchayat cannot conclude that the unit causes pollution. If, after establishing the unit, any pollution is caused, it is always open for the Panchayat or the Kerala State Pollution Control Board, as the case may be, to take appropriate preventive measures or even revoke or suspend the licence for non-compliance with the statutory provisions. Further, if any nuisance is caused by noise, vibration, effluent discharge, smoke or dust, Section 233A provides for sufficient precautionary measures that could be taken by the Panchayat in that regard. The very fact that the Panchayat is called upon to consider the report of the Secretary as well as the authorities specified in sub-section (4) of Section 233 is to enable the Panchayat to arrive at a proper decision. When all the authorities had confirmed that the unit will not cause any environmental problems and that there would not be any pollution or nuisance to the people at large, provided it functions as per the conditions and restrictions imposed by the said authorities, the question is whether, in the absence of any other material availabl with the Panchayat, it could reject a valid application.

                  15.4. In Ramapuram Grama Panchayat [2016 (2) KLT 219], on the facts of the case at hand, the Division Bench noticed that there was no material to indicate that the rejection was made on account of the fact that it is objectionable by reason of density of population in the neighbourhood and the possibility to cause nuisance or pollution as provided under Section 233 of the Act. If there has to be a finding that it is objectionable on account of density of population in the neighbourhood, the District Medical Officer ought to have taken such a view. Apart from that, the Panchayat relies on no such material. A perusal of Ext.P6 refers to a report of the Panchayat Secretary and also an enquiry by the Committee directly. It is stated in Ext.P6 that if the permit is granted to the petitioner, it will cause harm to the life and property of the people in the locality and affect the environment as such. This is an instance where the petitioner had obtained an environmental clearance from the appropriate authority. Therefore, the same can never be a reason for denial of permit. An expert body like the State Level Environment Impact Assessment Authority (SEIAA) had, vide its proceedings dated 07.04.2013, granted clearance on certain conditions. If there is failure to comply with the said conditions, it is a separate issue that the Panchayat can take up at a later stage, after establishment of the unit, when it finds non-compliance with the conditions imposed therein. But the finding that SEIAA did not  (properly evaluate the grant of environmental clearance is not a good reason to reject a licence.

                  15.5. In Ramapuram Grama Panchayat [2016 (2) KLT 219], the Division Bench noticed that in Benny Abraham [(2002) 9 SCC 493], the Apex Court set aside the decision of the Division Bench in Benny Abraham [2001 (2) KLT 690]. The Apex Court felt that the four conditions ascribed by the Panchayat need not be interfered with. A perusal of para 11 of the Division Bench judgment would indicate that the main reason stated for rejecting the application for permit was that there was scarcity of water in the area and therefore it would not be possible to use sprinklers as directed by the Pollution Control Board during the summer season, and the agricultural properties might be adversely affected, and it would include the members belonging to the scheduled caste around the locality, and there was a road around 100 metres from the premises. It was therefore clear that Benny Abraham [2001 (2) KLT 690] was decided on its own facts, which is also clear from the decision of the Apex Court in Benny Abraham [(2002) 9 SCC 493], and cannot be treated as a binding precedent to form an opinion that in all cases such a view is to be taken. That apart, this is an instance where, in addition to the permission/licence obtained from various statutory authorities, environmental clearance has also been obtained wherein the competent authority, viz., SEIAA, has clearly imposed general conditions as to how the quarrying operation has to be carried out and the precautionary measures that are to be taken in the matter. In Gem Granites [2008 (1) KLT 937], the issue was whether permission from the Panchayat was required for the functioning of a quarrying unit having a licence under the Kerala Minor Mineral Concession Rules. Such a question does not arise for consideration in the present appeal.

                  15.6. In Ramapuram Grama Panchayat [2016 (2) KLT 219], the Division Bench noticed that what is to be considered is whether the licence can be rejected on the ground of reasons 5 to 8, 18 and 19. The mining lease has been granted with reference to a property which does not belong to either the Government or the Panchayat. It is private land, and the owner or holder of the land is entitled to utilise it as he wishes, subject to reasonable restrictions. As the property is private, the Panchayat cannot take a view that it has a right to prevent any activity on the property for public purposes. A permit/licence can be rejected only if there is a possibility of pollution and it affects the neighbourhood in any manner due to density of population. No such contingency is highlighted, nor has any material been relied upon to form such an opinion.

16. In Nagaroor Grama Panchayat v. Vijayakumar [2016 (3) KLT 82], a Division Bench of this Court was dealing with writ appeals filed by Nagaroor Grama Panchayat challenging the interim orders granted by the learned Single Judge. The writ petitioners were issued with licences under the Kerala Panchayat Raj Act, 1994, and the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, 1996. The learned Single Judge directed that those licences under the 1996 Rules be renewed without insisting on environmental clearance certificates. The said interim order was under challenge. The Division Bench noticed that the provisions of Sections 232, 233 and 234 of the Act, as well as the contents of the 1996 Rules, clearly show that the provisions of the Act and the 1996 Rules stand by themselves and those provisions are not dependent on any decision to be rendered on the basis of any other statute. The Division Bench held that the decision-making process by the Panchayat authorities under the 1996 Rules has to be made independently, which would not depend upon anything that is not statutorily insisted or permitted to be relied on in such proceedings. Therefore, applications for licence will have to be processed without insisting on environmental clearance. Whether a particular entrepreneur or a person who has obtained a licence under the 1996 Rules will ultimately carry out the activity is his lookout, because that may depend on different licences and permits to be granted by different authorities.

17. In Tomy Thomas v. State of Kerala [2019 (3) KLT 987], the legal issue referred in W.P.(C)No.15505 of 2016 for consideration by a Full Bench was whether the Grama Panchayats (Village Panchayats) are obliged to grant permission for construction or establishment of any factory, workshop, workplace or machinery, under Section 233 of the Kerala Panchayat Raj Act, 1994, read with Rule 12 of the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, 1996, in cases where all the authorities had issued permissions/ consents/no-objections certifying that such factory, workshop or workplace will not cause any environmental problems, if it is permitted to function as per the conditions and restrictions imposed by the said authorities, and when such units had also obtained environmental clearance from the State Environmental Impact Assessment Authority (SEIAA). In other words, the issue was whether the Panchayats have got primacy in their powers to take an independent decision to reject such applications seeking permission/licence in cases where permissions/consents/no-objections were issued by all the authorities concerned.

                  17.1. In Tomy Thomas [2019 (3) KLT 987], when W.P.(C)No.15505 of 2016 came up for consideration, the learned Single Judge noticed that a Division Bench of this Court in Ramapuram Grama Panchayat [2016 (2) KLT 219] had distinguished the decision of the Apex Court in Benny Abraham [(2002) 9 SCC 493] as well as the decision of a Division Bench of this Court in Gem Granites [2008 (1) KLT 937], in order to hold that the Panchayat has no authority to decline the licence. However, in Gem Granites [2008 (1) KLT 937] and Bosco Antony [2007 (4) KLT 526], the Division Bench had upheld the primacy of the power enjoyed by the Panchayats. The Division Bench took a similar view in Nagaroor Grama Panchayat v. Vijayakumar [2016 (3) KLT 82]. Therefore, the learned Single Judge observed that there exists a difference in the opinion with respect to the legal position settled in the rulings in Ramapuram Grama Panchayat [2016 (2) KLT 219] on one side and the rulings in Benny Abraham [(2002) 9 SCC 493], Gem Granites [2008 (1) KLT 937], Bosco Antony [2007 (4) KLT 526] and Vijayakumar [2016 (3) KLT 82] on the other side. On noticing the conflict, the matter was referred to a Division Bench for decision, as per the order of reference dated 20.09.2016. When W.P.(C)No.15505 of 2016 came up for consideration before a Division Bench, W.P.(C)No.31684 of 2016 was also tagged on. A common order of reference was passed by the Division Bench observing that there exists a conflict of opinion in the Division Bench rulings between Ramapuram Grama Panchayat [2016 (2) KLT 219] and the rulings in Vijayakumar [2016 (3) KLT 82], Gem Granites [2008 (1) KLT 937] and Bosco Antony [2007 (4) KLT 526]. Therefore, the Division Bench found that a Full Bench must settle the question of law. Hence, the above cases were referred to a Full Bench, as per the order of reference dated 03.07.2018.

                  17.2. In Tomy Thomas [2019 (3) KLT 987], after referring to the decisions in Manjapra Grama Panchayat [1996 (2) KLT 719] and Benny Abraham [2001 (2) KLT 690], the Full Bench noticed that in Benny Abraham [(2002) 9 SCC 493], the Apex Court held that the Panchayat had refused the permission/licence for installation of the metal crusher machine on ascribing four specific reasons as to why it came to the conclusion that it would not be in public interest to grant such licence. In the opinion of the Apex Court, all those reasons were germane to the issue, which could not be held to be arbitrary or fictitious. Therefore, the Apex Court found that the Division Bench in Benny Abraham [2001 (2) KLT 690] had seriously erred in issuing the impugned direction in exercise of the powers vested under Article 226 of the Constitution of India, against an order of a statutory authority. The Full Bench noticed that since the Apex Court had set aside the decision of the Division Bench in Benny Abraham [2001 (2) KLT 690], the clarifications made by the Division Bench to the decision in Manjapra Grama Panchayat [1996 (2) KLT 719] cannot be considered as a precedent having any binding force.

                  17.3. In Tomy Thomas [2019 (3) KLT 987], after referring to the decisions in Bosco Antony [2007 (4) KLT 526], Gem Granites [2008 (1) KLT 937] and Kadaplamattom Grama Panchayat [2013 (3) KLT 1053], the Full Bench noticed that the ruling in Bosco Antony [2007 (4) KLT 526] has no direct bearing on the issue involved in the case at hand. The decision in Gem Granites [2008 (1) KLT 937] is also not exactly on the issue under consideration in the cases at hand. The decisions in Benny Abraham [(2002) 9 SCC 493], Gem Granites [2008 (1) KLT 937] and various other decisions of this Court and the Apex Court were elaborately considered in a relatively recent decision, in Ramapuram Grama Panchayat [2016 (2) KLT 219], wherein it was held that the Division Bench ruling in Benny Abraham [2001 (2) KLT 690] cannot be treated as a binding precedent for forming an opinion because the Apex Court in Benny Abraham [(2002) 9 SCC 493] had set aside the judgment on the finding that the four conditions ascribed by the panchayat need not be interfered with. However, in Ramapuram Grama Panchayat [2016 (2) KLT 219], the decision of the Apex Court in Benny Abraham [(2002) 9 SCC 493] was distinguished, and the same was found to apply only on its own facts and context, which is also clear from the decision of the Apex Court.

                  17.4. In Tomy Thomas [2019 (3) KLT 987], the Full Bench noticed that in Ramapuram Grama Panchayat [2016 (2) KLT 219], the Division Bench found that, in the light of the expert view, the reasons stated by the Panchayat are not justified, nor can it be said that the Panchayat can obtain other expert opinion to deny such permission. On the facts of the case at hand, the Division Bench observed that the Panchayat was evaluating the clearance granted by the Department of Environment and Climate Change. The question is whether the Panchayat can take a different view from what was taken by the competent authorities. The Division Bench, after extracting and analysing the report submitted to the Panchayat by the members in the Sub Committee, held that the provisions of Sections 232, 233 and 234 of the Kerala Panchayat Raj Act, 1994, as well as the relevant rules in the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, 1996, would clearly show that the Act and the Rules stand by themselves and those provisions are not dependent upon any decision to be rendered based on any other statute. The view taken by the Single Judge that the Panchayat authorities are bound by provisions of the Act and the 1996 Rules was affirmed.

                  17.5. In Tomy Thomas [2019 (3) KLT 987], the Full Bench noticed that the question to be examined is as to whether there is any contrary view taken in Ramapuram Grama Panchayat [2016 (2) KLT 219]. In that case, the Division Bench, after extracting all 20 reasons pointed out by the Sub Committee of the Grama Panchayat, found that reasons 1 to 4 relate to environmental clearance granted by SEIAA, which was apparently not within the jurisdiction of the Panchayat. With reference to reasons 5 to 8 noticed therein, it was found that the Panchayat relied on no expert opinion from any competent authority and formed its own opinion. It was found that the Sub Committee had not consulted any expert body nor had it taken assistance of any experts in the field. With reference to reasons stated in 9 to 17 and 20, it was observed that they also relate to environmental issues. Therefore, it was observed that whether reasons 5 to 8, 18 and 19 fall within the area of consideration of the Panchayat, in terms of Section 233 of the Kerala Panchayat Raj Act, 1994, has to be considered. Referring to sub-section (3) of Section 233, it was observed that the Secretary has to enquire and report whether the establishment of the factory, workshop, or workplace is objectionable by reason of the density of population in the neighbourhood and the possibility of causing nuisance or pollution. The Village Panchayat has to consider the report of the Secretary and such other authorities under sub-section (4) of Section 233. The very fact that the Village Panchayat has to call for a report from the Secretary and the opinion of the experts specified in sub-section (4) of Section 233 is to enable the Village Panchayat to arrive at a proper decision. Therefore, the question was whether the Panchayat had any other material to reject a valid application.

                  The Division Bench found that, in the case at hand, no material was available to indicate that the rejection was on account of the density of population in the neighbourhood and the possibility of causing nuisance or pollution, as envisaged under Section 233 of the Act. The specific conclusion in Ramapuram Grama Panchayat [2016 (2) KLT 219] is that the Panchayat cannot take a view that it has a right to prevent any activity in the property for public purposes. It was found that permission/licence can be rejected only if there is a possibility of pollution and if it affects the neighbourhood in any manner due to density of population. The said observation can only be considered as one upholding sub-section (3) of Section 233. Clause (b) of sub-section (3) of Section 233 provides for specific power of the Panchayat to refuse the permission for reasons to be recorded. The finding was that the reason for rejection should be the reasons contained in sub-section (3), that it is objectionable by reason of the density of population in the neighbourhood and the possibility of causing nuisance or pollution. The Full Bench viewed that, in short, the decision in Ramapuram Grama Panchayat [2016 (2) KLT 219] had only fortified the dictum that, for a refusal of the permission/ licence, the Panchayat should be convinced that the unit in question is objectionable by reason of the density of population in the neighbourhood and possibility of causing nuisance or pollution and that such decision could be formed only on the basis of report of the Secretary, which should contain the opinion of experts also. The premise on which the permission can be refused is reiterated in the provisions of clause (b) of sub-rule (3) of Rule 12 of the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, 1996, which say that if the Panchayat is of the opinion that such construction is objectionable by reason of the high density of population in the neighbourhood or that it is likely to cause nuisance, it can refuse the permission. Therefore, it is evident that the decision in Ramapuram Grama Panchayat [2016 (2) KLT 219] has not in any manner negatived the power vested in the Grama Panchayat to refuse the licence on the basis of the reason that it is objectionable due to the high density of population in the neighbourhood and that it is likely to cause pollution or nuisance. The Court clarified only that such a decision ought to be supported by proper materials collected by the Secretary in his report, which should also be based on expert opinion. Therefore, the Full Bench concluded that the decision in Ramapuram Grama Panchayat [2016 (2) KLT 219] did not fully take away the principle of primacy of powers of the Panchayat with respect to taking a decision either to grant or to refuse the licence. Nor can it be found that the dictum contained in Ramapuram Grama Panchayat [2016 (2) KLT 219] will in any manner be held as  a  proposition  that  the  Panchayat  is  bound  to  grant permission/licence, whenever the expert authorities have issued clearance, subject to any conditions incorporated in the consent/permission/no-objection certificate. Under the above- mentioned circumstances, the Full Bench opined that the reference needs to be answered only to the extent of clarifying that the power vested in the Grama Panchayat to grant or refuse an application for installation of a factory, workplace or machinery is  not  absolutely  or  fully  dependent  upon  the  clearances /permissions/no objections/licences issued by other authorities or experts. But the Panchayats will be well within their powers to refuse permission if they are convinced that establishing such a factory, workshop, workplace, or machinery is objectionable because of the density of population in the neighbourhood and the possibility of causing nuisance or pollution. But the exercise of such power should have a definite basis and support of the materials collected by the Panchayat through report of the Secretary, which should be based on the opinion of experts or expert bodies and which should not be contrary to any of the expert opinions already procured by the Panchayat on the basis of the mandatory requirement contained in the Kerala Panchayat Raj Act and in the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules.

18. In Tomy Thomas [2019 (3) KLT 987], before the Full Bench, it was pointed out by the learned Senior Counsel for the petitioner that the relevant provisions in the Kerala Panchayat Raj Act and in the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules had undergone drastic changes. Vital changes occurred in the entire scenario with respect to the powers vested in the Panchayats and their Secretaries to refuse permission for construction or establishment of factories, workshops, or workplaces, and for installation of machinery. The Kerala Investment Promotion and Facilitation (No.2) Act, 2018 (Act 14 of 2018), which was notified by the Government in the Official Gazette on 07.04.2018, was enacted for giving effect to certain proposals of the Government of Kerala to avoid delay in granting various licences, permissions, approvals, clearances required under various enactments and to provide for other matters connected therewith or incidental thereto. Following the amendment of Sections 232 and 233 of the Kerala Panchayat Raj Act, the Government of Kerala amended the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, 1996, through a notification, SRO 674/17 (G.O.(P)No.80/2017/LSGD) dated 31.10.2017. The title of the Rules itself was amended as ‘the Kerala Panchayat Raj (Issue of Licence to Factories, Trades, Entrepreneurship, Activities and other Services) Rules’. To better appreciate the amendments brought into effect with respect to Section 233 of the Act and Rule 12 of the 1996 Rules, the Full Bench attached a comparative chart of those provisions at paragraph 25 of the decision.

                  18.1. In Tomy Thomas [2019 (3) KLT 987], the Full Bench noticed from the comparative chart given at paragraph 25 that sub-section (3) of Section 233 of the Act has undergone drastic changes. Under the unamended provisions, when an application for permission is received by the Secretary, he was obliged to enquire and submit a report to the Village Panchayat as to whether the establishment of the factory, workshop, workplace or other installation of machinery or manufacturing plant, for which the permission is applied for, is objectionable by reason of density of population in the neighbourhood and possibility to cause nuisance or pollution. The Village Panchayat, after considering the application, the report of the Secretary, and the reports of such other authorities as specified in sub-section (4), was bound to take a decision as expeditiously as possible, and in any case within sixty days. Sub-clause (a) of sub-section (3) provided that the Village Panchayat can grant the permission either absolutely or subject to such conditions as it thinks fit to impose. Sub-clause (b) of Sub-section (3) enabled the Village Panchayat to refuse the permission for the reasons to be recorded. However, under the amended provisions of sub-section (3) of Section 233 of the Act, the Secretary or the officer authorised by him should conduct an enquiry and submit a report to the Village Panchayat as to whether the establishment of the factory, workshop, workplace or other installation of machinery or manufacturing plant, for which the permission is applied for, is objectionable by reason of density of population in the neighbourhood and possibility to cause nuisance or pollution. The Village Panchayat, on consideration of the application and the report of the Secretary and of such other authorities as specified in sub-section (4), may, as expeditiously as possible, at any rate within thirty days, grant the permission either absolutely or subject to such conditions as it thinks fit to impose. Sub-clauses (a) and (b) of sub-section (3) contained in the unamended provisions were omitted through the amendment. Sub-clause (b) of sub-section (3), which enabled the Village Panchayat to refuse permission for reasons to be recorded, was omitted from the statute book, which gives a clear indication that the power of the Village Panchayat to refuse permission has been taken away by the legislature.

                  18.2. In Tomy Thomas [2019 (3) KLT 987], the Full Bench noticed that consequent to the amendments to Section 233 of the Kerala Panchayat Raj Act, the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules were also amended. As evident from the comparative chart at paragraph 25, Rule 12 underwent drastic changes. Under the unamended provision of sub-rule (3) of Rule 12, the Village Panchayats were obliged to consider the application for permission within 45 days in case of obtaining no objection certificates from other establishments and within 30 days in other cases either to grant permission applied for, absolutely or subject to conditions or to refuse permission if it is of the opinion that such construction or establishment is objectionable by reason of high density of population in the neighbourhood or that it is likely to cause nuisance. The power vested in the Village Panchayat to refuse permission as contained under sub-clause (b) of sub-rule (3) of Rule 12 was amended drastically. Under the amended sub-clause (b) it is provided that, if the Village Panchayat is of the opinion that the construction or establishment is objectionable by reason of high density of population in the neighbourhood and is likely to cause nuisance, the Secretary shall as soon as may be after receipt of the application obtain an expert opinion of the department concerned with regard to determination of nuisance or its abatement, at the cost of the owner or person in-charge of the factory, workshop, workplace or machinery concerned and such report shall be furnished to the Village Panchayat as soon as possible not later than 30 days of reporting such nuisance. Further, it is provided that, on furnishing such report of the concerned department, the Village Panchayat shall issue permission subject to such conditions as may be required for abatement of the nuisance, if any, as recommended in the expert opinion of the concerned department. From the amendment incorporated under sub-rule (3) of Rule 12, it is clear and evident that the power vested in the Village Panchayat to refuse the permission based on the opinion that the construction or establishment is objectionable by reason of high density of population in the neighbourhood or that it is likely to cause nuisance, has been taken away by the legislature. Through the amendment it is clarified that if the Village Panchayat is of the opinion that the construction or establishment is objectionable by reason of high density of population in the neighbourhood and is likely to cause nuisance, then the Secretary shall obtain an expert opinion of the department concerned and shall place such report for consideration of the Village Panchayat. There also, the Village Panchayat is only authorised to issue permission subject to such conditions as may be required for abatement of the nuisance, as recommended in the expert opinion of the concerned department. Therefore, it is clear and evident that  the  power  vested  in  the  Village  Panchayat  to  refuse permission has been taken away by virtue of the amendments.

                  18.3. In Tomy Thomas [2019 (3) KLT 987], the Full Bench noticed that the object of introducing the amendments by the Kerala Investment Promotion and Facilitation (No.2) (Act 14 of 2018), as specified therein, was intended to give effect to certain proposals of the Government of Kerala to avoid delay in granting various licences, permissions, approvals and clearances required under various enactments. Therefore, the intention of the legislature to bring such drastic amendment is clear and explicit. Hence it is to be observed that, from the date of enforcement of the amendments from 20.10.2017, it cannot be said that Village Panchayats have got primacy of power to take an independent decision to reject the applications for permission/licence under the provisions of the Kerala Panchayat Raj Act and the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, for construction or for establishment of any factory, workshop or workplace. On the other hand, the Grama Panchayats (Village Panchayats) are obliged to grant permissions in cases where the authorities mentioned under Section 233 of the Act have issued such permissions or consents or no-objection certificates. Even if the Panchayat is of the opinion that the construction or establishment of the factory, workshop or workplace is objectionable by reason of high density of population in the neighbourhood and is likely to cause nuisance, then also the Panchayat can only obtain expert opinion from the department concerned, and it is obliged to issue permission for such construction or establishment subject to such conditions as may be required for abatement of the nuisance, if any, as may be recommended in the expert opinion of the concerned department. Under the above-mentioned circumstances, the Full Bench answered  the  reference  by  upholding  the  view  taken  in Ramapuram Grama Panchayat [2016 (2) KLT 219] as the correct law. But the Full Bench made it clear that the legal position has been changed by virtue of the amendments as mentioned above and the Village Panchayats do not enjoy any primacy of their power to refuse the applications seeking permission for construction or establishment of any factory, workshop or workplace under Section 233 of the Kerala Panchayat Raj Act, on and from the date of enforcement of the amendments.

19. As stated in the Statement of Objects and Reasons of the Constitution (Seventy-third Amendment) Act, 1992, Article 40 of the Constitution of India, which enshrines one of the Directive Principles of State Policy, lays down that the State shall take steps to organise Village Panchayats and endow them with such powers and authority as may be necessary to enable them to function as units of self-government. In light of the experience of the last forty years and the shortcomings observed, it was considered that there is an imperative need to enshrine in the Constitution certain basic and essential features of Panchayat Raj Institutions to impart certainty, continuity and strength to them. Accordingly, it was proposed to add a new part relating to Panchayats in the Constitution to provide for, among other things, Gram Sabha in a village or group of villages; the constitution of Panchayats at the village and intermediate level; etc.

20. Clause (d) of Article 243 of the Constitution of India defines ‘Panchayat’ as an institution (by whatever name called) of self-government constituted under Article 243-B for the rural areas. As provided in clause (1) of Article 243-C, subject to the provisions of Part IX, the Legislature of a State may, by law, make provisions with respect to the composition of Panchayats. As per the proviso to clause (1), the ratio between the population of the territorial area of a Panchayat at any level and the number of seats in such Panchayat to be filled by election shall, so far as practicable, be the same throughout the State.

21. As provided in Article 243-G, 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.

22. As per the mandate of clause (1) of Article 243-G of the Constitution of India, the State Legislature enacted the Kerala Panchayat Raj Act, 1994 to replace the enactments relating to Panchayats and district councils by a comprehensive enactment, for securing a greater measure of participation of the people in planned development and in local governmental affairs, by constituting village, block and district Panchayats; and to endow such Panchayats with such powers and authority to enable them to function as institutions of self-government.

23. As per sub-section (1) of Section 5 of the Kerala Panchayat Raj Act, 1994, every Panchayat shall be a body corporate by the name of the Panchayat specified in the notification issued under Section 4, shall have perpetual succession and a common seal, and shall, subject to any restriction or qualification imposed by or under this Act or any other law, be vested with the capacity of suing or being sued in its corporate name, of acquiring, holding and transferring property, movable or immovable, of entering into contracts, and of doing all things necessary, proper or expedient for the purposes for which it is constituted. As per sub-section (2) of Section 5, a District Panchayat, a Block Panchayat and a Village Panchayat shall exercise such powers, perform such functions and duties and shall have such responsibilities and authorities as are provided by or under this Act or any other law for the time being in force.

24. Though the legal issue referred in W.P.(C)No.15505 of 2016 for consideration by a Full Bench was whether the Grama Panchayats (Village Panchayats) are obliged to grant permission for construction or establishment of any factory, workshop, workplace or machinery, under Section 233 of the Kerala Panchayat Raj Act, 1994, read with Rule 12 of the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, 1996, in cases where all the authorities had issued permissions/consents/no-objections certifying that such factory, workshop or workplace will not cause any environmental problems, if it is permitted to function as per the conditions and restrictions imposed by the said authorities, a reading of the decision of the Full Bench in Tomy Thomas [2019 (3) KLT 987] would show that, in the said decision, the Full Bench has not even referred to Article 40 of the Constitution of India, which enshrines one of the Directive Principles of State Policy, lays down that the State shall take steps to organise Village Panchayats and endow them with such powers and authority as may be necessary to enable them to function as units of self-government; or the provisions in Part IX of the Constitution of India, inserted by the Constitution (Seventy-third Amendment) Act, 1992, including Article 243-G, which provides that, 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, which may contain provisions for the devolution of powers and responsibilities upon Panchayats at the appropriate level, with respect to the matters as may be entrusted to them including those in relation to the matters listed in the Eleventh Schedule. In paragraph 6 of the decision, the Full Bench has referred to the observations made by the learned Single Judge in Manjapra Grama Panchayat [1996 (2) KLT 719] that the legislative  intent  of  the  Seventy-third  Amendment  of  the Constitution of India and the enactment of the Kerala Panchayat Raj Act, 1994, was to endow the Panchayats with such powers and authority to enable them to function as institutions of self-government, and that the Panchayats have got such powers and duties to enable them to function as institutions of self-government.

25. As rightly noticed by the learned Single Judge in Manjapra Grama Panchayat [1996 (2) KLT 719], the Parliament enacted the Constitution (Seventy-third Amendment) Act, 1992, to give effect to one of the Directive Principles of State Policy, namely, Article 40 of the Constitution of India, which directs the State to organise Village Panchayats as units of self-government. The State Legislature enacted the Kerala Panchayat Raj Act, 1994, to replace the existing enactment relating to Panchayats and District Councils, which has given the Panchayats considerable powers to enable them to function as institutions of self-government.

26. After referring to the provisions of Rule 12 of the Kerala Panchayat (Licensing of Dangerous and Offensive Trades and Factories) Rules, 1963, in Manjapra Grama Panchayat [1996 (2) KLT 719], the learned Single Judge rightly observed that, over and above the powers vested in the Pollution Control Board and the District Medical Officer of Health under the relevant statutes, the Panchayat itself has statutory duties and obligations under the Kerala Panchayat Raj Act. The Panchayat has such powers and duties to enable it to function as an institution of self- government, which could independently consider whether setting up a metal crusher unit within its area would affect the people of the locality.

27. In the reference order dated 20.12.2021 in W.A.No. 1503 of 2019, the Division Bench noticed that, as held by the learned Single Judge in Manjapra Grama Panchayat [1996 (2) KLT 719], neither the Pollution Control Board nor the District Medical Officer of Health can usurp the statutory duties and obligations of the Panchayat. The question whether a metal crusher unit would affect the locality detrimentally has many facets, all of which could not be looked into by the Pollution Control Board or the District Medical Officer of Health. The Panchayat could independently consider whether setting up a metal crusher unit would detrimentally affect the lives of the people residing in the locality, which is the primary concern of the local self-government institutions at the grassroots level.

28. In Benny Abraham [2001 (2) KLT 690], a Division Bench of this Court clarified that the judgment in Manjapra Grama Panchayat [1996 (2) KLT 719] was rendered on the basis of the Kerala Panchayat (Licensing of Dangerous and Offensive Trades and Factories) Rules, 1963, where the Panchayat was required only to consult and have due regard to the opinion of the District Medical Officer and other authorities. That is not the situation in the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, 1996. The Division Bench held that, once it is possible to protect the interest of the public, meaning thereby, protecting human life or health or property by specifying appropriate conditions in the licence, it will not be open to the Panchayat or its President to deny permission/licence to an industry, unless of course there is a valid industrial policy decision taken by the Panchayat regarding ban on certain types of industry, industrial zoning, etc. If an entrepreneur obtains sufficient positive certification from the competent authorities, the Panchayat/ President is liable to act on it and issue the permission/licence unless bound by valid policy reasons.

29. In Benny Abraham [(2002) 9 SCC 493], a Three-Judge Bench of the Apex Court reversed the decision of the Division Bench in Benny Abraham [2001 (2) KLT 690]. The Three-Judge Bench observed that it is no doubt true that the entrepreneur had obtained the necessary ‘no-objection certificate’ from the environmental authorities. But the Panchayat, on consideration of the matter, was of the opinion that the decision not to grant permission to install the metal crusher machine would be in the interest of the public and it ascribed four reasons as to why the Panchayat came to the conclusion that it would not be in the public interest to grant such licence. All those reasons are germane to the issue and cannot be held to be arbitrary or fictitious. Therefore, the Panchayat was fully justified in refusing to grant licence to the entrepreneur. Therefore, the Division Bench in Benny Abraham [2001 (2) KLT 690] seriously erred in law in issuing the impugned direction.

30. In Bosco Antony [2007 (4) KLT 526], a Division Bench of this Court held that even in the absence of sub-sections (2), (3) and (4) of Section 232 of the Kerala Panchayat Raj Act, the remaining provisions contained in sub-section (1) of Section 232 support the inclusion of abkari shops under the Schedule to the Rules. Therefore, even though the petitioner has got Ext.P1 licence to run a toddy shop for the abkari year 2007-08, he can run the toddy shop in the Panchayat area only after getting a licence under the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, 1996, from Thannyam Grama Panchayat.

31. In Gem Granites [2008 (1) KLT 937], the Division Bench found that the provisions of the Kerala Panchayat Raj Act and the Rules framed thereunder, i.e., the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, 1996, and those of the Mines and Minerals (Development and Regulation) Act and the Rules framed thereunder, operate in different fields and they occupy different areas. One, inter alia, concerns the well-being of the people of the Grama Panchayat by regulating dangerous and offensive trades. If a dangerous or offensive trade takes place at a mine or a quarry, a permit or licence is required, notwithstanding the lease granted under the provisions of the Mines and Minerals (Regulation and Development) Act and the Rules framed thereunder. So, a licence/permission under one Act is not a substitute for a licence/permission under the other Act. The Division Bench noticed that the above view is supported by the decision of the Division Bench in C.A. Industries [1995 (2) KLT 720].

32. In Kadaplamattom Grama Panchayat [2013 (3) KLT 1053], the question before the Division Bench was whether the Village Panchayat can take a common decision not to grant any fresh licence for conducting quarries because of objections from the local residents. The Division Bench found that, while considering an application under sub-section (3) of Section 233 of the Kerala Panchayat Raj Act, the Village Panchayat can consider whether granting such permission is objectionable on account of the density of population in the area or the possibility of causing nuisance or pollution. Having gone through the various provisions, especially Sections 232 and 233 of the Act and the Rules framed thereunder, i.e., the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, 1996, the Division Bench took a view that when a composite application is submitted by a person under Sections 232 and 233, a decision to grant a licence or permission under Section 233 is to be taken by the Village Panchayat and the decision to issue licence under Section 232 is to be taken by the Secretary. If the Panchayat decides not to grant permission under Section 233, the Secretary cannot separately consider the application under Section 232 read with the 1996 Rules. However, if an application is submitted only under Section 232 of the Act read with the 1996 Rules, and permission under Section 233 is not required, the Secretary is competent to consider the application and pass appropriate orders. That apart, in matters coming under Rule 12(3)(d) of the 1996 Rules, the power is conferred on the Secretary.

33. In Kadaplamattom Grama Panchayat [2013 (3) KLT 1053], the Division Bench found that the Village Panchayat can of course pass resolutions as permitted by the provisions of the Panchayat Raj Act, 1994, and the Rules framed thereunder, i.e., the 1996 Rules. Sub-section (1) of Section 166 read with the Third Schedule relates to the functions of the Panchayat. The mandatory and other functions enumerated in the Third Schedule do not empower the Panchayat to take a decision as stated in Ext.P8. Where a person files an application to establish a factory, workplace,  or  other  establishment,  the  Panchayat  cannot summarily reject it by stating that it has taken a policy decision not to permit any such establishment in the Panchayat area. The Panchayat is not vested with such authority under Sections 166(1), 232 and 233 of the Act or under the 1996 Rules. Apart from that, a decision like Ext.P8 will affect the constitutional right of an individual to carry on business or trade and put his property to the best advantage. The Panchayat will have to consider each application on its own merits and decide whether permission could be granted or not. However, if the application is filed for establishing a unit which does not come under Section 233 of the Act and if it comes only under Section 232 or under Rule 12(3)(d) of the 1996 Rules, the licence is to be issued only by the Secretary.

34. In Ramapuram Grama Panchayat [2016 (2) KLT 219], on the question as to whether reasons 5 to 8, 18 and 19 stated in Ext.P7 decision taken by the Grama Panchayat for rejection of licence to operate quarry come within the area of consideration of the Panchayat in terms of Section 233 of the Kerala Panchayat Raj Act, the Division Bench noticed that in terms of sub-section (3) of Section 233, the Secretary has to enquire and report to the Village Panchayat as to whether the establishment of the factory, workshop or workplace or other installation of machinery or manufacturing plant is objectionable by reason of density of population in the neighbourhood and the possibility to cause nuisance or pollution. The report has to be submitted to the Village Panchayat. The Village Panchayat will have to consider the report of the Secretary and such other authorities as specified under sub-section (4) of Section 233. The Panchayat is called upon to consider the report of the Secretary, as well as the authorities specified in sub-section (4) of Section 233, to enable it to arrive at a proper decision.

35. In Ramapuram Grama Panchayat [2016 (2) KLT 219], on the facts of the case at hand, the Division Bench noticed that there was no material to indicate that the rejection was made on account of the fact that it is objectionable by reason of density of population in the neighbourhood and the possibility to cause nuisance or pollution as provided under Section 233 of the Act. If there has to be a finding that it is objectionable on account of density of population in the neighbourhood, the District Medical Officer ought to have taken such a view. Apart from that, the Panchayat relies on no such material. If there is failure to comply with the conditions in the environmental clearance obtained from an expert body like the State Level Environment Impact Assessment Authority (SEIAA), it is a separate issue that the Panchayat can take up at a later stage, after establishment of the unit, when it finds non-compliance with the conditions imposed therein. But the finding that SEIAA did not properly evaluate the grant of environmental clearance is not a good reason to reject a licence.

36. In Ramapuram Grama Panchayat [2016 (2) KLT 219], the Division Bench noticed that in Benny Abraham [(2002) 9 SCC 493], the Apex Court set aside the decision of the Division Bench in Benny Abraham [2001 (2) KLT 690]. The Apex Court felt that the four conditions ascribed by the Panchayat need not be interfered with. A perusal of para 11 of the Division Bench judgment would indicate that the main reason stated for rejecting the application for permit was that there was scarcity of water in the area and therefore it would not be possible to use sprinklers as directed by the Pollution Control Board during the summer season, and the agricultural properties might be adversely affected, and it would include the members belonging to the scheduled caste around the locality, and there was a road around 100 metres from the premises. It was therefore clear that Benny Abraham [2001 (2) KLT 690] was decided on its own facts, which is also clear from the decision of the Apex Court in Benny Abraham [(2002) 9 SCC 493], and it cannot be treated as a binding precedent to form an opinion that in all cases such a view is to be taken. The Division Bench observed that, as the property is private, the Panchayat cannot take a view that it has a right to prevent any activity on the property for public purposes. A permit/licence can be rejected only if there is a possibility of pollution and it affects the neighbourhood in any manner due to density of population. On the facts of the case at hand, the Division Bench noticed that no such contingency is highlighted, nor has any material been relied upon to form such an opinion.

38. A reading of the decision of the Division Bench in Ramapuram Grama Panchayat [2016 (2) KLT 219] would show that, in the said decision the Division Bench has not referred to Article 40 of the Constitution of India, which enshrines one of the Directive Principles of State Policy, and lays down that the State shall take steps to organise Village Panchayats and endow them with such powers and authority as may be necessary to enable them to function as units of self-government; or the provisions in Part IX of the Constitution of India, inserted by the Constitution (Seventy-third Amendment) Act, 1992, including Article 243-G, which provides that, 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, which may contain provisions for the devolution of powers and responsibilities upon Panchayats at the appropriate level, with respect to the matters as may be entrusted to them including those in relation to the matters listed in the Eleventh Schedule.

39. After noting that there was no material to indicate that the rejection was made on account of the fact that it is objectionable by reason of density of population in the neighbourhood and the possibility to cause nuisance or pollution as provided under Section 233 of the Act, the Division Bench observed in Ramapuram Grama Panchayat [2016 (2) KLT 219] that, if there has to be a finding that it is objectionable on account of density of population in the neighbourhood, the District Medical Officer ought to have taken such a view. If there is failure to comply with the conditions in the environmental clearance obtained from an expert body like the State Level Environment Impact Assessment Authority (SEIAA), it is a separate issue that the Panchayat can take up at a later stage, after establishment of the unit, when it finds non-compliance with the conditions imposed therein.

40. As already noticed hereinbefore at paragraph 38, in Ramapuram Grama Panchayat [2016 (2) KLT 219] the Division Bench has not referred to Article 40 of the Constitution of India or the provisions in Part IX of the Constitution of India, inserted by the Constitution (Seventy-third Amendment) Act, 1992, including Article 243-G. As noticed by the Division Bench in the reference order dated 20.12.2021 in W.A.No.1503 of 2019, the view expressed by the Division Bench in Ramapuram Grama Panchayat [2016 (2) KLT 219] that, if the authorities specified under sub-section (4) of Section 233 of the Kerala Panchayat Raj Act offer no objection and accede to the establishment of an industry with or without conditions; then the hands of the Panchayat are tied, insofar as the grant of licence being the only recourse, has been approved by the Full Bench in Tomy Thomas [2019 (3) KLT 987]. In that decision, the Full Bench did not refer to Article 40 of the Constitution of India or the provisions in Part IX of the Constitution of India, inserted by the Constitution (Seventy-third Amendment) Act, 1992, including Article 243-G.

41. We notice the decision of a Division Bench of this Court in Nagaroor Grama Panchayat [2016 (3) KLT 82], wherein it was noticed that the provisions of Sections 232, 233 and 234 of the Kerala Panchayat Raj Act, as well as the contents of the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, 1996, clearly show that the provisions of the Act and the 1996 Rules stand by themselves and those provisions are not dependent on any decision to be rendered on the basis of any other statute. The Division Bench held that the decision-making process by the Panchayat authorities under the 1996 Rules has to be made independently and cannot depend on anything that is not statutorily insisted upon or permitted to be relied on in such proceedings. Therefore, applications for licence have to be processed without insisting on environmental clearance. Whether a particular entrepreneur or a person who has obtained a licence under the 1996 Rules will ultimately carry out the activity is his lookout, because that may depend on different licences and permits to be granted by different authorities.

42. In the reference order dated 20.12.2021 in W.A.No.1503 of 2019, the Division Bench noticed that Section 233 of the Kerala Panchayat Raj Act, as it stood prior to the amendment by the Kerala Investment Promotion and Facilitation (No.2) Act, 2018, required the Secretary, on the receipt of an application, to enquire and report to the Village Panchayat regarding any objection by reason of density of population or the possibility of nuisance or pollution being caused. While sub-section (3) of Section 233 also empowered the Panchayat to either grant the permission absolutely or with conditions and also to refuse such permission; the consideration was further regulated by sub-section (4), which required in specified instances, a report of the Inspector of Factories or an officer of the Industries Department [clause (a)], a report of the District Medical Officer [clause (b)] and a report of the Divisional Fire Officer [clause (c)]. The proviso further excluded the report of the District Medical Officer, if there is a declaration recommending the establishment from the Industries Department or the Kerala State Pollution Control Board, certifying no pollution being caused. If sub-section (4) of Section 233 was the only mandate for consideration, then the legislature would not have required a report of possible objections from the Secretary.

                  42.1. The Division Bench opined that, as held in Manjapra Grama Panchayat [1996 (2) KLT 719], there are many facets of human life which ought to be looked into by the Village Panchayat; which an officer of the Industries Department, the District Medical Officer, the Divisional Fire Officer or even the Pollution Control Board would not be able to look into or be aware of. Only such an interpretation would be in consonance with the Seventy-third Amendment of the Constitution of India. The Division Bench specifically noticed Article 243-G of the Constitution of India, which mandates 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.

                  42.2. The Division Bench noticed that the provisions as appearing in Section 233 of the Kerala Panchayat Raj Act, prior to its amendment by the Kerala Investment Promotion and Facilitation  (No.2)  Act,  2018,  required  an  independent consideration by the Village Panchayat after also considering the report of the Secretary and the reports of the various authorities specified under sub-section (4). Therefore, it cannot be said that when the authorities under sub-section (4) of Section 233 accede to the establishment, the Panchayat would be rendered helpless; which, according to the Division Bench, would result in the usurpation of the power granted to the Panchayat under sub- section (3) of Section 233 to grant or refuse a permission, after consideration of the various reports, i.e., the objections as raised by the Secretary and the permissions/consent issued by the various authorities under sub-section (4).

                  42.3. The Division Bench noticed that, after the amendment by the Kerala Investment Promotion and Facilitation (No.2) Act, 2018, in Tomy Thomas [2019 (3) KLT 987], the Full Bench declared the Panchayats to be totally denuded of the powers to refuse a permission sought for establishment of a factory, workshop, workplace, etc., under Section 233 of the Kerala Panchayat Raj Act. The Division Bench noticed the oft-quoted proposition that the power to grant necessarily implies a power to refuse. The Division Bench also noticed a circumstance where the unit sought to be established is of such a nature that none of the competent authorities specified under sub-section (4) of Section 233 can accede to such an establishment, by whatsoever reason of nuisance or pollution. Even then, it cannot be said that the Panchayat can only make a grant with conditions, which conditions may not necessarily abate or avert the concerns of public health or environmental depredation. In Tomy Thomas [2019 (3) KLT 987], the Full Bench made the said declaration specifically by reason of the deletion of the word 'refusal' from the provision conferring power to grant. The Division Bench opined that, even if that power was not specifically conferred, it was implied in the power to grant.

                  42.4. The Division Bench noticed that, under Section 233 of the Kerala Panchayat Raj Act, a new provision, i.e., sub-section  (2A), has been added by the Kerala Investment Promotion and Facilitation (No.2) Act, 2018, which requires the Secretary to acknowledge the application filed in the appropriate form with supporting documents and immediately inform the applicant about any defect in such applications, including the absence of a required document and allow the applicant to rectify the defect within, but not later than five days. Sub-section (3) of Section 233, though amended, is substantially the same with respect to the objections to be placed as a report before the Village Panchayat after an enquiry by the Secretary. The amended provisions require the Village Panchayat to consider the application, the report of the Secretary, and the reports of such authorities as specified in sub-section (4) of Section 233; which authorities are identical to those in the unamended provision. In fact, there could be found an anomaly in the unamended Section 233, insofar as sub-section (3) empowers the Village Panchayat to grant absolutely or conditionally or refuse the permission after considering the report of the Secretary, and then sub-section (4) requires also the consideration of the reports of the various authorities. The Division Bench observed that the amended provision addresses the anomaly, but does not denude the Panchayat of the power to refuse, since that power is implied in the power to grant.

                  42.5. The Division Bench noticed that, as per the amended provisions, the Secretary has to not only enquire and report on any objection but has also to obtain the reports of authorities enumerated under sub-section (4) of Section 233 of the Kerala Panchayat Raj Act and also consider them before finalising the report to the Village Panchayat. If the Village Panchayat, as per amended Rule 12(3) of the Kerala Panchayat Raj (Issue of Licence to Factories, Trades, Entrepreneurship Activities and other Services) Rules, 1996, is again of the opinion that the construction or establishment is objectionable by reason of high density of population or the causation of nuisance, then an expert opinion  has to be called for from the concerned Department with regard to the determination of the nuisance and its abatement. If abatement is possible, the Village Panchayat cannot sit over it and has to necessarily grant permission with conditions and stipulations to ensure such abatement as advised by the expert body. The grant or refusal shall also be within the time stipulated in the Rules, failing which the applicant would be entitled to carry on with his activity, deeming the permission under Section 233. Therefore, in the reference order, the Division Bench opined that, prior to amendment, even if the authorities under sub-section (4) conceded to the establishment sought for under Section 233, the Village Panchayat had the power to refuse such permission on the basis of the objections pointed out by the Secretary. After the amendment, which obviously was in promotion of establishment of industries, there is a definite time frame for the various stages of processing the application and the ultimate grant with or without conditions, which also implies refusal in a contingency on valid grounds. There is also a mandate that when the abatement of nuisance, as pointed out by the Secretary or which occurs to the Village Panchayat on a consideration of the various reports under sub-section (4), is possible, then the Village Panchayat is obliged to grant the permission under Section 233, with such conditions as required by the expert body to abate or avert the nuisance. However, this does not denude the Panchayat of its power to refuse permission, which is not only implied in its power to grant it but also is in consonance with the functioning of the Panchayat as a self-government institution, as envisaged in the Constitution of India.

43. In the reference order dated 20.12.2021 in W.A.No.1503 of 2019, the Division Bench observed that the amended provisions of Section 233 of the Kerala Panchayat Raj Act address the anomaly, but do not denude the Panchayat of the power to refuse, since that power is implied in the power to grant.

                  43.1. Section 13 of the Interpretation and General Clauses Act, 1125, deals with construction of provisions as to exercise of powers and duties. As per sub-section (1) of Section 13, where an Act confers a power or imposes a duty, then, unless the contrary intention appears, the power may be exercised, and the duty shall be performed from time to time as occasion requires. The provisions of sub-section (1) of Section 13 of the Interpretation and General Clauses Act, 1125, are pari materia to sub-section (1) of Section 12 of the General Clauses Act, 1897, which provides that, where, by any Central Act or Regulation made after the commencement of the 1897 Act, any power is conferred, then, unless a different intention appears, that power may be exercised from time to time as occasion requires.

                  43.2. In Khargram Panchayat Samiti v. State of West Bengal [(1987) 3 SCC 82], in the context of Section 117 of the West Bengal Panchayat Act, 1973 and Rules 7 to 9 of the West Bengal Panchayat (Samiti Administration) Rules, 1984, a Two-Judge Bench of the Apex Court held that the statutory bodies like the Panchayat Samiti enjoy a wide ‘incidental power’, i.e., they may do everything which is calculated to facilitate, or is conducive or incidental to, the discharge of any of their functions, and the doctrine of ultra vires is not to be applied narrowly. It is well accepted that the conferral of statutory powers on these local authorities must be construed as impliedly authorising everything which could fairly and reasonably be regarded as incidental or consequential to the power itself.

                  43.3. In Khargram Panchayat Samiti [(1987) 3 SCC 82], it was noticed that in V.T. Khanzode v. Reserve Bank of India [(1982) 2 SCC 7] the Apex Court followed the dictum of Lord Selborne in Attorney General v. Great Eastern Railway [(1880) 5 AC 473] and reaffirmed the principle that the doctrine of ultra vires in relation to the powers of a statutory corporation have to be understood reasonably, and so understood, whatever may fairly be regarded as incidental to, or consequential upon, those things which the legislature has authorised ought not (unless expressly prohibited) to be held by judicial construction, to be ultra vires. In State of U.P. v. Batuk Deo Pati Tripathi  [(1978) 2 SCC 102], a Constitution Bench laid down that a power to do a thing necessarily carries with it the power to regulate the manner in which the thing may be done.

44. As already noticed hereinbefore, the Constitution (Seventy-third Amendment) Act, 1992 came into force on 24.04.1993 to give effect to one of the Directive Principles of State Policy, viz., Article 40 of the Constitution of India, which directs the State  to  organise  village  panchayats  as  units  of  self- government. On the coming into force of the said Constitutional Amendment, the Legislature of a State was required to take steps to organise Village Panchayats on the lines of the provisions of the said Constitutional Amendment, by making law or amending the existing law suitably. Article 40 of the Constitution neither defines ‘Village’ nor provides guidelines for organising Village Panchayats. Article 40 only requires that Village Panchayats, howsoever organised, be equipped with such powers and authority as may be necessary to enable them to function as units of self-government.

When Article 40 speaks of Village Panchayats as units of self-government, it has in view the organisation of the lowest level units of self-governance in the hierarchy of self-governing, democratic, policy-making and administrative units.

 45. As held by a Two-Judge Bench of the Apex Court in Pradhan Sangh Kshettra Samiti [(1995) Supp. 2 SCC 305], Article 40 envisages Village Panchayats as the base democratic institutions of a pyramid of democratically organised and functioning self-governing units. While organising the Village Panchayats, what is necessary to be kept in mind is (a) that the Village Panchayats are to be the self-governing units at the lowest end of the democratic polity, (b) that being self-governing units, those who are governed by the said units and for whose benefit they are going to operate, will have either a direct or an elective indirect representation in them; (c) that they will have an effective say in the conduct of their affairs including its plans, policies and programmes and their execution; and (d) that thus they will have not only a sense and satisfaction of participation but also an experience in the governance of their own affairs. As long as the Village Panchayats are organised to achieve these objectives, the requirements of Article 40 of the Constitution have to be complied with in letter and spirit.

46. As long as Article 40 of the Constitution envisages Village Panchayats as the base democratic institutions of a pyramid of democratically organised and functioning self- governing units, organised to achieve the aforesaid objectives  enumerated in the decision of the Two-Judge Bench in Pradhan Sangh Kshettra Samiti [(1995) Supp. 2 SCC 305], the requirements of Article 40 have to be complied with in letter and spirit. As per the mandate of Article 243-G in Part IX of the Constitution, inserted by the Constitution (Seventy-third Amendment) Act, 1992, 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, which may contain provisions for the devolution of powers and responsibilities upon Panchayats at the appropriate level, with respect to the matters as may be entrusted to them including those in relation to the matters listed in the Eleventh Schedule.

47. As already noticed hereinbefore, the Division Bench in Ramapuram Grama Panchayat [2016 (2) KLT 219] and the Full Bench in Tomy Thomas [2019 (3) KLT 987] did not refer to Article 40 of the Constitution of India or the provisions in Part IX of the Constitution of India, inserted by the Constitution (Seventy-third Amendment) Act, 1992, including Article 243-G, or the law laid down in the decision of the Two-Judge Bench in Pradhan Sangh Kshettra Samiti [(1995) Supp. 2 SCC 305]. With due respect, we are unable to agree with the dictum laid down by the Division Bench in Ramapuram Grama Panchayat [2016 (2) KLT 219], which has been approved by the Full Bench in Tomy Thomas [2019 (3) KLT 987].

                  In the above circumstances, we deem it appropriate to direct Registry to place the matter before the Hon'ble the Chief Justice for constitution of a Larger Bench to consider whether the dictum laid down by the Full Bench in Tomy Thomas v. State of Kerala [2019 (3) KLT 987] requires a re-consideration.