Anaparthy Village of East Godavari District had a Gram Panchayat constituted under the A.P. Panchayat Raj Act, 1994 (for short 'the P.R. Act'). It has grown in size and activity. Therefore, proposals were mooted for upgrading it into Nagar Panchayat. This required the steps of denotification of the Gram Panchayat under Section 3 of the P.R. Act and a consequential notification under Section 2(42a) of the AP. Municipalities Act, 1965 (for short 'the Act). While the notification under Section 3 of the P.R. Act draws a curtain on the Gram Panchayat, the notification under Section 2(42a) of the Act would bring into existence, what is known as "transitional or smaller urban area". On such notification being published, the consequences provided for under Section 2-A of the Act ensue.

2. In respect of Anaparthy Gram Panchayat, a notification under Section 3 of the P.R.Act was published in G.O.Ms. NO.216, dated 07.06.2008. On the same day, the Government in Municipal Administration Department published a notification under Section 2(42a) of the Act in G.O.Ms.NoA02.

Through another order passed on the same date i.e., G.O.Ms. NoA03, the Government appointed a special officer for the newly constituted Nagar Panchayat.

3. W.P.No.12147 of 2008 is filed by a Member of the erstwhile Anaparthy Gram Panchayat, challenging the notifications referred to above, issued by the Government. W.P.No.20643 of 2008 is filed by two residents of the same village.

4. The contention of the petitioners is that the parameters prescribed by the Legislature for constituting a Nagar Panchayat do not exist and still, the notifications were issued. They harp upon the percentage of employment' in nonagricultural activities (PENA), which according to them is 20%, which is far below than the minimum requirement under the Rules issued in G.O.Ms.No.39, Municipal Administration Department, dated 03.02.1995 (for short 'the Rules') viz., 50%. It is also urged that other factors were not properly verified and the entire exercise was undertaken in undue haste.

5. The authorities of the Panchayat Raj Department, on the one hand, and the Municipal Administration Department, on the other, have filed separate counter affidavits. They state that the prescribed procedure was duly followed and it was only on finding that the prescribed factors are satisfied that the notifications were issued.

6. Sri Gani Reddy and Sri Sat yam Reddy, learned counsel appearing for the petitioners in the respective writ petitions, submit that not only Section 2(42a) of the Act stipulates the requirements to be fulfilled before an existing Gram Panchayat is upgraded into Nagar Panchayat, but also the Government had framed the Rules, wherein the parameters, in terms of figures, are prescribed. They contend that even if one goes by the facts and figures furnished by the respondents in their counter affidavits, it emerges that no proper exercise was undertaken as contemplated under law.

7. Learned Government Pleader for Municipal Administration and the learned Government Pleader for Panchayat Raj, on the other hand, submit that the notifications were issued only after ensuring proper compliance with the prescribed norms. It is urged that there existed a small discrepancy as to PENA and further steps were taken only after the verification of record.

8. The petitioners do not dispute the power of the Government either to de-notify an existing Gram Panchayat or to upgrade the same into a Nagar Panchayat. The only controversy is as to whether the necessary parameters prescribed by the Government for undertaking such exercise exist in the instant case.

9. Section 3 of the P.R. Act confers power on the Government to de-notify a Gram Panchayat. The power is almost unbridled and no parameters are prescribed for exercise thereof. Obviously it is treated as a prelude either to upgrade an existing gram panchayat or to re-constitute it. Before an erstwhile Gram Panchayat is upgraded into a Nagar Panchayat, it is essenti