RASHBIHARI PANDA ETC.

STATE OF ORISSA

January 16, 1969

(M. HIDAYATULLAH, C.J.,

J. C. SHAH,

V. RAMASWAMI,

G. K. MITTER AND A. N. GROVER, JJ.J

Orissa Kendu Leaves (Control of Trade) Act (28 of 1961) s. 10- Scheme of Government for sale and disposal of leaves purchased by it- Contracts tvith. and invitation to offer, restricted to licencees of previous year-If violative of Arts. 14 c.nd 19(1)(g) of Constitution-Art. 19(6)

(ii)-Mo1wpo/y of Government-Tests for validity-Bona fides of Governn1ent and error of judg111ent by Governrnent-1/ a defence to discri111inatio11.

Kendu tree is a wild growth and its Jeaf is used mainly in the manufacture of bidis.

To regulate trade in Kendu leaves and prevent exploitation of growers and pluckers the respondent-State adopted diverse measures.

In 1961, the Orissa Kendu I.eaves (Control of Trade) Act, 1961, was enacted. By s. 3 of the Act no person other than the Government, an authorised officer of the Government, or an agent appointed by the Government, shall purchase or transport Kendu leaves; and under s. 4 the Government is authorised to fix the price at which the leaves shall be purchased from the gro\\•ers by the officer or agent of the Government.

Section JO provides that the Kendu leaves purchased shall be sold or disposed of iu such manner as the Government may direct, and under s. 11, at least one half of the net profits derived by the Government is to be

paid to Sa111itis and Gram Panchayats. A growr of Kendu leaves chal lcnged ss. 3 and/4 and r. 7(5) made under the Act as infringing his fundamental rights under Arts. 14 and 19(1)(f) and (g). This Court, in Akudasi Padh<n v. State of Orissa, (1963] Supp. 2 S.C.R. 691, held that ss. 3 and 4 did not infringe Art. 19(6)(ii), but that the State was in competent to implement the provisions of the Act and give effect to its n1onopoly. because, the agents appointed \vere not really agents of the Government but were autho'rised to carry on trade in the leaves purchased not on behalf of the Government but on their own account, and that it thus gave rise to a monopoly in favour of the agents which was not pro tectcd by Art. 19(6)(ii) since the law cannot be used by the State for the private benefit of agents.

Thereafter. the Statemade some changes in the implementotion of its monopoly.

In J 966, it inrited tenders from persons desirous of purchasing Kendu leaves purchased by the. officers and agents of the Government.

During the years 1966 and 1967, the prices of Kendu leaves ruled very high and when sales \Vere effected by public auction, prices .; onsiderably in excess of those at which tenders \\.'ere nccepted \\'ere realised.

Early in 1968, the State evolved another scheme under which. the State offered to renew the licences of those traders who in the State's view had worked Satisfactorily in the previous year_ and had paid the amounts due from them regularly. The scheme was objected to. and realising thJt, the scheme a'rbitrarily excluded many persons interested in the trade-. and hence was objectionable, the Government dec, ided to in

vite offers for advance purchases of Kendu leaves but restricted the invitation to those individuals who had carried out the contracts in the previous year without default and to the satisfaction of the Government, that is, the existing contractors were given the exclusive right to make offers to

F -

A purchase Ke11du leaves.

This new method of offering to enter into agreements for advance purchases ot' Kendu leaves by private offers in preference to open competition, was challenged by writ petitions in the High Court as violative of the petitioner's fundamental rights under Arts.

14 and l9(l)(g).

The High Court held that under s. JO of the Act the Government cpuld dispose of the leaves in such manner as it thought fit, that the only B question for the Court was whether in adopting the new scheme of offer:ing to enter into advance purchase contracts by private negotiation the Govern.ment had acted bona fide, and that the petitioners failed to sho\v that in exercising its dbcrction the Government acted arbitrarily or without bona fir/es.

In appeal to this Court,

HELD : The validity of a law by which the State assumed the monopoly to trade in a given commodity has to be judged by the test whether the entire benefit arising therefrom is to cnure to the State, and the monopoly is not used <ts a cloak for conferring private benefit upon a limited class of persons.

The monopoly of purchasing Kendu leaves under s. 3 may be held to be valid if, it be administered only for the benefit of the State.

Similarly, the right to sell or dispose of Kendu leaves by the State under s. 10, in such inanncr as the Government may direct, would be valid if it be exercised in public interest and not to serve the private interests of any person or c)ass of persons. The profit resulting from the sale must be for the public benefit and not for private gain.

Section 11 also emphasises the concept that the machinery of sale or disposal of the leaves must also be geared to serve the public interest. _ If the scheme of disposal creates a class of middle men who could purchase from the Government at concessional rates and earn large profits disp'roportionatc to the nature of the service rendered or duty performed by them. it cannot clai111 the protection of Art. 19(6) (ii) as it is not open to the Government to create a monopoly in favour of third parties from its own monopoly.

(383 D-G; 385A-B]

In the present ,,1ase, the right to make offers being open to a limited' class of persons it effectively shut out all other persons carrying on trade in Kendu leaves rs well as new entrants into the trade. Both the schemes, evolved by the Government, namely : the one of offering to enter into confracts with certain named liccncees, and the other of inviting tenders from liccncees who had in the previous year carried out their contracts satisfactorily gave rise to a monopoly in the trade in the leaves to certain

raders and singled out other traders fo'r discriminating treatment. Theretore, they were violative of the fundamental right of the petitioners under Arts. 14 and 19(1) (g) and as the schemes were not 'integrally and essentia11y' connectedwith the creatiOn of the Jnonopolv they \vere not protected by Art. 19(6)(ii). [384 E-H; 385 B-DJ ·

la) 1f the only anxiety of the Government \Vas to ensure due performance by those vlho submitted tenders. Government could devise adequate safeguards.

But the classification based on the circumstance that certain existing contractors had carried cut their obligation in the previous year regularly and to the satisfaction of the Government is not based on any real and substantial distinction, bearing a just and reasonable relation to the objects sought to be achieved namely, the effective execution of the monopoly in public interest, the prevention of exploitation of pluckers and

growers of Kendu leaves, or the securing of the full benefit from the trade, to the State.

[3840-H; 386B-DJ

( b) The chemc could not be supported on the ground that it A imposed reasonable restrictions, within the meaning of Art. 19(6), on the fundamental rights o'f traders to carry on business in Kendu leaves. [385C-Dl

( c) The plea that the action of the Government was bona fide cannot be an effective answer, because, the Government had not considered, the prevailing ptices of Kendu leaves about the time when offers were made, the estin1ated crop, the conditions in the market, offers of higher prices B and the likelihood of offerers of higher prices carrying out their obligations and whether it was in the interests of the State to invite tenders in the open ma'rket fron1 all persons irrespective of their having taken con

tracts in the previous year.

[385H; 386A-B]

(d) lt could not also be said that the Government merely committeJ an error of judgment in adopting the impugned scheme.

It is not a case .of the Government erring in the exercise of its discretion, but the action C of the Government was itself not valid.

[386 BD] CIVIL APPELLATE JURISDICTION : Civil Appeals Nos.· 1472 to 1474 of 1968.

Appeals by special leave from the judgment and order dated May 8, 1968 of the Orissa High Court in O.J.C. Nos. 49, 52 and 132 of 1968.

.1. B. Dadaclwnji, for the appellant (in C.As. Nos. 1472 and 1473 of 1968).

A. S. R. Chari, Govind Das and J. B. Dadachanji, for the pncllant (in C.A. No. 1474 of 1968).

C. K. Daphtary, Santosh Chatterjee and R. N. Sachthey, for the respondent (in all the appeals).

The .T udgment of the Court was delivered by Shah, J.

These appeals arise out of orders passed in petitions moved before the High Court of Orissa challenging the scheme adopted by the Government of Orissa for sale of Ke11d11 leaves in which the State has assumed a monopoly of trading. by the Orissa Kendu Leaves (Control of Trade) Act 28 ,, f 1961.

Kendu tree is a wild growth.

Its leaf is used mainly in the manufacture of bidis. To regulate the trade in Kendu leaves the State of Orissa has adopted diverse executive and legislative measures.

In exercise of the powers conferred by s. 3 (1) of the Orissa Essential Articles Control and Requisitioning (Temporary Powers) Act, 1947 the Government of Orissa issued the O:issa

Kendu Leaves (Control and Distribution) Order, 1949, providing for the issue of licences to person trading in Kendu leave,.

The District Magistrates were authorised to fix the minimum -rates for purchase of Kendu leaves and the Order provided that 1he licensees shall purchase Kendu leaves from the pluckers or

A owners of private trees and forests at rates not below the minimum prescribed. A trader in Kendu leaves challenged the validity of the Act and the Order before the High Court of Orissa

on the plea that the State Legislature was incompetent to enact the Act and that in any event the Act and the Order infringed the guarantee of fundamental freedom to carry on business under B Art. 19(1 )(g) of the Constitution.

A Division Bench of the Orissa High Court upheld the validity of the Act : Jagdish Patel

v. Patel Tobacco Company('). The Court observed that the main purpose of the Order was to prevent indiscriminate and unrestricted ompetition in the trade in Kendu leaves and to protect the growers and pluckers from exploitation.

C The Order of 1949 was replaced by another Order issued in

_I 960, but without any substantial changes in its principal provisions.

Thereafter the State Legislature enacted the Orissa Ken du Leaves (Control of Trade) Act 28 of 1961.

By s. 3 of the Act no person other than (a) the Government; (b) an officer of Government authorised in that behalf; ( c) an agent in D respect of the unit in which the leaves have grown shall purchase or transport Kendu leaves. By s. 4 it was enacted that the Government shall, after consultation with the Advisory Committee, fix the price at which Kendu leaves shall be purchased by any officer or agent from growers of Kendu leaves during any year.

By s. 8 the Government was. authorised to appoint E agents for different units to purchase Kendu leaves.

Section 10 provided that :

"Kendu leaves purchased by Government or by their officers or agents under this Act shall be sold or otherwise disposed of in such manner as Government may direct."

Out of the net profits derived by the Government. from the trade in Kendu leaves under the Act, by s. 11, an amount not less than one half was to be paid to Samitis and Grama Panchayats. Sections 14, 15 and 16 dealt with penalties, attempts and abetment of offences and procedure of courts.

Section 18 conferred upon the Government power to make rules for carrying out the purposes of the Act.

Agents were appointed by the Government of Orissa to purchase Kendu leaves.

The agents were authorised under the agreements to purchase the Kendu leaves and also to trade in the Kendu leaves purchased.

H A grower of Kendu leaves moved a petition in this Court contending that the principal provisions of the Act infringed his

(1) A.LR. 1952 Orissa 260.

.fundamental rights under Arts. 19(1 )(f) & (g) and Art. 14.

He challenged ss. 3 and 4 and rule 7 ( 5) as infringing the .fundamental right under Art. 19(l)(f) and (g) of the Constitution, and ss. 5, 6 and 9 as contravening the equality clause of the Constitution. This Court held in Akadasi Padhan v. The .State of Orissa (') that the Orissa Kendu (Control of Trade) Act, 1961, was a valid piece oi legislation, and creation of a State monopoly in Kendu leaves was protected by Art. 19 ( 6) as amended by the Constitution (First Amendment) Act, 1951.

In the opinion of the Court, fixation of prices prescribed by s. 4 was. reasonable and in the interest of the general public both under Art. 19(5) and Art. 19(6) and s. 4 of the Act was on that account valid. The Court further held that section 3 which allowed the Government or an officer of the Government authorised in that behalf or an agent in respect of the unit in which the leaves were grown, to purchase or transport Kendu leaves for .and on behalf of the Government, was not open to attack .. But in the view of the Court the categories of persons mentioned in els. (b) & (c) of s. 3 i.e. officers of' the Government and agents were intended to work for the Government and all their actions and dealings in pursuance of the provisions of the Act had to be actions and dealings on behalf of and for the benefit of the Government, and since under the agreement obtained from the agent under r. 7(5) to work the monopoly of the State, the appointees were not made agents in the strict sense or the term, and were appointed to carry on trade on their own account, the agreements were invalid.

The Court accordingly held that the State Government was incompetent to implement the provisions of the Act through the Agents appointed under those agrrements.

Thereafter the Government of Orissa made some changes in the machinery for implementation of the monopoly and entered into agreements. of sale of Kendu leaves ater inviting tenders from traders.

Even against this scheme objections were raised.

It was claimed by persons interested in the production and trade in Kendu leaves that the Government of Orissa merely resorted to adevice of introducing purchasers who were mere associates or nominees of the "so called agents," and that the position remained practically the same as in the days before the judgment of this Court.

On February 2, 1966, the Government of orrssa invited tenders from persons desirous of purchasing Kendu leaves purchased or collected by Government or by their officers or Agents under the provisions of the Orissa Kendu Leaves (Control of

(l) [1963] Supp. 2 S.C.R. 6~1. ·

Trade) Act, 1961, in the units as constituted lll!der s. 5 of the Act. In the last paragraph of the tender notice it was stated :

"If the person appointed as Purchaser during the currency of his agreement in respect of any Unit duly observes and performs all the terms and conditions to the satisfaction of the Government and if the Government are satisfied that the Purchaser has been prompt in taking delivery of leaves and making payments, the Government may grant to the Purchaser a renewal of his appointment for one year on such terms and conditions as may be mutually agreed upon."

During the years 1966 and 1967 the prices of Kendu leaves ruled very high and when sales were effected on behalf of the Government of Orissa in certain cases by public auctions, prices considerably in excess of those at which tenders were accepted were realized.

Early in 1968 letters were addressed to certain traders intimating that it had been decided by the-"tiovernment of Orissa to renew "leases of Kendu leaf Units" held by them, for the year 1968 if they accepted the terms set out therein.

Under this scheme the Government pllered to those licensees who in their view had worked satisfactorily in the previous year and had paid the amounts due from them regularly to continue

their licences with the added provision that the aents with whom they had been working in 1967 will also work during 1968.

The link between the agent and the purchaser which had been the subject-matter of agitation in previous years. it was claimed, was extended by the scheme.

On January 24, 1968, a petition was moved by Rashbihari Panda in the High Court of Orissa under Art .. 226 of the Constitution challenging the action of the Government.

The Government, it appears, had second thoughts and the oilers to renew the previous licenses were withdrawn and the licensees were informed that the Government had decided to invite oilers for advance-purchases from persons who had purchased Kendu leaves from individual units during the year 1967 and had not committed default in payment of the dues.

Other writ petitions were filed challenging the legality of the new method adopted by the State Government of offering to enter into agreements for advance purchases of Kendu leaves by private oilers in preference to open competition.

It was urged on behalf of the petitioners that in seeking to enter into agreements for advance purchase contracts for Kendu

leaves by private negotiation the State Government sought to support their party interests in preference to public benefit envisaged by the State monopoly, and that the so-called State

monopoly trade in Kendu leaves "was a colourable device to make it appear constitutional and permissible under Art. 19(6)(ii) of the Constitution'', whereas in truth it was intended to benefit only the supporters of the party in power, and the scheme on that account '\vas a fraud on the Constitution". The new scheme, it was said, was devised for the purpose of increasing the party funds to the detriment of public revenue, and on that account the act of the State Government was ''ma/a fide and unconstitutional''.

The petitioners claimed that the Government of Orissa had classified the units into five sections raising the royalty or share of profit from the purchaser from Rs. 44 to a maximum amount of Rs. 64 whereas the offer of one of the petitioners who offered Rs. I 00 per bag in addition to the rates offered by the Government by a telegram early in January 1968 and followed by a confirmatory letter, was not accepted. It was further said that an offer made by a manufacturer of bidis to purchase the entire crop for a total amount of rupees three crores was also not accepted.

On behalf of the State it was submitted that till 1967 no rate was fixed for dried and processed leaves in the hands of the growers but when the new Ministry assumed office in 1967 the minimum price was fixed at Rs. 35 per bag of processed leaves in the hands of the growers, which was later raised to Rs. 45 per bag, and the remuneration payable to p!uckers was also raised under orders issued by the Government, and as a result thereof it was anticipated that the pluckers and growers would earn Rs. 47 lakhs in addition to the amount they had earned in 1967; that the scheme of making an offer to established licensees was evolved with a view to "close the channels of corruption and the policy had eliminated all sorts of negotiations or personal approach in the matter of sale of Kendu leave> by the Government", and after careful consideration. the Government determined the fair price that may be realized by selling Kendu leaves; that the dealers who were given contracts for two

years by the previous .Ministries had been offered options to purchase the leaves at rates higher than those obtaining during the last few years and that under the new policy the profits earned rose from Rs. 1,00,75,000 in 1962-63 to Rs. 1,91,00,000 in

1968-69.

It was also submitted that under s. I 0 of the Kendu Leaves (Control of Trade) Act, the Government was authorised to dispose of the Kendu leaves in such manner as the Government may direct and thereby the authority vested in the Government t\) use their discretion "was not amenable to the writ jurisdictiorl of the High Court", and that from the data furnished it was clear that the Government had acted in the best interests of the State and the "figures showed their bona fides in the matter".

RASHDIHARI PANDA v. ORISSA (Shah, /.) 38f

The High Court was of the view that the State having assumed monopoly of trading in Kendu leaves was alone entitled to purchase the Kendu leaves from the primary producers, was by s. 10 authorised to dispose of the leaves "in such manner as the Government may direct". Section 10, in the view of the High Court, placed no restriction on the manner in which the B Government may sell Kendu foaves, and the only question which the Court had to consider was whether in adopting the new scheme of offering to enter into advance purchase contracts by private negotiations for selling Kendu leaves in 1968 the Government had acted bona fide.

The High Court observed :

" ...... we hold that the Government's exercise of the power or discretion under s. 10 cannot be said to be arbitrary as it is open to the Government to direct the sale or disposal of Kendu leaves in any manner they may direct--either by advance purchase contracts by private negotiations or by public auction or by tender; it is not a case where the State Government has exercised this power or discretion without jurisdiction.

The Court is not concerned with the propriety of the Government's action in adopting the particular manner of sale or disposal as it purported to direct. Evidently, the Government acted, as any prudent businessman would do, for the purpose of getting the maximum revenuer-net profits-from the trade in Kendu leaves.

Government's direction, in exercise of the power of discretion conferred on them under s. 10, as to whether a particular manner of sale or disposal will be suitable in a particular year, will depend entirely on their subjective satisfaction, upon consideration of a number of factors which may vary from year to year.

Such direction by the State Government as to the particular manner of sale or disposal in a particular year, as dependent on the subjective satisfaction of the Government as aforesaid, is not justiciable. There is also nothing on record to show lack of bona {ides on the part of the State Government in adopting the manner it did private negotiations-in the matter of sale of Kendu leaves in 1968; nor have we been shoWn any material to hold that its action was capricious or arbitrary or in excess of its jurisdiction." Article 19(1)(f) guarantees the citizens the right to acquire, hold and dispose of property, and Art. 19(1)(g) guarantees the H right to practise any profession, or to carry on any occupation, trade or business. The right under cl. (f) is subject to reasonable restrictions which the State may impose on the exercise of the right in the interests of the general public or for the pro-

11 Sul' C.1./69~

tection of the interests of any scheduled tribe.

Clause ( 6) of Art. 19 which was amended by the Constitution (First Amendment) Act, 1951, sets out the restrictions which may be imposed upon the right to practise a profession or to carry on any occupation. trade or business.

It states : "Nothing in sub-clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub-clause, and, in particular, nothing in the said sub-clause shall affect the operation of any existing law in so far as it relates to, or prevent the State from making any law relating to, - ( j)

(ii) the carrying on by the State, or by a corporation owned or controlled by the Sta, te, of any trade, business, industry or service, whether to the exclusion, complete or partial. of c)tizens or otherwise." In A kadsi Padhan's case(') this Court beld that by the amendments in Art. 19(6) it was intended that the State monopoly in respect of any trade or business must be pr.esumed to be reasonable and in the interests of the .general public; that the expression "law relating to" occurring in cl. (ii) means "essential ; ind basic provisions" enacted to give effect to the monopoly i.e. provisions "integrally and essentially connected with the creation of the monopoly"; that the provisions which are incidental or subsidiary to the creation or operation of the monopoly must satisfy the test of the main clause, and that if the law infringes uny other fundamental right in cl. ( 1) of Art. 19 it must be tested under the appropriate provision governing it.

The Court accordingly held that ss. 3 and 4 of the Act were valid but declined in substance to give effect to the monopoly because the agents appointed were not agents of the Government merely for purchasing Kendu leaves but were authorised to carry on trade in leaves purchased on their own account. The operation of the State monopoly was in the view of the Court to give rise to a monopoly in favour 'of the agents which had not the protection of Art. 19 ( 6 )(ii). The Court observed that the appointee must be "an agent of the Government strictly so-called" acting for and on behalf of the Government and not on his own behalf. The Court while upholding the grant of monopoly by s. 3 of the Act to the Government to carry on the business of purchasinf! Kendu leaves was of the view that the law cannot be used by the State

for the private benefit of agents; it must only be administered

(I) [1961] ~11op. 2 S.C.R. 601.

tor the benefit of the general public, and any arrangement in which under the guise of a monopoly the State pennitted a set of persons to make profit for themselves by carrying on business in Kendu leaves on their own behalf was invalid.

It is urged by th~ appellants that the machinery devised by the Government for sale of Kendu leaves in which they had acquired a monopoly to trade was violative of the fundamental rights guaranteed under Arts. 14 and 19(l)(g) of the Constitution.

It is. said that the purchasers are merely nominees of th\: agents.

It is also claimed that after this Court struck down a scheme under which the agents were to carry on business in Kendu leaves on their own account and to make profit for themselves. the Government with a view to help their party-men set up a body of persons who were to be purchasers to whom the monopoly sales were to be made at concessional rates and that the benefit which would have otherwise been earned by the State accrued to those purchasers.

Section 10 of the Act is a counter-part of s. 3 and authorises the Government to sell or o!herwise dispose of Kendu leaves in such manner as the Government may direct. If the monopoly of purchasing Kendu leaves by s. 3 is valid, insofar as it is intended to be administered only for the benefit of the State, the sale or disposal of Kendu leaves by the Government must also be in the public interest and not to serve the private interests of any person or class of persons. lt is true that it is for the Government, having regard to all the circumstances, to act its a prudent business-man would, and to sell or otherwise dispose of Kendu leaves purchased under the monopoly acquired under s. 3, but the profit resulting from the sale must be for the public benefit and not for private gain. Section 11 which provides that out of the net profits derived by the Government from the trade in Kendu leaves an amount not less than one half is to be paid to the Samitis and Grama Panchayats emphasises the concept that the machinery of sale or disposal of Kendu leaves must also be geared to serve the public interest. lf the scheme of disposal creates a class of middle-men who would purchase from the Gov emment Kendu leaves at concessional rates I and would earn large profits disproportionate to the nature of the service rendered or duty perfonned by them, it cannot claim the protection of Art. 19(6)(ii).

Section 10 leaves the method of sale or disposal of Kendu leaves to the Government as they think fit.

Tne action of the Government if conceived and executed in the interest of the general public is not open to judicial scrutiny.

But it is not given to the Government thereby to create a monopoly in favour of 'third parties from their own monopoly.

\ Jidity of the schemes adopted by the Government of Orissa for sate ot Kendu leaves must be adjudged in the light of Art. 19(1J (g) and Art. 14. lnstead of inviting tenders the Governme.u offered tu certain old contractors the optiQn to purchase Kendu leaves for the years 1968 on terms mentioned therein. ·;;, e reason suggested by the Government that thes< offers were made because the purchasers had carried out their obligations in the iJreviJus year to the satisfaction of th.o Gov ernment is not of any significance.

From the affidavit filed by the State Government it appears that the price fetched at public auctions before and after January 1968 were much higher than the prices at which Kendu leaves were offered to the old con tractors.

The Government redised that the Scheme of offering to enter into contracts with the old licensees and to renew their terms was open to grave objection, since it sought arbitrarily to exclude many persons interested in the trade. The Government then decided to invite offers for advance purchases of Kendu leaves but restricted the invitation to those individuals who had carried out the contracts in the previous year without default and to the satisfaction of the Government.

By the new scheme instead of the Government making an offer, the existing contractors were given the exclusive right to make offers to purchase Kendu leaves.

But insofar as the right to make tenders for the purchase of Kendu leaves was restricted to those persons who had obtained contracts in the previous year the scheme was open to the same objection.

The right to make offers being open to a limited class of persons it effectively shut out all other persons carrying on trade in Kendu leaves and also new entrants into that business. It ws ex facie discriminatory, and imposed unreasonable restrictions upon the right of persons other than existing contractors to carry 011 business.

In our view, both the schemes evolved by the Government were violative of the fundamental right of the petitioners under Art. 19 ( 1 )( g) and Art. 14 because the schemes gave rise to a monopoly in the trade in Kendu leaves to certain traders, and singled out other traders for discriminatory treatment.

The classification based on the circumstance that certain existing contractors had carried out their obligations in the previous year regularly and to the satisfaction of the Government is not based on any real and substantial distinction bearing a just and reasonable relation to the object sought to be achieved i.e .. effective execution of the monopoly in the public interest. ExchLsion of all persons interested in the trade, who were not in the previous year licensees is ex facie arbitrary : it had no direct relation to the object of preventing exploitation of pluckers and growers of Kendu leaves, nor had it any just or reasonable relation 10 the securing of the full benefit from the trade, to the State.

RASHB!HARI PANDA v. OR!SSA (Shah, J.) 385

Validity of the law by which the State assumed the monopoly to trade in a given commodity has to be judged by the test whether the entire benefit arising therefrom is to enure to the State, and the monopoly is. not used as a cloak for conferring private benefit upon a limited class of persons.

The scheme adopted by the Government first of offering to enter into contracts with certain named licensees, and later inviting tenders from licensees who had in the previous year carried out their contracts satisfactorily is liable to be adjudged void on the ground that it unreasonably excludes traders in Kendu leaves from carrying on their business.

The scheme of selling Kendu }eaves to selected purchasers or of accepting tenders only from a specified class of purchasers was not "integrally and essentially" connected with the creation of the monopoly and was not on the view taken by this Court in Akadasi Padhan's case(') protectei by Art. 19 ( 6 )(ii): it had therefore to satisfy the requirement of reasonableness u; nder the first pa; t of Art. 1 9 ( 6). No attempt was made to support the scheme on the ground that it imposed reasonable restrictions on the fundamental rights of the traders to carry on business in Kendu leaves.

The High Court also did not consider whether the restrictions imposed upon per- 'ons excluded from the benefit of trading satisfied the test of reasonableness under the first part of Art. 19 ( 6).

The High Court examined the problem from the angle whether the action of the State Government was vitiated on account of any oblique motive, and whether it was such as a prudent person carrying on business may adopt.

No explanation has been attempted on behalf of the State as to why an offer made by a well-known manufacturer of hidi< interested in the trade to purchase the entire crop of Kendu leaves for the year 1968 for rupees three crores was turned down. If the interests of the State alone were to be taken into consideration, the State stood to gain more than rupees one crore by accepting that offer.

We are not suggesting that merely because that offer was made, the Government was bound to accept it.

The Government had to consider, as a prudent businessman, whether, having regard to the circumstances, it should accep' the offer, especially in the light of the financial position of the offeror, the security which he was willing to give arui the effect which the acceptance of the offer may have on the other trader; and the general public interest.

The learned Judges of the High Court have observed that in their view the exercise of the discretion was not shown to be arbitrary, nor was the action shown to be Jacking in bona fides.

But that conclusion is open to criticism that the Government is not shown to have considered the prevailing prices of Kendu

(I) [1963] Supp. 2 S.C.R. 691,

leaves about the time when offers were made, the estimated crop of Kendu leaves, the conditions in the market and the likelihood of offerors at higher prices carrying out their obligations, 3nd whether it was in the interests of the State to invite tenders in the open market from all persons whether they had or had not taken contracts in the previous year. If the Government was anxious to ensure due. performance by those who submitted tenders for purchase of Kendu leaves, it was open to the Government to devise adequate safeguards in that behalf. In our judg, ment, the plea that the action of the Government was bona fide cannot be an effective answer to a claim made by a citiz.en that his fundamenJal rights were infringed by the action of the Government, nor can the claim of the petitioners be defeated on the plea that the Government in adopting the impugned scheme commited an error of judgment. The plea would have assisted the Government if the action was in law valid and the objection was that the Government erred in the exercise of. its discretion. It is unnecessary in the circumstances to consider whether the Government acted in the interest of their party-men and to increase party funds in devising the schemes for sale of Kendu lea, ves in 1968.

During the pendency of these proceedings the entire year for which 'the contracts were given has expired.

The persons to wl)om the contracts were given are not before us, and we cannot declared the contracts which had ben entered into by the Government for thC"sale of Kendu leaves for the year 1968 unlawful in these proceedings.

Counsel for the appellants agree that it would be sufficient if it be directed that the tenders for purchase of Kendu leaves 'be invited bythe Government in the next season from all persons interested in the trade.

We trust that in accepting tenders, the State Government will act in the interest of the general public and not of any class of traders so that in the next season the State may get the entire benefit of the monopoly in the trade in Kendu leaves and no disproportionate share thereof may be diverted to any private agency. Subject to these observations we make no further order in the petitions out of which these appeals arise.

There will be no order as to CO!!ts in all these appeals throughout.

V.P.S.

Scheme declared invalid:

RASHBIHARI PANDA ETC

STATE OF ORISSA

January 16, 1969

M. HIDAYATULLAH, C.J.

C. SHAH

V. RAMASWAMI

G. K. MITTER

A. N. GROVER, JJ

s. 10

Arts. 14

Art. 19(6)

s. 3

s. 4

s. 11

ss. 3

Arts. 14 and 19(1)(f)

ss. 3 and 4

Art. 19(6)(ii)

Art. 19(6)(ii)

Arts.

14

s. 3

s. 10

Section 11

Art. 19(6)

Kendu

Arts. 14 and 19(1)

Jnonopolv

Art. 19(6)(ii)

Art. 19(6)

Orissa High Court

B. Dadaclwnji

A. S. R. Chari

Govind Das

J. B. Dadachanji

C. K. Daphtary

Santosh Chatterjee

R. N. Sachthey

Shah

High Court of Orissa

Government of Orissa

State of Orissa

s. 3

Art. 19(1 )(g)

s. 3

s. 4

s. 8

Section 10

s. 11

Sections 14, 15 and 16

Section 18

Arts. 19(1 )(f)

Art. 14

ss. 3 and 4

Art. 19(l)(f)

ss. 5, 6 and 9

Art. 19

s. 4

Art. 19(5)

Art. 19(6)

s. 4

section 3

s. 3

February 2, 1966

s. 5

January 24, 1968

Rashbihari Panda

Art. 19(6)(ii)

s. 10

Section 10

s. 10

s. 10

Article 19(1)(f)

Art. 19(1)(g)

Art. 19

A kadsi Padhan

Art. 19(6)

Art. 19

ss. 3 and 4

Art. 19

s. 3

Arts. 14 and 19(l)(g)

Section 10

s. 3

s. 3

s. 3

Section 11

Art. 19(6)(ii)

Section 10

Art. 19(1J (g)

Art. 14

Art. 19

Art. 14

Akadasi Padhan

Art. 19

Art. 1

Art. 19


MUNICIPAL BOARD, SITAPUR

PRAYAG

NARAIN

SAIGAL

& FIRM MOOSARAM'.

BHAGWANDAS

January 16, 1969

[S. M. SIKRI. R. S. BACHAWAT AND K. S. lIEGDE, JJ.]

U.P. Municiplities Act, 1916 (U.P. Act 2 of 1916)-Levy of water rax-Non-comp/iance with provisions of SJ. 131(3), 132(2) and 94- Whether makes levy involid-E[Ject of' 135(3).

The Municipal Board Sitapur took various steps to levy water tax a~ authorised by s. 126(1)(x) of the U.P. Municipalities Act, 1916, and the special resolution imposing the tax with effect from October l, 1957 wa~ passed on April 23, 1957. The High Omrt held the levy to be invalid.

In appeal filed by the Municipal Board this O>urt had to consider the effect of (i) the omission to publish the preliminary p\'opooal separately in the manner prescribed by s. 131(3) read with s. 94,

(ii) the non publication of the modified proposal in accordance with s. 132(2) and

(iii) the non-publication of the special resolution directing the impooition of the tax in accordance with s. 94.

HELD : The High Court was in error in quashing the imposition ol the watertax.

(i) Procedural defects in the imposition of the tax are cured by s. 135(3). Snch defects cannot be regarded as fundamental or as invalidating the imposition, if no substantial prejudice is caused thereby to thl.".' inhabitants of the municipality.

The issue of the notification under s. 135(2) ts conclusive proof that all necessary steps for the imposition ol the tax. have been taken in accordance \Vith the provisions of the Act.

[J89E-F]

Municipal Board v. Raghuvendra, [19661 I S.C.R. 950. Buland Sugar

v. Municipal Board, [1965) I S.C.R. 97(} and Berar Swade.ihi Vana.rpcthi

v. Municipal Committee, Shegaon, [1962] 1 S.C.R. 596, applied.

(ii) In the present case there was substanti::ll compliance with s. 131 (3).

The proposal was not separately published in the prescribed tonn but the 01nission to do so was a mere irregularity.

The object of the publication under s. 131(3) is to inform the inhabitants of !he proposal so that they can file their objeclions to it.

Thal object was fully achie.ved by the publication in the local newspaper.

[39(} B-D]

(ii!) The inh.abitants submitted all objections which they could possibly raise both with regard to the rate of tax and the exemption limit. No prejudice was caused by not inviting fresh objections to reduction of the

rate of tax or !he exemption limit.

Tbe non-publication of the modified proposal was a mere irregularity and the defect was cured bys. 135(31.

[390 E]

(iv) Section 134(2) does not provide for the publication of the special re.olut1on passed under it.

Assuming that it had to be published under the general provisions of s. 94, the non-publication was a mere irregularity cured by s. 135(3).

[391 CJ

CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 84 7 and 848 of 1966.

Appeals by special leave from the judgment and order dated A January 20, 1965 of the Allahabad High Court, Lucknow Bench in Writ Petitions Nos. 108 and 109 of 1962.

S. C. Manchantla and S. S. Shukla, for the appellant (in both the appeals).

C. B. Agarwala and K. P. Gupta, for the respondents (in B both the appeals).

The Judgment of the Court was delivered by Bacbawat, J. These appeals are directed against orders of the Allahabad High Court (Lucknow Bench), quashing the imposition of a water rate imposed by the Municipal Board, Sitapur.

Section 126(l){x) of the "(J.P. Municipalities Act, 1916 ( U.P Act No. 2 of 1916) empowers the Board to impose a water tax on the annual value of buildings or lands or of both.

Sections 131 to 135 lay down the procedure for imposing the tax. The High Court held that the levy was invalid as the Bollfd did not comply with this procedure.

A municipal board desiring to impose the tax is required by s. 131 sub-s. (1) to pass a ecial reso!\1tion framing the preliminary proposal for the tax.

The Municipal Board, Sitapur. passed a special resolution on January 24, 1956 framing the proposal for the levy of water tax at the rate of 12 % per annum on the annual value of buildings and lands and exempting buildings and lands whose annual value was Rs. 24 or below.

Section 131 sub.-s. (2) requires the Board to prepare a draft Of the rules in respect of the proposed tax.

The Board duly prepared the necessary draft rules.

Section 131 sub-s. (3) requires the Board to publish in the manner prescribed in s. 94 the proposal and the draft rules along with a notice in the form setforth in Schedule III. The draft rules along with the notice was published in the Rashtra Sandesh, a local paper published in Hindi.

The proposal was not separately published. But the proposal was to be found in the: draft rules published in the local paper. Objections against the proposal were filed by the inhabitants of the municipality.

The Board duly considered the ob- .iections and passed orders thereon under s. 132 sub-s. (1).

After considering the objections and the recommendations of the prescribed authority under s. 133 sub-s.

(1) the Board decided to modify the original proposal by reducing the tax to !0% on the annual value and by exempting all lands and buildings whose annual value was Rs. 36 or below.

Section 132 sub-s. (2) requires the Board to publish the modified proposal along with a notice indicating that it is iri modification of the original proposal. ands. 132 sub-s. (3) provides that the objecc

MUNIC. BOARD v. P. N. SAIGAL (Bachawat, J.) 389

tions to the modified proposal shall be dealt with in the manner prescribed by sub-s. ( 1). The modified proposal was not published as required by s. 132 sub-s. (2). The prescribed authority acting under s. 132 sub-s. (2) duly sanctioned the final proposal and mad~ the necessary rules in respect of the tax. It may be noted that the Commissioner, Lucknow Division, was the prescribed authority.

On receipt of the order of sanction and the copy of the rules, the Board acting under s. 134 sub-s. (2) passed a special resolution on April 23, 1957 directing the imposition of the tax with effect from October 1, 1957. This special resolution was not published in the manner prescribed by s. 94.

On receipt of the special resolution the prescribed authority acting under s. 135 sub-s. (2) notified in the official gazette dated August 3, 1957 the imposition of the tax from the appointed date.

Section 135 sub-s. (3) provides that "a notificatioa of the imposition of a tax under sub-section (2) shall be conclusive proof that the tax has been imposed in accordance with the provisions of this Act."

The respondents raised three objections against the validity of the imposition of the water tax : ( 1) omission to publish the preliminary proposal separately in the manner prescribed by s. 131 sub-s. (3) read with s. 94; (2) non-publication of the modified proposal in accordance withs. 132 sub-s. (2); and (3) non-publication of the special resolution directing the imposition of the tax in accordance with s. 94. The procedure laid down by the Act was not strictly complied with before imposing the tax.

But all the procedural defects in the imposition of the tax <ue cured by s. 135 sub-s. (3), where, as in this case, the Municipal Board has the power to levy the tax and has passed the special .resolution necessary for the imposition of the tax and the defects are not of a fundamental character. The procedural defects cannot be regarded as fundamental or as invalidating the imposition, if no substantial prejujdice is caused thereby to he inhabitants of the municipality.

The issue of the notificatton under s. 135 sub-s. (2) is conclusive proof that all necessary steps for the imposition of the tax have been taken in accordance with the provisions of the Act.

In Municipal B'>ard v. Raghuvendra( 1 ) the Court held that the deft of non-publication of the special resolution proposing the tax m a local Hindi paper and omission to publish the draft rules as required bys. 131 sub-s. (3) read withs. 94 sub-s. (3)

wa~ .cured by .s. 135 sub-s. (3) and that the publication of the special resolution by affixing a copy of it on the notice board and by beat of drum was sufficient.

In Bland Sugar v. Muni cipal Board(') the Court held that the publication of the prorn[l966J I~ S.C.R. 950-. --·

12) [!%5] I S.C.R. 970.

posals and the draft rules in Hindi in a local Urdu paper was A sufficient compliance with s. 131 sub-s. ( 3). In Berar Swadeshi

Vanaspathi v. Municipal Committee, Shegaon,( 1 ) the Court held that in view of the similar provisions of s. 67 sub-s. (7) of the C.P. and Berar Municipal Act, 1922, the validity of imposition of the octroi tax could not be challenged on the ground that the objections were not considered on the merits.

As to the first objection we find that there was substantial compliance with s. 131 sub-s. ( 3). The draft rules were published in the Rashtra Sandesh.

They incorporated the preliminary proposal and mentioned the special resolution dated January 24, 1956 by which the proposal was framed.

There was thus sufficient publication of the proposal.

The. proposal was not separately published in the prescribed form, but the omission to do so was a mere irregularity.

The inhabitants of the municipality had due notice of the proposal. The object of the publication under s. 131 sub-s. ( 3) is to inform the inhabitants of the proposal so that they can file their objections to it. That object was fully achieved by the publication in the Rashtra Sandesh.

As to the second objection, we find that the original proposal was to levy water tax at the rate of 12% per annum on the annual value.

The inhabitants had full opportunity to raise objections to the rate of the tax and to submit whether the rate should be 12% or 10% or less.

After considering their objections, the Board proposed to levy the tax at the reduced rate of 10%· per annum on the annual value.

No prejudice was caused by not inviting fresh objections to the modified proposal of levying the tax at the reduced rate. It is interesting to notice that the U.P. Municipalities (Amendment) Act, 1964 (U.P. Act No. XXVII of 1964) inserted in s. 132 sub-s. (2) the following proviso : "Provided that no such publication shall be necessary where the modification is confined to reduction in the amount or rate of the tax originally proposed.'' This proviso was not in force on January 24, 1956. But it does indicate that i.t is unnecessary to publish a modified proposal reducing the rate of tax originally proposed.

The original proposal exempted all buildings and land> whose annual value was Rs. 24 or below.

The modified proposal raised the exemption limit and provided that all buildings and lands whose annual value was Rs. 36 or below would be exempted. The inhabitants of the municipali.ty had full opportunity to raise objections as to the exemption limits as originally proposed and to submit whether buildings and lands of the value of Rs. 24 or Rs. 36 or more should be exempted.

No prejudice was caused by not inviting fresh objections to the

(1)(190211 S.C.R. 596.--

)!IUNIC. BOARD v. P. N. SAIGAL (Bachawat, J.) 391

modified proposal raising the exemption limit.

The inhabitants submitted all objections which they could possibly raise bot, h with regard to the rate of tax and' the exemption limit. In our

opinion, the non-publication of the modified proposal was a mere irregularity, and the defect was cured by s. 135 sub-s. (3).

As to the third objection it is to be observed that s. 134 sub. s. ( 2) does not provide for the publication of the special resolution passed under it. Assuming that this special resolution had to be published under the general provisions of s. 94, we think that the non-publication was a mere irregularity.

The inhabitants had no right to file any objections againstthe special resolution. They had clear notice of the im position of the tax from the notification published in the official gazette on August 3, 1957. The defect of the non-publication of the special resolution in the manner prescribed by s. 94 was cured by s. 135 sub-s. ( 3). The High Court was in error in quashing the imposition of the water tax.

In the result, the appeals are allowed with costs in this Court and in the High Court, the order of the High Court is set aside and the writ petitions are dismissed. There will be one hearing fee.

G.C.

Appeals allowed ..

PRAYAG NARAIN SAIGAL & FIRM MOOSARAM BHAGWANDAS

January 16, 1969

S. M. SIKRI. R. S. BACHAWAT

Municiplities Act, 1916

The Municipal Board Sitapur

s. 126(1)(x)

Municipalities Act, 1916

23, 1957

s. 131(3)

s. 94

s. 132(2)

s. 94

s. 135(3)

s. 135(2)

[1962] 1 S.C.R. 596

s. 131

s. 131(3)

Section 134(2)

s. 94

s. 135(3)

Allahabad High Court, Lucknow Bench

S. C. Manchantla

S. S. Shukla

C. B. Agarwala

K. P. Gupta

Bacbawat

Allahabad High Court (Lucknow Bench

Section 126(l)

Municipalities Act, 1916

Sections 131 to 135

s. 131

Municipal Board, Sitapur

January 24, 1956

Section 131

Section 131

s. 94

Schedule III

s. 132

s. 133

Section 132

s. 132

s. 132

Lucknow

s. 134

April 23, 1957

s. 94

s. 135

August 3, 1957

Section 135

s. 131

s. 94

s. 94

s. 135

s. 135

s. 135

s. 131

s. 67

Berar Municipal Act, 1922

s. 131

s. 131

s. 132

s. 135

s. 134

s. 94

s. 94

s. 135


STATE OF UTTAR PRADESH & ORS.

HARISH CHANDRA SINGH

January 17, 1969

[S. M. Snou, R. s. BACHAWAT AND K. s. HEGDE, JJ.]

Constitution of India Art. 311(1)--Consideration of past record- 01nission in show cause-Whether justifies lesser pena/v.

Police A.ct, 1861, ss. 7 and 29-Scope of-Prosecution under s. 29, need not precede charges under s. 7.

The respondent, was selected by the Deputy Inspector General of Police for admission to the Police Training College, and the result declar- C ing him successful was issued by the order of the Inspector General of Police, and bis appointment announced in the police gazette.

While the respondent was serving as a Sub-Inspector of Police. charges were framed against him, under s. 7 of the Police Act, 1861. The Superintendent of Police gave a report mentioning his past record, and recommended his 'removal from service. Notice to show cause, enclosing the findings of the Superintendent of Police was served on the respondent.

The Deputy Inspector General, held the enquiry, and agreed with the findings of the D Superintendent of Police. The respondent filed an appeal to the !nspector- General of Police, which was rejected.

In their order, both the Deputy Inspector General and Inspector General, took into consideration the past record of the respondent.

The respondent filed a suit for a declaration th:1t his removal was illegal and ineffective.

The trial court dismissed the suit, but the High Court decreed the suit holding that no opportunity was given to the respondent to expl¥n his past record which \Vas ta.ken into E consideration.

In appeal to this Court, the State contended that the respondent had notice that his past record would be taken into considerati-.:>n.

and alternatively, if the past record was t~.kcn into consideration for imposing lesser oenalty, it was not necesary to mention in the show cause notice that the past record would be considered.

The respondent contended that there has been breach of Art. 311 ( 1) of the Constitution as he was appointed by the Inspector General of Police and removed by the Deputy Inspector General of Police and that he should have been tried under F s. 29 of the Police Act, before he was charged under s. 7.

HELD : The suit must be dismi.sed.

(i) The respondent had notice that his past record would be taken into consideration because the Superintendent of Police had mentioned it in hi!ri order, a copy of \Vhich w:1s supplied to him.

Furthe'r, on the charges against the respondent, he had been dealt with leniently and if the record was taken into consideration for the purpose of imposing a lesser

punishment rind not for the pUrpose of increasing the quantum or nature of punishment. then it was not necessary that it should be stated in the sho\v cause. notice that his past record would be taken into consideration.

[397A; G-HJ

State of M., sore v. K. Manche Gowda, [1964] 4 S.C.R. 540. 548, referred to.

(ii) The first appellate court's conclusion that the respondent hh.d been appointed by the Deputy Inspector General of Police, was a finding of fact and was binding on this Court. But apart from that the "';'IY doc; ument relied on by the respondent was the result sheet dec1anng him

A successful ;1fter training and this had no relevance to his appointment as Sub-Inspector of Police.

[398 A-OJ

(iii) A Police Officer may also be liable to be prosecuted under s. Z9 of the Police Ac), but it i• not necessary that in every case which falls within s. 7 the Police Officer should first be prosecuted under s. 29 before he can be proceeded under s. 7. Section 7 deals with disciplinary proceed- B ings while s. 29 makes certain beaches criminal olfences. Section 29 does not in any way limit the operation of s. 7. [399 CJ

C1v1L APPELLATE JuR1so1cTION: Civil Appeal No. 834 of 1966.

Appeal by special leave from the judgment and order dated March 2. 1965 of the Allahabad High Court in Second Appeal C No. 1271of1962.

C. P. A garwa/a and 0. P. Rana, for the appellan~:

E. C. Agrawa/a, S. R. Agrawa/a and P. C. Agrawlllla, tor the respondent.

The Judgment of the Court was delivered by Sikri, J. This appeal by special leave is directed against the judgment of the High Court of Judicature at Allahabad diing the appeal filed by the State of Uttar Pradesh and Others, appellants before us, against the judgment and decree passed by the Additional District Judge, Varanasi, setting aside the judgment Jnd decree passed by the Trial Court and decreeing the plaintiff's suit.

The plaintiff, Harish Chandra Singh, had brought a suit against the State of Uttar Pradesh and some Police Officers tor a declaration that the order of removal of the plaintiff from the

Police Service was void, illegal, ineffective and inoperative, and that the plaintiff still CQ!ltinued to be in Uttar Pradesh Police Service as Station Officer-in-Charge of a Police Station and that he was entitled to his full pay and emoluments with increments as they fell due.

He had also prayed for recovery of Rs. 7,453 as full emoluments and salary from June 27, 1956 up to the date of the suit.

In order to appreciate the points raised before us it is necessary to set out the relevant facts.

On December 13, 1942, the plaintiff was appointed as Platoon Commander in the Civil Guards.

Jn 1945 there was a notification regarding the absorption of civil guards in the Police and on November 6, 1945, the plaintiff was

elected by the Deputy Inspector General, Police Headquarters, Allahabad, for admission to the 1946 Session of the Police Training College, Moradabad.

On January 8, 1947, the result of the Civil Police Cadets for 1946 Session was announced, and in the extract of the Police Gazette it is stated in the last column

under the heading 'where posted', against the name of the plaintiff, 'Azamgarh'.

This result sheet was issued by order of the Inspector General of Police, United Provinces.

We have mentioned these facts because the learned counsel for the plaintiff contends that the plaintiff was in fact appointed by the Inspector General of Police and not by the Deputy Inspector General of Police.

Following three charges were framed against the plaintiff under s. 7 of the Police Act, 1861 on February, 6. 1956:

"!. A case Cr. No. 92 u/s 324 !PC was registered at P. S. Mariahun which on receipt of the injury report on 6-11-55 at the P. S. was found to fall within the purview of section 326 !PC and yet this SJ. did not investigate the case in accordance with law and failed even to comply with the orders of the Dy. S.P. (then acting as S.P.) given .by him on 19-11-55.

2. On 2 l-11-55 a written report of burglary was made over to him by one Lalji Singh r Io J amua who came to the P .S. alongwith Ramdeo anc1 Ganesh but he failed to record that report and register a case in contravention of the provision of paragraph 97 of the Police Regulations.

A case Cr. No. 101 u/s 457 /380 IPC was, however, registered by him on 5-12-55 although he had been to the scene of occurrence on 27-11-55 and had conducted some investigation on that date. He did not prepare any case diary for the investigation carried out on 27-11-55 and even after the registration of the case on 5-12-55 he deferred proper investigation until 22-12-55.

3. A report of burglary on the night of 17/18-10-55 was handed over to this S.I. personally by complainant Raj Bahadur Singh but no action was taken on that report nor any entry was made in the General Diary to this effect. On receipt of a complaint the C.I. was asked to enquire into the matter who directed him to register a case and accordingly a case was registered on Cr. No.

100 u/s 457/380 T.P.C. on 2-12-55.

Even after the registration o.f this case this S.I. deferred proper investigation until 17-12-55."

The Superintendent of Police gave a report on February 27, 1956, but the Inspector General ordered. a fresh enquiry on March 6, 1956.

On April 30, 1956. the Superintendent of Police gave his report.

He held the plaintiff guilty of the charoes framed H "against him.

Towards the cind of the report, the Suprintendcnt "Jf Pohce observed :

"S.I. Harish. Chandra Singh is an enlistment of 29-1-4 7 when he seems to have started his service satisfactorily. In 1950 he was placed under suspension and was dismissed from service from 21-6-1951 while he was in district Azamgarh.

On subsequent consideration he was reinstated and he reported for service in January

I 952. He was, however, reduced to the lowest scale of a S.I. for a period of three years. His character roll indicates that he was again placed under suspension from 20-8-54 but reinstated on 30-9-54. Soon after he was again placed under suspension with effect from 4-11-54 and was proceeded against u/s 7 of the Police Act as i:

result of which he was reduced from R>. 162 p.m. to Rs. 144 p.m. for a period of one year fn>m 8-2-55 and reinstated in service. Subseyuently he was awrded a misconduct entry for a non-registration of dacoity case while posted in district Basti.

On the other hand he has also earned some rewards and is at pre>ent posted as II Officer P.S. Mirganj. This record of service does not appear encouraging at all.

In respect of the various items of charge u/ s 7 of the Police Act framed against him he has been held guilty and considering the seriousness of these charges I do not think any leniency is called for in his favour. He has clearly disobeyed the lawful orders of his superior officers and has failed to comply with the mandatory provisions of law and Police Regulations.

A S. I. acting in this manner is not in my opinion fit to discharge his responsibilities as a police officer.

Since. however. no dishonesty has been attributed to him in the various items of the charge framed against him. I think it will meet the ends of justice if he is only removed from police service.

Accordingly findin!! him guiltv u/s 7 of the Police Act I propose that he may be removed from the

Police Service and submit this finding to the

D.T.G.

Eastern Range in accordance with paragraph 490 subparagraph 8 (a) of the Police Regulations."

On May 16. 1956, a show-cause notice was served on the plaintiff and a copy of the findings of the Superintendent of Police was enclosed.

In the show-cause notice it was stated that the plaintiff could send his written representation within I 0 days of the receipt of the show-cause notice and after checking his explanation he would be called to appear before the Deputy Inspector General of Police, E. Range.

He appeared before the Deputy Inspector General of Police and answered variom questions put by the D.T.G.

Towards the end he stated that he had no complaint with regard to the departmental proceedings against him.

The Deputy Inspector General agreed with the findings of the Superintendent of Police, and at the end of his order he observed:

"S.I. Sri Harish Chandra Singh was enlisted on 29-1-194 7.

In 1950 he was placed under suspension and he was dismissed from service from 21-6-51. He was, however, later reinstated and joined his duty in January 1952. He was also reduced to lowest scale of S.l.s for a period of 3 years vide orders (torn) 'E' dated 25-4-51. In 1955 he was dealt with u/s 7 of the Police Act for having contracted illicit connection with Shrimati Mina Devi who was ultimately recovered from (torn) the C.I. and he was reduced for 2 years.

He (tom) entry in 1955 for having failed to (tom) o! dacoity.

Against this black record, the (torn) 15 rewards and commendations. The party is indisciplined and unreliable and he does not deserve (tom) in the police service.

The charges proved against him (torn) very serious and there is no room for me to show him any (tom) in the award of punishment. Agreeing with the proposal of the S.I., I order that S.I. Harish Chandra Singh be removed from service with effect from the date that this order is communicated to him." The plaintiff then filed an appeal to the Inspector General of Police, who rejected the appeal, and after taking into consideration his previous record confirmed the order of removal. He observed:

"In fact the D.I.G. has taken a lenient view in (tom) removing him from service especially in view of his past

(tom)."

The High Court held that no opportunity was given to the plaintiff to offer any explanation on the question of his past record which was taken into consideration by the Deputy Inspector General of Police in arriving at his decision to remove the plaintiff from service.

The High Court relied on the following passage from the judgment of this Court in State of Mysore v.

K. Manche Gowda(') :

"We, therefore, hold that it is incumbent upon the authority to .give the Government servant at the second stage reasonable opportunity to show cause against the proposed punishment and if the proposed punishment is also based on his previous punishment or his previous bad record, this should be included in the second notice so that he may be able to give an explanation."

(t) (1964] 4 S.C.R. 540, 548.

1:1

The learned counsel for the State contends that on the facts of this case it is clear that the plaintiff had notice that his record would be taken into consideration because the Superintendent of Police had mentioned it towards the end of his order, a copy of which was supplied to the plaintiff.

In the alternative he contends that if the record is taken into consideration for the purpose of imposing a lesser punishment and not for the purpose of increasing the quantum or nature of punishment, then it is not necessary that it should be stated in the show-cause notice that his past record would be taken into consideration.

It seems to us that the learned counsel is right on both the points. The concluding para of the report of the Superintendent of Police, which we have set out above, clearly gave an indication to the plaintiff that his record would be considered by the Deputy Inspector General of Police and we are unable to appreciate what more notice was required. There is also force in the second point urged by the learned counsel. In State of Mysore v.

K. Manche Gowda(') the facts were that the Government servant was misled by the show-cause notice issued by the Government, and but for the previous record of the Government servant the Government might not have imposed the penalty of dismissal on him.

This is borne out by the following observations of Subba Rao, J., as he then was:

"In the present case the second show cause notice does not mention that the Government intended to take his previous punishments into consideration in proposing to dismiss him from service. On the contrary, the said notice put him on the wrong scent, for it told him that it was proposed to dismiss him from service as the charges proved against him were grave. But, a comparison of paragraphs 3 and 4 of the order of dismissal shows that but for the previous record of the Government servant, the Government might not have imposed the penalty of dismissal on him and might have accepted the recommendations of the Enquiry Officer and the Publilc Service Commission.

This order, therefore, indicates that !he show cause notice did not give the only reason which mfluenced the Government to dismiss the respondent from service." (p. 549)

We may mention that on the charges against the plaintiff, and as observed by the Inspector General of Police, the plaintiff had been dealt with leniently.

The learned counsel for the plaintiff, in reply urges before m that there has been breach of Art. 311 (1) ol the Constitution because although the plaintiff was appointed by tbt Inspector Gene-

OJ (1964] 4 S.C.R. S40, 548~ SS up.C.l./69-7

ral of Police he had been removed by the Deputy Inspector General, Range E. The learned Additional District Judge, after examining the evidence and para 406 of the Police Regulaltions, came to the conclusion that the plaintiff had been appointed by the Deputy Inspector General of Police. This is a finding of fact and binding on us. But apart from that the only document relied on by the learned counsel for the plaintiff is the result sheet dated January 8, 1947. This has no relevance to the question of his appointment as Sub-Inspector. We must, therefore, overrule this contention.

The last point urged by the learned counsel for the plaintiff is that the plaintiff should have been tried under s. 29 of the Police Act before he was charged under s. 7. Sections 7 and 29 of the Police Act read thus:

"7. Subject to the provisions of article 311 of the Constitution, and to such rules as the State Government may from time to time make under this Act, the Inspector General, Deputy Inspector General, Assistanflnspectors General and District Superintendents of Police may at any time dismiss, suspended or reduce any police-officer of the subordinate ranks whom they shall think remiss or negligent in the discharge of his duty, or unfit for the same, or may award any one or more of the following punishments to any police-officer of the subordinate ranks who shall discharge his duty in a careless or negligent manner, or who by ainy act of his own shall render himself unfit for the discharge thereof, namely:- {a) fine to any amount not exceeding one month's pay;

-( b) confinement to quarters for a term not exceeding fifteen days with or without punishment-drill, extra guard, fatigue or other duty; { c) deprivation of good-conduct pay;

-( d) removal from any office of distinction or special emolument.

S. 29. Every police-officer who shall be guilty of any violation of duty or wllful breach or neglect of any rule or regulation or lawful order made by competent authority, or who shall withdraw from the duties of his office without permission, or without having given previous notice for the period of two months or who, being absent on leave, shall fail, without reasonable cause, to report himself for duty on the expiration of suc)l leave, or who shall engage without authority in any employment other than his police-duty, or who shall be guilty of

cowardice, or who shall offer any unwarrantable personal violence to any person in his custody, shall be liable on conviction before a Magistrate to a penalty not exceeding three months' pay, or to imprisonment, with or without hard labour, for a period not exceeding three months, or to both."

We are unable to appreciate why it is necessary that a police officer should be prosecuted under s. 29 before departmental proceedings can be taken under s. 7 of the Police Act. It may be that a police-officer is also liable to be prosecuted under s. 29, but it is not necessary that in every case which falls within s. 7, the police-officer should first be prosecuted under s. 29 before he can be proceeded against under i. 7.

Section 7 deals with disciplinary proceedings while s. 29 makes certain breaches criminal o!fences. Section 29 does not in any way limit the operation of s. 7.

In the result the appeal is allowed, judgments and decrees of the High Court and the Additional District Judge set aside and the suit dismissed with costs throughout.

Y.P.

Appeal allowed.

STATE OF UTTAR PRADESH & ORS

HARISH CHANDRA SINGH

January 17, 1969

R. s. BACHAWAT

K. s. HEGDE, JJ.

Constitution of India

Art. 311(1)

ss. 7 and 29

s. 29

s. 7

s. 7

Police Act, 1861

Art. 311

s. 29

Police Act

s. 7

[1964] 4 S.C.R. 540

s. 7

s. 29

s. 7

Section 7

s. 29

Section 29

s. 7

C. P. A garwa

P. Rana

E. C. Agrawa

S. R. Agrawa

P. C. Agrawlllla

Sikri

High Court of Judicature at Allahabad

State of Uttar Pradesh

Additional District Judge, Varanasi

Harish Chandra Singh

State of Uttar Pradesh

June 27, 1956

December 13, 1942

November 6, 1945

Allahabad

January 8, 1947

Azamgarh

s. 7

Police Act, 1861

February, 6. 1956

s 324

P. S. Mariahun

section 326

2 l-11-55

Lalji Singh

Ramdeo

Ganesh

s 457

IPC

Raj Bahadur Singh

s 457

February 27, 1956

March 6, 1956

April 30, 1956

Jf Pohce

S.I. Harish. Chandra Singh

Azamgarh

s 7

Police Act

Basti

P.S. Mirganj

s 7

Police Act

s 7

Police Act

May 16. 1956

Harish Chandra Singh

29-1-194 7

s 7

Police Act

Shrimati Mina Devi

(1964] 4 S.C.R. 540

Subba Rao

Publilc Service Commission

Art. 311

S40, 548

s. 29

Police Act

s. 7

Sections 7 and 29

Police Act

article 311

S. 29

s. 29

s. 7

Police Act

s. 29

s. 7

s. 29

Section 7

s. 29

Section 29

s. 7