Judgment

A. C. GUPTA, J. :- The appellant was elected a councillor of Anjar municipality in Kutch District sometime in 1972, and later. President of the municipality. On June 30, 1973 after he had been elected President, the appellant applied to the chief officer of the municipality for allotting to him a plot of land admeasuring 18 feet x 16 feet situate in the town of Anjar. In his application the appellant stated that he wanted the plot for running a flour mill temporarily until he got a suitable plot from the government. By his order dated July 5, 1973 the chief officer granted the request permitting the appellant to hold the land on payment of rent on condition, inter alia, that the land should be vacated whenever the municipality so ordered. The first respondent who is a resident of Anjar applied to the Collector of Kutch under Sec. 38 of the Gujarat Municipalities Act, 1963 (referred to as the Act hereinafter) for declaring that the appellants office has "become vacant" as he has disabled himself from continuing as a councillor by taking lease of the land from the municipality. The Collector having heard the parties held that the appellant had got the land by misusing his position as President of the Municipality incurring thereby the disqualification referred to in Section 38 (1) (b) (i) of the Act which disabled him from continuing to be a councillor and declared that his office had become vacant. The appellant before us preferred an appeal under Section 38 (4) of the Act to the State Government against the Collectors order. The State Government allowed the appeal and dismissed the application of the first respondent. It was held that the land was allotted to the appellant in accordance with the by-laws of the municipality and that there was no evidence of the appellant exerting any influence on the chief officer. The first respondent challenged the order of the State Government by filing a writ petition in the Gujarat High Court. The learned Judge of High Court who heard the petition allowed the same, quashed the order of the State Government, and restored the order made by the Collector. This appeal by special leave is directed against the Judgment of the High Court allowing the writ petition.

2. The appeal turns on Section 38 (1) (b) (i) of the Act which reads as follows :

"38. Disabilities from continuing as a councillor. (1) If any councillor during the term for which he has been elected or nominated -

(a) x x x

(b) acts as a councillor in any matter -

(i) in which he has directly or indirectly, by himself or his partner, any such share or interest as is described in clause (i), (ii), (iii), (v) or (vii) of sub-section (3) of Section 11, whatever may be the value of such share or interest, or ........

he shall subject to the provisions of sub-section (2) be disabled from continuing to be a councillor and his office shall become vacant."

The provisions of sub-section (2) are not relevant for the present purpose. Section 11 of the Act enumerates, inter alia, the "general disqualifications for becoming a councillor" and specifies the cases to be treated as exceptions. Section 11 (2) (c) disqualifies a person from being a councillor "who, save as hereinafter provided, has directly, or indirectly, by himself or his partner any share or interest in any work done by order of a municipality or in any contract or employment with or under or on behalf of a municipality." Sub-section (3) (A) (i) of Section 11 which contains an exception to this rule provides :

"(3) A person shall not be deemed to have incurred disqualification -

(A) under clause (c) of sub-section (2) by reason of his -

(i) having any share or interest in any lease, sale or purchase of any immovable property or in any agreement for the same."

Thus a person is disqualified from becoming a councillor if he has a direct or indirect interest in any contract with the municipality, but having any share or interest in any lease of any immovable property or in any agreement f