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Man Mal Sharma & Others v/s Bikaner Sahkari Upbhokta Bhandar & Others

    Civil Writ Petition Nos. 1118 & 4077 of 1997 & 1031 of 1998

    Decided On, 04 August 1998

    At, High Court of Rajasthan


    For the Appellants: M.R. Singhvi, Advocate. For the Respondents: M.S. Singhvi, Sangeet Lodha, Advocates.

Judgment Text

B.S. Chauhan, J.

1. All the aforesaid petitions are inter-connected and there is an order of the Court to hear all these petitions together. Thus, they are being disposed of by the common judgment. To dispose of all these three petitions, S.B. Civil Writ Petition No. 1031/1998 is taken as the leading case for the reason that all the relevant documents and orders of all the three cases have been filed therein.

2. The respondent No. 1, Bikaner Sahkari Upbhokta Bhandar, hereinafter called "the Bhandar", is a Co-operative Society registered under the provisions of the Rajasthan Cooperative Societies Act, 1965 (hereinafter referred as "the Act") and the Rajasthan Co-operative Societies Rules, 1966 (hereinafter referred as "the Rules"). The management committee of the respondent No. 1, which is headed by the elected Chairman, resolved to instal a statue of its earlier Chairman late (Shri) Vijay Singh in the premises of the respondent No. 1 -- the Bhandar, vide Resolution dated 7-12-94, just to recognise the services rendered by him to the society and to pay homage to the departed soul. The Registrar, Cooperative Societies (hereinafter called "the Registrar"), served an order dated 12-3-97, contained in Annexure-4 to this petition, purported to have been passed u/s 32 of the Act he rescind the said resolution restraining the Bhandar to install the statue. According to the said order, the installation of the statue was contrary to the provisions of the Act and the Rules, and the purposes the society was to achieve and moreover it would not serve the interest of any person, rather installation of the statue would have an adverse effect on the interest of the society. The Bhandar being aggrieved by the said order dated 12-3-97, preferred S.B. Civil Writ Petition No. 1118/1997 before this Court on the ground that the installation of the statue, is not in violation of any rule or the provisions of the Act, the said order was without jurisdiction, rather il was in consonance with the spirit of the Cooperative Movement as the purpose was to pay homage to the departed soul who dedicated his life in the Co-operative Movement and such an installation would encourage the persons in future to support the Co-operative Movement. This Court, vide its order dated 19-5-97, stayed the operation of the order dated 12-3-97 passed by the Registrar, and after obtaining the said interim order, the statue has been installed.

3. The Registrar issued show cause notice on 5-11-97, contained in Annexure-5 to the petition, u/s 36(1) of the Act, as to why the Committee may. not be superseded, according to which the installation of statue of late (Shri) Vijay Singh was against the interest of the society; it caused great loss to the society; it was in contravention of the order of the Registrar and by installing the statue, the management committee has acted in violation of the order of the Registrar as the interim order of this Court dated 19-5-1997 did not authorise the Bhandar to instal the statue without prior approval of the Registrar and it, also, violated the provisions of the Act and the Rules. Being aggrieved and dissatisfied, the Bhandar preferred another S. B. Civil Writ Petition No. 4077/1997, and this Court, vide order dated 11-11-1997, stayed further proceedings in pursuance of the said notice.

4. The Government passed an order dated 21-3-1998, contained in Annexure-3 to the petition, by which petitioner Sri Man Mal Sharma was reverted from the post of Chief Executive Officer of the Society to the post of Manager of the Bhandar. The order specifically provides that the order of reversion from the deputation has been made as the services of petitioner were not found satisfactory. Being aggrieved and dissatisfied, Mr. Sharma filed S.B, Civil Writ Petition No. 1031/1998.

5. The main contentions raised by the petitioner are that as in the earlier two writ petitions, he had been the Perokar of the Bhandar and filed affidavits in support

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of the contentions raised in the said Writ petitions and interim applications, the order had been passed just to harass him as the Registrar could not proceed to execute his earlier order dated 12-3-97 and proceeded further in pursuance of the notice dated 4-11-1997; there is not even an iota of evidence to show that petitioner's services were not satisfactory and thus the order is bad as not based on any evidence. Even otherwise, as per the appointment letter of the petitioner dated 23-9-1995 (Annexure-2), the term of the petitioner was likely to expire on 22-9-98, and thus the order has been passed in colourable exercise of power and it is Without jurisdiction; the order is penal in nature because it casts stigma as it has been specifically mentioned in the order of reversion that the services of the petitioner were not found satisfactory, initiation of proceedings by the Registrar against the petitioner u/s 74 of the Act for surcharge related to the consumption of diesel by the vehicle owned and possessed by the Bhandar was not related to the petitioner as the vehicle was under the control of the Chairman of the Bhandar as provided under the Rules and the petitioner cannot be held responsible for the surcharge and no proceedings u/s 74 of the Act could be initiated against him and his reply is still pending and Registrar did not proceed further and kept the proceedings pending just to harass the petitioner; the said notice u/s 74 has been issued after the interim orders had been passed by this Court in the earlier two writ petitions and it was just to harass the petitioner for being Perokar of the Bhandar in earlier writ petitions; entire record was lying before the Joint Registrar of the Cooperative Societies, Bikaner and the order has been passed by the State Government without examining the record. Thus, it was a case of non-application of mind and the order deserves to be quashed on this sole ground.

6. In respect of the earlier writ petitions, the averments are to the effect that the installation of the statue has nothing to do with the Registrar as it is not an activity which may fall within the purview of the statutory provision and does not give jurisdiction to the Registrar to interfere. Thus, the order dated 12-3-1997 passed u/s 32 and the notice dated 5-11-97 issued u/s 36(1) of the Act are void being without jurisdiction.

7. The respondents have filed reply through Joint Registrar contending that the impugned order reverting petitioner Sri Man Mat Sharma has been passed after finding his services unsatisfactory and it has been passed after assessing the Service Record of the petitioner; several recoveries are pending against Sri Sharma and he has not shown interest in making the recoveries against other members of the society though he had supervisory control over them and as his services had been subject to the Doctrine of Pleasure of the Government, he cannot raise any grievance before this Court; and in response to the show cause notice u/s 36(1) of the Act, the society can file its reply before the competent authority, however, the writ petition is not maintainable.

8. In the rejoinder-affidavit, the petitioners have reiterated the averments made in the writ petitions and denied the allegations made in the reply. Petitioner Sri Sharma has filed some documents along with the rejoinder-affidavit, to show that the performance of the petitioner had been outstanding, particularly in view of the Minutes of the Meeting of the Board dated 9-3-98, contained in Annexure-R-1/1, according to which the Bhandar has progressed well during the tenure of the petitioner and the Board was fully satisfied by the working of the petitioner. The Board has commended the services rendered by the petitioner and he has been awarded higher pay scale by the Board by passing a Resolution in its meeting dated 9-3-98 with effect from 30-9-95; the documents issued by the respondent No. 2 on 6-6-98, show that there were only eight cooperative societies in the State of Rajasthari which has been categorised for rendering outstanding services and their categorisation has been made after assessing their performance wherein the Bhandar has been assesed as number 3 in the whole of Rajasthan as its performance had been assessed at 73% while the two other Bhandars had been assessed showing their performance at 76% and 79%. An another Book-let published by the respondent No. 2 in September, 1994 (Annexure-6 to the rejoinder) has been filed to show that the Bhandar had progressed very well during the time of the petitioner as Manager as it provided that in one year the turn-over of the Bhandar had been to the tune of Rs. 5 crores. It has further been reiterated by the petitioner that the Government has not placed anything on record to show as to how the services of the petitioner were found to be unsatisfactory.

9. Heard learned counsel for the parties.

10. Mr. M.R. Singhvi has further submitted that the Government could not have reverted the petitioner in terms of Clause (iv) of the appointment letter dated 23-9-1995 which provided that the appointment was for a period of three years and he could be reverted to his parent post in parental department in case his services were not found satisfactory. Petitioner's grievance is that in absence of any material to show that the services of the petitioner were unsatisfactory, the Government has acted arbitrarily.

11. It is settled proposition of law that even if an authority has a discretion to pass an order, the discretion cannot be exercised in an arbitrary manner.

12. In Breen v. Amalgamated Engineering Union(197l) 2 QB 175, Lord Denning has observed as under :--

"The discretion of a statutory body is never undetered. It is the discretion which is to be exercised according to law, that means, at least this : the statutory body must be guided by relevant consideration and not by irrelevant. If the decision is influenced by extraneous consideration, which is ought not to have taken into account, then the decision cannot stand. No matter that the statutory body may have acted in good faith : nevertheless the decision will be set aside."

13. The contents of Clause (iv) have to be read in consonance with the statutory rule. (Vide Union Territory, Chandigarh Admn. and others Vs. Managing Society, Goswami, GDSDC, ; and Dr. S.K. Kacker v. All India Instilute of Medical Sciences (1996) 8 JT 513 : AIR 1996 SCW 3953. It has been held in the above referred two cases that the contract in violation of the mandatory provisions of law can only be read and enforced in terms of the law and in no other way. Mr. Singhvi has submitted that this Clause (iv) has to be read in consonance with Rule 7 of the Rajasthan Civil Services (Special Selection and Special Conditions of Service for Selection of Chief Executives; Executive Officers for Apex Cooperative Institutions and District Level Banking/ Wholesale Consumer and Marketing Cooperative Institutions) Rules, 1995 (for short, "the Rules, 1995") which reads as under :--

"7. Tenure.-- The tenure of officers selected under these rules shall ordinarily be three years which may be extended by the appointing authority for further terms not exceeding upto two years at a time; provided that if the Government wishes, without assigning any reasons, any officer may be reverted to hisoriginal post."

14. Mr. Singhvi has submitted that this provision is applicable only in a case where the person so appointed is a Government Servant as only a Government Servant can be sent back to his parent department. He further submitted that providing for a condition in the Rules that reversion can be done by Government without assigning reason is in contravention of the constitutional mandate being arbitrary. Moreover. executive order cannot stand the test of validity unless it specifies the reasons.

15. There can be no quarrel with the proposition of law that even on the administrative side, the authorities are bound to pass the speaking and reasoned order. In Kumari Shrilekha Vidyarthi and Others Vs. State of U.P. and Others, , the Apex Court has observed as under :--

"Every State action must be informed by reason and it follows that an act un-informed by reason is arbitrary. Rule of law contemplates governance by laws and not by humour, whims or caprice of the men to whom the governance is entrusted for the time being. It is trite law that "be you ever so high, the laws are above you". This is what men in power must remember always."

16. In LIC of India and Another Vs. Consumer Education and Research center and Others, , the Apex Court observed that the State or its instrumentality must not take any irrelevant or irrational factor into consideration or appear arbitrary in its decision. "Duty to act fairly is part of fair procedure envisaged under Articles 14 and 21. Every activity of the public authority or those under public duty, obligation must be informed by reason and guided by the public interest."

17. The same view has been taken by the Supreme Court in Mahesh Chandra Vs. Regional Manager, U.P. Financial Corporation and others, and Union of India (UOI) Vs. Mohan Lal Capoor and Others, .

18. In State of West Bengal Vs. Atul Krishna Shaw and Another, the Supreme Court observed as under :--

"If the findings are based on no evidence or based on conjecture or surmise as no reasonable man would, on given facts and circumstances come to the conclusion reached by the........ authority on the basis of the evidence on record, certainly this Court would oversee whether the finding recorded by the ......authority is based on no evidence or beset with surmise or conjecture. Giving of reasons is an essential element of administration of justice. A right to reason is, therefore, an indispensable pan of sound system of judicial review. Reasoned decision is not only for the purpose of showing that the citizen is receiving justice but also a valid discipline for the Tribunal itself. Therefore, statement of reason is one of the essentials of justice."

19. In S.N. Mukherjee Vs. Union of India, , it has been held that the object underlying the rules of natural justice is to prevent mis-carriage of justice and secure fair play in action. The expanding horizon of the principles of natural justice provides for requirement to record reasons as it is now regarded as one of the principles of natural justice, and it was held in the above case that except in case"? where the requirement to record reasons is expressly or by necessary implication dispensed with, the authority must record reasons for its decision.

20. In Krishna Swami Vs. Union of India and another, , the Apex Court observed that the rule of law requires that any action or decision of a statutory or public authority must be founded on the reason stated in the order or borne out from the record. The Court further observed as under:--

"Reasons are the links between the material, the foundation for these erection and the actual conclusions. They would also administer how the mind of the maker was activated and actuated and their rational nexus and syntheses with the facts considered and the conclusion reached. Lest it may not be arbitrary, unfair and unjust, violate Article 14 or unfair procedure offending Article 21."

21. In Uptron India Ltd. v. Shamru Bhai (1998) 3 JT(SC)47: AIR 1998 SCW 1447,the Apex Court placed reliance on its earlier judgments, particularly D.K. Yadav v. J.M.A. Industries Ltd. (1993) 3 JT(SC) 716 :AIR 1993 SCW 1995 , West Bengal State Electricity Board and Others Vs. Desh Bandhu Ghosh and Others, ; and Central Inland Water Transport Corporation Limited and Another Vs. Brojo Nath Ganguly and Another, , and held that the, services of a permanent employee cannot be terminated in terms of the standing order which provides for termination of services automatically, and that too without assigning any reason on happening of a particular eventuality for the, reason that such a regulation was held to be capable of vicious discrimination and may, also, be held to be naked "hire and fire" rule. The principle of natural juslice have to be read into provisions relating to automatic termination of the services and if such an action is taken on the basis of a rule without giving an opportunity of hearing to the employee, it would be wholly unjust, unfair and arbitrary.

22. In Nand Kishore v. State of Punjab (1995) 7 JT (SC) 69 : AIR 1995 SCW 4650, the Hon'ble Apex Court has observed that the declaration by the Supreme Court is of binding character and is "as commandful as the law made by a Legislative body or Authorised Delegate of such body", for the reason that "the Court, as a wing of the State, is by itself a source of law. The law is what the Court says it is." Thus, in view of the above, I have my reservations to accept that in a given case, as that of the petitioner, the services can be terminated without assigning any reason, and without affording him an opportunity of hearing. The instant case of reversion/ termination cannot be equated with the discharge of a probationer from service as petitioner was certainly not appointed on probation nor the rules contemplate it.

23. Thus the issue remains to be examined as to whether the Government has exercised the power fairly, reasonably and bona fide as there is no scarcity of judicial pronouncements to support the proposition that official arbitrariness may be worst than the statutory arbitrariness. In the State of Andhra Pradesh and Another Vs. Nalla Raja Reddy and Others, , the Constitution Bench of the Apex Court has observed as under :--

"Official arbitrariness is more subversive of doctrine of equality than the statutory discriminatio'n. In spite of statutory discrimination, one knows where he stands but the wand of the official arbitrariness can be waved in all directions indiscriminately."

24. Similarly, in S.G. Jaisinghani Vs. Union of India (UOI) and Others, , the Constitution Bench of the Apex Court has observed as under :--

"In this context it is important to emphasise that absence of arbitrary power is the first essence of the rule of law, upon which our whole Constitutional System is based. In a system governed by rule of law, discretion, when conferred upon Executive Authorities, must be confined within the clearly defined limits. Rule of law, from this point of view, means that the decision should be made by the application of known principle and rules and in general such decision should be predictable and the citizen should know where he is, if a decision is taken without any principle or without any rule, it is unpredictable and such a decision is antithesis to the decision taken in accordance with the rule of law."

25. In the said judgment, the Apex Court has referred to the judgment in United States v. Wunderlich 1951) 342 US 98, wherein it has been observed as under:--

"Law has reached its finest moments, when it has freed men the unlimited discretion of some ruler..... where discretion is absolute, man has always suffered."

26. Therefore, Rule of Law may be said to be the sworn enemy of caprice. The Apex Court has, also, referred and quoted with approval Lord Mansfild in case of John Wilkes (1770) 4 Burr 2528, wherein it has been of observed as under:--

"Discretion means sound discretion guided by law. It must be governed by rule, not by humour : it must not be arbitrary, vague and fanciful."

27. In a case where a result of a decision taken by the Government the other party is likely to be adversely affected, the Government has to exercise its powers borta fide and not arbitrarily. The discretion of the Government cannot be absolute and injusticiable. (Vide Amarnath Ashram Trust Society and Another Vs. Governor of U.P. and Others, ).

28. There is no manner of doubt that the public authorities and the Government are bound to act reasonably and fairly and each action of such authorities must pass the test of reasonableness and whenever action taken is found to be lacking is bona fide and made in colourable exercise of the power, the Court should not hesitate to strike down unfairand unjust proceedings. (Vide Hansraj H. Jain Vs. State of Maharashtra and Others, ).

29. In fact the order of the State or State Instrumentality would stand vitiated if it lacks bona fides as it would only be a case of colourable exercise of power. In State of Punjab and Another Vs. Gurdial Singh and Others, the Hon'ble Apex Courl has dealt with the issue of legal malice which is just different from the concept of personal vice. The Court observed as under :--

"When the custodian of power is influenced in its exercise by considerations outside those for promotion of which the power is vested the Court calls it a colourable exercise and is undeceived by illusion. In a broad, blurred sense, Benjmin Disraeli was not off the mark even in law when he stated : 'I repeat...... that all power is a trust -- that we are accountable for its exercise -- that, from the people, and for the people, all springs, and all must exist.' Fraud on power voids the order if it is not exercised bona fide for the end designed. Fraud in this context is not equal to moral turpitude and embraces all cases in which the action impugned is to affect some object which is beyond the purpose and intent to the power, whether this be malice-laden or even benign. If the purpose is corrupt the resultant act is bad. If considcrations, foreign to the scope of the power or extraneous to the statute, enter the verdict or impels the action mala fides or fraud on power vitiates the ........official act."

30. It is, thus, well settled that the minimum and hare requirement of Rule of Law is that every action of the State should be free from arbitrariness as denial of the "administrative fairness is constitutional anethema." Article 14 of the Constitution of India strikes in arbitrariness in such action and ensures reasonableness and fairness. (Vide E.P. Royappa Vs. State of Tamil Nadu and Another, ; Mrs. Maneka Gandhi Vs. Union of India (UOI) and Another, ; Kumari Shrilekha Vidyarthi and Others Vs. State of U.P. and Others, and Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, ).

31. There is no substance in the submission of Mr. Lodha that by virtue of the provisions of Section 35-A of the Act, petitioner held the post at the pleasure of the Government. The doctrine of "pleasure" embodied in Section 35-A of the Act does not mean an absolute, arbitrary and discretionary power in the statutory Authority. The discretion has to be exercised on the basis of the fact and for invoking such provisions there must be sufficient material which warrant the exercise of such power. The issue of Doctrine of Pleasure is no more res-integra. It has been considered by the Hon'ble Supreme Court time and again. In The State of Uttar Pradesh and Others Vs. Babu Ram Upadhya, , the Court held that the power of the Governor to dismiss at pleasure subject to the provisions of Article 311, is not an executive power under Article 154 but a Constitutional power and cannot be delegated to the officers subordinate to him. In Moti Ram Deka etc. Vs. General Manager, N.E.F. Railways, Maligaon, Pandu, etc., , the Court reviewed its earlier judgment and held that the Doctrine of Pleasure enshrined in Article 310 is not absolute as it is subject to the provisions of Article 311 of the Constitution of India. That ratio was reiterated by a Larger Bench of the Supreme Court in Samsher Singh Vs. State of Punjab and Another, . In Union of India and Another Vs. Tulsiram Patel and Others, , the Apex Court considered all its earlier judgments on pleasure doctrine and held that Article 311 is an exception to the said doctrine contained in Article 310 of he Constitution of India.

However, the second proviso to Article 311 has been introduced in public interest and provided for Constitutional prohibitory injunction restraining the disciplinary authority from holding enquiry where any of the three clauses of second proviso became applicable. But such exclusion of inquiry did not render the delinquent without remedy as the post decisional remedies, i.e., appeal, review etc. were maintainable against such order.

32. Has the instant case been a case of mere nomination and not of appointment, perhaps pleasure doctrine would have been applied straightway as in such a situation he could not have been equated with the employees or other duly elected Office-bearers of the Society as unequals cannot be treated as equals. (Vide Om Narain Agarwal and others Vs. Nagar Palika, Shahjahanpur and others,).

33. Judicial review has been declared as a basic feature of the Constitution by the Apex Court as the object has been to ensure that the High Courts and the Supreme Court, being Custodian of law. have a right to check and provide for the protection of rights of the citizen and while doing so, the Courts have