60&

STATE OF ANDHRA PRADESH

BATHU PRAKASA RAO

May 7, 1976

[A. N. RAY, C.J., M. H. BEG AND JASWANT SINGH, JJ.]

Practice and procedure-Findings of fact by High Court-Supreme Court's interference, when called for.

Essential Commodities Act, 1955, s. 6A. Validity of confiscation proceedings .1 by Distri<:t Revenue Officer. r

The respondent-rice-millers obtained permits under clause (3) of the Southern States (Regulation of Export of Rice) Order, 1964, for exporting "broken rice" from Andhra Pradesh to Kerala. but were intercepted for allegedly transporting "whole rice" for "broken rice". The rice was seized, and samples analysed in

the presence of the District Revenue Officer who ordered confiscation of the estimated quantity of the "whole rice". On appeal, the District Judge remanded the matter for giving fuller opportunity to the respondents for objecting t.o the sample analysis which was to be carried out afresh in their presence. The State's

revisioh application against the remand order dismissed by the High Court, The Revenue Officer then ordered a release of 12%, and the confiscation of the ,-emaining quantity seized, as no sample from the bags contained a minimum percentage of 60% of "broken" grains satisfying the test laid down in the Handbook on Grading Foodgrains and Oilseed. The District & Sessions Judge partially allowed the respondents' appeals.

Both sides. filed revision applications.

The High Court decided in favour of the respondent, holding that "broken rice"

included "whole rico".

Allowing the appeals, the Court,

HELD: (I) Ordinarily, this Court does not interfere with findings of fact.

But, where the errors of logic as well as law appear to be gross and to have occasioned a miscarriage of justice, the court is constrained to interfere. [609-]

(2) The Revenue Officer's order releasing the seized rice to the ex!ent of 'about 12% having become final, it should not be interfered with except to the

F extent that the learned Sessions Judge added 2% more for foreis:n matter thereby releasing slightly more in favour of the respondent.

[610-DJ

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal Nos. 100- 146 of 1976.

Appeals by Special Leave from the Judgment and Order dated 29-8-75 of the Andhra Pradesh High Court in Cr!. Rev. Cases Nos. 256-302/75 and 437-483/75 respectively.

Niren De. Attorney General for lndiq (In CrL A.100, 101 and 112 of 1976) P.. Ram Reddy (Crf. A.102-111, and 113-145/76); P. P. Rao and k, J(_~ , Deshpande for the appellants In .aU the appeals;

Sachin Chaudhary (In Crl. A.100/76); S. V. Gupte (In CrL A.101/

76) T. Ramam, B. Parthasarthi 'for Respondents' in Cris. A. Nos. 101 105, 10'7-118 120-139 and 141-146/76.

The Judgment of the Coun was delivered by

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BEG, J.

These appeals, by Special Leave, raise an apparently simple question which appears to be essentially one of fact. But, as

the real question to be answered was not correctly posed before itself by the High Court of Andhra Pradesh, it misdirected itself as to what was to be really decided by it and also how it should be decided according to rules of ordinary logic as well as law.

Ordinarily, this Court does not interfere with findings of fact.

But, where the errors of logic as well as law, discussed below, appear to us to be gross and to have occasioned a miscarriage of justice, we are constrained to interfere.

The crucial question to be decided may be put as follows : What did the respondents understand when they obtained permits for the despatch of "broken rice (raw, boiled)" shown in their export permits?

If the respondents understood what their permits meant, they could not, nnder the guise of these permits, transport any other kind of rice.

It was their duty to abide by the terms of their permits, and to show, when proceeded against, that they did so.

Each permit shows : quantity permitted to be sent; the duration of the validity of the permit; the name of the consignor; the name of the station from which rice was to be despatched; the means of despatch (shown as "by rail only"); the name and address of the consignee (shown as "self'); the State to which the consignment was to be booked (shown as Kerala State), purpose of the consignment (shown as trade account) . The permit was described as an "export permit".

The details mentioned above were given in a schedule, the permit was addressed "to the Miller", and its operative part said :

"In exercise of the powers conferred under clause 3 of the Southern States (Regulation of Export of Rice). Order, 1964 read with G.0.Ms. No. 2495 F & A Dt. 17-10-1964 the Collector hereby permits the transport of rice products mentioned in the Schedule subject to the conditions specified below".

The specified conditions, in addition to those mentioned in the details given above were :

"1. This permit is not transferable.

2. It is liable for cance1Iation at any time by the issuing authority for the reasons to be recorded in writing.

3. It is valid only for the period mentioned in the permit and the consignment must be booked from the despatching station before the expiry of such period.

4. Any permit that is taken out but not utilised should be returned immediately to issuing authority.

5. The stuff shonld be got checked by the Assistant Grain H Purchasing Officer assisted by the Food Inspector concerned while loading into the wagon and a certificate should be 41-833Suti. CI/76

got recorded on the permit itself that the stuff loaded is broken rice and not whole rice and the quantity loaded.

6. In respect of self permits the permit holder, should furnish to the Collector, West Godavari, Eluru (A.P.) am;! the District Supply Officer, Tedepalligudam and the Collector of the importing District within one month from the date of issue of the permit the particulars of the Station to which the consignment is booked names and addresses of the buyers".

The allegation against the respondents was that they had broken the conditions of their permits inasmuch as their consignments. which had been seized, whilst being transported in railway wagons from Andhra Pradesh to Kerala, consisted of rice instead of "broken rice".

After the issue of show cause notices and the replies filed by the respondents, a number of writ petitions was filed on a number of grounds in the High Court of Andhra Pradesh questioning the validity of confiscation proceedings under Section 6A of the Essential Commodities Act, 1955 (hereinafter referred to as 'the Act'). These writ petitions were dismissed on 25th October, 1971.

After the dismissal of the Writ Petitions mentioned above, the Revenue Officer passed orders, on 18th November, 1911, confiscating only what was estimated as the quantity of "whole rice", according to the standards applied in drawing up an analysis report from samples which the Revenue Officer accepted as correct.

The respondents then appealed to the District and Sessions Judge who, on 16th February, 1972, set aside the orders of the Revenue Officer and directed him to decide again the question involved in the cases in accordance with law, after giving full opportunity to the respondents to object to the analysis which was to be carried out afresh in their presence.

The District Judge did not consider the report of the Assistant Marketing Officer of Chitur, after an analysis carried out in the presence of the District Revenue Officer, to be a sufficient compliance with the requirement to give due opportunity to the respondents to show what the consignments contained.

It may be mentioned here that the reports upon which proceedings were commenced in respect of a very large quantity of rice had been filed by the Inspector of Police of the Vigilance Section of the Civil Supplies' Department. It was clearly mentioned in these reports that the rice which was seized by the police in the course of its transit in a number of wagons of a goods train proceeding from Andhra Pradesh to Calicut in Kerala State was not "broken rice".

The respondents are regular Millers whose business it is to know the varieties and the nomenclature of various types and qualities of rice.

They could not, therefore, be ignorant of what was the case against them. Moreover, when the cases were actually remanded to the Revenue Officer with specific directions to give the respondents fuller opportunity to show cause and meet the cases against them, there could be no possible excuse for the respondents not to put in evidence of their side of the case if they bad a case to put up in defence.

The Revision Applications by the State against the orders of District and Sessions' Judge were dismissed by the Higq Court on 29th March, 1973. During the pendency of the revision applications in the High Court, notices of auction of boiled rice were issued under the orders of the High Court.

The rice was sold as ord_inary "boiled rice".

It is alleged on behalf of the State, that the price for which the boiled rice. seized from the Railway wagons, was sold on 5th October,

1972. was about Rs. 30 lakhs.

This price, it was submitted, could -0nly be fetched by "whole rice" .

We are, however, more concerned with what took place after the High Court had upheld the order of the District & Sessions' Judge remanding the case for full hearing and adduction of evidence by both sides.

In his final order of 4th December, 1973, after the remand, the District Revenue Officer gave the whole history of the case and pointed out the opportunities th~ respondents had been given for substantiating their case if they had one worth consideration.

The District Judge had remanded the case principally because the first report of the analyst, issued by the Assistant Director of Marketing, Chitur. had been made without an analysis carried out in the presence of the respondents although it was made in the presence of the District Revenue Officer.

The District Judge had held that the Asstt. Director of Marketing should have himself given evidence before J1is report could be treated as evidence.

After the case had been remanded. there was a fresh analysis with fresh samples taken under the orders of the High Court.

And, this second analysis took place in the presence of the respondents. The Assistant Director of Marketing, who made the analysis, was produced in evidence.

The respondent had full opportunity of cross-examining him and also of giving their own versions. But, they contented themselves with some cross-examination of the Assistant Director of Marketing in the course of which it was not suggested to the Assistant Director that the test of "broken rice" was itself incorrect.

On the other hand, in answer to one of the questions in cross-examination, the Assistant Director of Marketing replied :

"I agree that any grain which is less than 3 /4th of the whole grain is a broken.

According to Serial Grading Rules. 1966. rice includes brokens, but it is classified separately".

This meant that the respondents knew, and, therefore, suggested that the test applied by the Asstt. Director, Marketing that any grain less than 3/4th of the whole length was to be deemed as "broken'', was H correct. The cross-examination was directed towards showing that, accepting this test, known to both sides, the consignment was of "broken rice".

SUPREME COURT REPORTS [1976] SUPPLEMENTA]i_Y

It is true that the Assistant Director, in his evidence, admitted that he had not actually measured a whole grain.

He said that he had adopted the method of differentiation by looking at the grains with the naked eye and by picking them up with his hand using his own fingers.

He also admitted that, in ten out of the 50 samples he had analysed, the percentage of brokens in the analysis conducted in 1973 was Jess than that of 1971 from 2 to 10% but in others it was greater. The Revenue Officer, after a careful consideration of :ill the facts of the case and the whole background, including the test faid down in the Hand-book on Grading Foodgrains and Oilseeds, had reached the conclusion that the whole of the quantity seized was liable to be confiscated because no sample taken from the bags contained a minimum percentage of 60% of "broken" grains satisfying the test adopted, that is to say, grain less than 75% of its normal length would be deemed to be broken. The Revenue Officer treated the opinion of the Assistant Director as that of an expert which ought to be accepted.

The District and Sessions' Judge, in appeals from the orders of the Revenue Officer, reconsidered the whole case at considerable length and allowed the appeals partiailly by holdirig that percentage which could be fairly classified as broken had to be deducted after an addition to it of 2 % as allowable "foreign matter". The Sessions' Judge's interpretation of the remand order, as affirmed in revision by the High Court, was that the Revenue Officer could only determine the quantities of "broken" rice and whole rice to decide what proportion was and not whether the whole of the seized rice was liable to confiscation as not covered by the permits. It appears that there had been an order by the Revenue Officer releasing 12 % of the total rice as equivalent of "broken rice" which had not been set aside and had become final.

On the question whether the respondents could be said to hav~ a mens rea the learned Sessions' Judge observed :

"I am not prepared to accept the contention that they are under a mistaken impression that whole rice, when boiled could become boiled brokens. I do not also admit that they are not having any mens rea. I am of the opinion that they had certainly managed with the officers, and attempted to transport whole rice (boiled) under the guise of brokens (boiled).

Therefore, it cannot be said that they have no mens rea in this case when they attempted to transport whole rice as brokens. It is a fact that huge quantities of rice are involved and the money involved is also huge.

But the crime that these appellants attempted to perpetrate can also be considered as huge (Grave) in consonance with the quantity of rice they attempted to transport. Therefore, I am of the opinion, that these appellants do not deserve sympathy and it does not require any more alteration of the lower Court's orders, than the one I have already indicated above".

Hence, with the abovementioned notification of the orders of the Revenue Officer by adding 2 % for "foreign matter" to the amount

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released as equivalent of "broken rice", the respondents' appeals were A dismissed by the Sessions' Judge on 20th November, 1974.

Both sides filed revision applications. The High Court had before it two sets of Revision applications.

One of these was by the State of Andhra Pradesh against that part of the order of the learned Sessions' Judge by which he held that the Revenue Officer had no jurisdiction, after the remand order, to order confiscation of the whole quantity of B rice.

The State claimed the price of the whole of the seized consignment.

The other set of revision applications before the High Court was of _the respondent millers against the affirmations of the orders of the Revenue Officer. The respondents submitted that no part of the consignment was liable to be confiscated as it was not proved that it was not broken rice.

They, therefore, urged that they should get the price of the whole quantity sold.

The High Court also went into the history of the case.

It held that the object of the remand order "was to take samples of the stocks for the purpose of analysis in the presence of the rice millers and after the analysis and report of the Assistant Director, Marketing, Chitur, to give an opportunity to the rice millers to cross-examine him with regard to it". It held : D

"There is uot111ng in the remand order from which it can be said that the learned Sessions' Judge intended the entire matter to be reopened including that of the released stocks with regard to which, according to the learned Sessions' Judge, the matter had become fimcl because of the view taken by him in the appeals preferred by the State that the State E has no right of appeal as provided under Section 6-A of the Essential Commodities Act".

The High Court upheld the contention that the State Government had no right of appeal to the Sessions' .Judge. It held that only a person aggrieved by an order of confiscation and not just anybody aggrieved by an order under Section 6-A had a right of appeal. It is, F however, not necessary for us to go into this question as it has not been argued by either side. '

The High Court held that there could be a contraventfon of the • Southern States (Regulation of Export of Rice) Order, 1964, by the rice millers if they attempted to transport essential goods requiring permit under the Regulation Order of 1964 from the State of Andhra . G Pradesh to Kerala.

It, however, proceeded to hold that, as it was not proved that what was being transported was "broken rice", there was no contravention.

It reached this conclusion by a somewhat strange reasoning that, since the percentages of whole rice in the samples analysed were not known, it could not be held that the consignment was of a kind of rice for which any permit was required.

We are constrained to observe that we are not able to follow the reasoning of H the High Court that, as the definition of rice in clause 2(B), in the Regulation Order of 1964, says that rice "includes broken rice and paddy", it necessarily follows that the converse must be tme so

that "broken rice must include rice". It would have been quite correct if the High Court had said that "broken rice" is also "rice".

As the definition of rice is a comprehensive one, it includes "broken rice as part of rice".

But, to hold that this meant tbat "broken rice" must include whole rice is to accept that a part includes the whole, if the wil.ole includes a part, it necessarily means that the part cannot possibly be equated with the whole.

The natural, and, indeed, the only reasonably open logic would be : if the whole includes a part, nothing which is merely a pilft of the whole could be equated with the whole, we think that the High Court misdirected itself seriously by accepting an obviou&ly fallacious reasoning on this question.

The High Court said :

C "By merely establishing that the goods are not broken rice, no offence or contravention is committed.

It must further be established that the goods are rice in which case only there w; ll be contravention of tbe control orders as the rice millers were uot exporting the goods under permits issued for export of rice.

Having regard to the uncertainty to what the balance material other than the brokens contained D in the samples, it is not possible to say with any assurance that the rice millers have contravened the .control orders by attempting to export rice".

It went on to add :

"It may be said that having regard to the circums\'ances of the case 'it is reasdnable to assume that the rice millers have deliberately put some rice-in the goods they were transporting. Otherwise, normally, the price of whole rice being more, they would not have allowed it to go into the brokens, and, unless there were some substantive quantities of whole rice in the goods which the rice millers were transporting, the Inspector of Police, Vigilance Cell Civil Supplies Nellore, would not have thought of seizing the goods. It is common knowledge and judicial notice can be taken that rice or broken rice is very much costlier in Ker:Ha State than in the Andhra Pradesh State. It is quite possible that broken rice in Kerala State was then even costlier than whole rice in Andhra Pradesh State and it may be rn such circumstances the rice millers while exporting the goods allowed more whole rice to go into the brokens so that the entire thing could be sold as broken rice and even by that to get a better price than in Andhra Pradesh for the quantity of whole rice allowed into the brokens.

But at the same time, in the absence of any guidelines by fixing standards for rice and broken rice it is difficult to say that the rice millers have done so with the necessary animus that in so doing they would be going outside the permits issued to them and they would be contravening the control orders. When there were no standards fixed with regard to whole rice and broken rice and when there is an admixture of both whole rice and broken rice, it is difficult

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to say when a particular admixture can be said to be broken A rice or whole rice. On an uncertain ground or on vagueness, I do not think any person can be made liable for an action which will be penal in nature".

A ground given by the High Court to justify the millers' case, that the rice was broken rice, was :

"In the present case, there is also the fact that both the Assistant Grain purchasing Officer and the food inspector inspected the goods when they were loaded into the wagons and certified that the goods loaded to be broken rice. Across the Bar, Shri Babu Reddy has stated that no actia.1 was taken by the Government against thooe officers on the ground that colluding with the rice millers they falsely certified that goods loaded to be broken rice.

He has also submitted that not only that no action was taken against them, but they were olso promoted to higher posts subsequently perhaps, in usual course. Of course, there is no material before the Court with regard to it. But suffice it to say that the fact remains that those two officers certified the materials to be broke1,1 rice".

A smprising conclusion of the High Court, which conflicts with the earlier conclusion that there was an attempted transport of rice which would contravene the Regulation order, was stated as follows by the High Court:

"The rice millers were having the permits for exporting BROKEN RICE and they were not having any permits for exporting RICE. Even assuming that the goods which the rice millers were transporting were not broken rice, it is not enough, to prove the contravention, to show that the goods they were transporting were not broken rice. It must be proved that the goods which the rice millers were exporting were rice for which they have no permits.

If the goods which the rice millers were transporting could neither be said to be broken rice nor rice, there would be no contravention in either of which case no permits will be necessary under the control orders.

The consequences of the contravention of the cdntrol orders being penal in nature, the rice millers cannot be penalised by confiscating the goods on uncertain ground or vagueness. I have no doubt that the Government have failed to establish that the rice millers 'in attempting to export the goods in question outside the State have contravened the two control orders".

We can only make the passage from the High Court's judgment, set out above in the hlst paragraph, intelligible to ourselves by believing that what the High Court meant was that the control order does not make it necessary to have a permit for the transport of goods containing a mixture of broken rice and rice by requiring a permit for such a mixture. If this be the meaning, as it probably is, we think that it

616 SUPRE:.l:E COURT REPORTS

[1976] SUPPLEMENTARY

A constitntes a complete oversight or misreading of the Regulation Order

1964, clause 3 of which says :

"3. Regulation of export of rice from specified areas.- No person shall export or abet the export of rice from any place within a specified area to a place outside that area except under and in accordance with permit issued by the State Government or an officer authorised by that Goverament in this behalf".

It follows that the person who transports has to prove that he has a permit for the rice he is transporting.

Learned Attorney General has, very rightly, pointed out that the whole case of the respondent Millers from the outset, when they sent a reply to the show cause notice, was tha~ they were tra'asporting what was wholly "broken rice". In other words, their case was that they knew that they were holding the permit. They never said that they did not know what their permit meant or had misunderstood it. They did not plead that they had been cheated by somebody. Who sent something on their behalf which was not authorised by them.

We think that Section 106 of the Evidelace Act was clearly appli- C'able to such a case. It says : "When any fact is especially within the knowledge of any person, the burden of proving that fact is upon him".

The illustrations to this section are also helpful :

"(a) When a person does an act with some intention E other than that which the character and circumstances of the act suggest, the burden of proving that intention is upon him.

(b) A is charged with travelling on a railway without a ticket.

The burden of proving that he had a ticket is da hhn".

So far as the actual intentions of the respondent Millers are concerned, the High Court recorded a finding, set out above, that it appeared that they had deliberately mixed whole rice with broken rice, bec1use, unlike the situation in Andhra Prdesh, broken rice sells at a higher price in Kerala than it does in Andhra Pradesh. If this had been the correct state of affairs, it would have been reasonable for the Millers to transport broken rice to Kerala, where it fetches a higher price, and keep whole rice which sells at a higher price in Andhra Pradesh .. for sale in their own State.

Apart from this obvious flaw in the reasoning of the High Court, it is difficult to understand how the High Court could act on such an assumption about relative prices. It thought it could take judicial notice of such a srate of prevailil1g prices of rice in the two States. It H was certainly not a fact commonly or generally known to people that broken rice fetches a much higher price in Kerala than even whole rice.

Such as assertion has to be proved to be correct. It was nnreasonabfo to assume that, even if that was so, the millers of Andhra Pradesh would

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be so anxious to cheat the purchasers in Ke!'llla as to deliberately mix A ' some whole rice with brokeJn rice instead of selling the whole rice in Andhra Pradesh and broken rice in Kerala.

The more natural inference from patent facts, was obviously that there was some advantage in 'mixing some "broken rice" with "whole rice" for which the millers had no permit.

Thus, the learned Judges of the High Court have themselves expnossed a view indicating that the Millers were quite conscious of .the distinctio; i which existed, in accordance with the accepted practice, between what could be deemed to be "whole rice" and what could be described as "broken rice". If they were labouring under some mistake of fact and had no intention to cpmmit an offence, which the character and circumstances of their acts suggested, the burden of proving this was certainly upoil them.

Again, what was covered by the permit would be deemed to be known to the Millers who were carrying on the business of exporting rice of various kinds, grades, and descriptions. It is their business to see that they carry on their trade in accorr.)oance with the terrus of the permits they actually obtained. It is true that it appears, aS the High Court observes, that the Millets had, apprently, beeJn given the green signal by the officers who were expected to inspect the consignments and certify that it was "broken rice". It is difficult to know wh'at evidence the High Court was relying upon, apart from the conditions attac bed to the permits and the presumption that the'ir duties were carried out by their officers concerned, to hold what they had jlnspected and certified correctly. The respondents, who had objected to the first analysis report, dn the ground, inter alia, that the analyst did not enter the witness box could be met with a similar objection to the alleged inspection reports of some officers. _

The only evidence produced Fil the case was that of the Assistant Director of Marketing who performed the analysis in the presence of the Millers after the remand order.

If the respondents were relying upon some inspection carried out by the officers in compliance with the conditions of the permit, they ought to have produced th-at evidence SQ that the officers coiilcerned could have been subjected to cross-examination. An opportunity had

been given to the Millers to produce evidence in rebuttal. They produced none. On the other hand, the cross-examination of the Assistant G Director show~ that the Millers were accepting the tests laid down in the Hand-Book on Grading of Foodgrains and oilseeds as applicable to the descriptions of rice and ll'oken rice. These terms, as used in the Hand-book, must have been well understood by the Millers. The Foreword to the Hand-Book says that it contains instructions based on practice followed jn this country for many years b'y the Directorate of Marketing and Inspection. The Hand-Book is an official publication.

H It could be looked into to find out the accepted practice and tests employed by the Assista'nt Director. As already observed, the Assistant Director was cross-examined on matters cont"ained in the Hand-Book.

A It was hot suggested to him that the Hand-Book did not contain correct

information.

At page 8 of this Hand-book, we find : "Broken Rice" -In addition k> the classes me>ationed above broken rice forms a class by itself as it is a bye-product of rice milling. It has been classified into two groups, viz., fine brokens and common brokens. Fine brokens cover the brokens of long slender and scented varieties of rice and common brokens over the rest''. At page 6, we find : "Brokens.-Brokens shall

include pieces of rice kernels which are less than 3 I 4th of the whole kernel. Pieces smaller than 1/4th of the kernel are to be treated as fragments".

The cross-examination of the Assistant Director showed that the Counsel for the Millers were fully acqll'ainted With the contents of the Hand-book and were accepting it as the basis for :fi!uding out whether the tests laid down in the Hand-book had been observed.

The Hand-book contains several schedules.

Schedule 7 gives maximnm limits of tolerance for various grades of "mill rice", a term apparently used for whole rice. The maximum tolerance of brokens in whole rice of first grade i~ given as 3 % , whereas the maximum tolerance of the brokens in the whole rice grade is 20 % . Scltedule VIII is for "Parboiled Milled Super fine Rice".

In Schedule X, for "Parboiled, milled common rice", is shown io vary from 10% 'in Gr. I to 40% in Gr. IV. Schedule 14 gives the grade design11tions and definitions of different qualities. of "common broken rice". It shows that, in order to constitute "brokeln rice", the percentage of brokens, the maximum limit of tolerance is from not less than 80 lo not less than 60% in grade 1 to 3.

The District Judge had reached the conclusion that, quite apart from these technically prescribed tests for the purpose of grading, by the Directorate of Marketing and Inspection, the common sense test was that at least 50% must be brokens in order to constitute what could pass as a marketable consignment of "broken rice". He had a1ro made the necessary allowances for foreign matter. We do not think that the test adopted by the District & Sessions' Judge was either incorrect or unreasonable. Indeed, we think that the High Court was quite unjustified in interferitng with this test on what seems to us like metaphysical reasoning to justify its view that, where the quantities of the whole grains and broken grains in a consignment cannot be accurately determined, the consignment should be deemed to be no longer one of rice which requires a permit.

The learned Attorney General has rightly pointed out to us that at no earlier stage was it the case of the Millers that more mixture of some broken rice with some whole rice is enough to constitute the whole consignment into one of broken rice or of substance which was not "rice" at all. In otlr opinion, the High Court has quite erronously held that such mixtures do not fall within the mischief provided for by the Regulation Order of 1964.

An argument advanced by Mr. Sachin Chaudhari. on behalf of the Mille.rs, is that no rice in the course of Milling can really remain whole or unbroken in the sense that the whole length of it will be preserved.

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He contended that, in that sense, every grain must be broken to some A extent. lf that be the correct position, we think that the test laid down in the Hand-book on Grading of Foodgrains and Oilseeds, issued by the Directorate of Marketing and Inspection, compiled by the Ministry of Agriculture of the Govt. of India, is based on sound k!nowledge of what actually happens to grains of rice in the course of milling.

Still another argument was that it is impossible to determine with the ll'aked eye whether a grain of rice was above or below 3 /4th its normal length. We think that this would not be a difficult task at all for an expert in the line as an Asstt. Director of Marketing could be deemed to be. Indeed, even with his naked eye, any person can make out, by looking at the two ends of a grain, how much of a grain of rice appears to be broken. As we know, a grain of rice is thicker 'in the middle and tappers at each end. It is >not like a cylinder with a uniform diameter throughout. From its shape and size, it is possible, even for an ordinary C\lreful observer, to assess the length of a broken grain as compared with its expected length had it been whole.

Mr. S. V. Gopte appearjng for some respondents, has invited our attention to the differences, iia the analysis conducted in 1971 and in 1973, between percentages of broken rice" in samples from the same D stocks. The explanation of these dilferences according to the learned Attorney General, is indicated in the order of the High Court, dated 29th March, 1973, by which Revision petitions against remand orders were dismissed. The High Court observed :

"During the pendency of these proceedings in this Court admittedly fresh samp!Cs had been taken in the presence of ihe parties and the rest of the grain was directed to be disposed of. These fresh samples are now available for analysis, it is contended by the le>arned public prosecutor that dn

account of lapse of time there is the possibility of ev.en whole rice getting broken and a larger percentage of broken rice ocing forged in analysing now to be done. It should be possible for the Ap.alyst to know how long rice stay preserved as whole rice and what is the lapse of time that results in breaking up of even the whole rice and what percentage should be allowed in that connection and come to the conclusion in making an wnalysis of the new samples taken". ·

The High Court had said that "there should be no difficulty in getting the fresh samples taken analysed also and the analyst giving his opinion with regard to both the sampl~".

There is not only a difference between the results of the analysis of 1971, as compared with the analysis of 1973, for which samples were taken afresh from the same bags of rice, but we find that the report of 1973 itslf shows, that, out of 50 samples taken from different bags of rice, there is a variation ranging from 12.5%, in the case of two H samples from wagon No. SE 53657 to 40% in the case of the sample from wagon No. SE 57670. The analysis of another sample from the same wagon SE 57670 gives a percentage of 36.2 of "broken rice".

Two samples from the same wagon WR 70715 show 22.5% and 37.5% of broken rice, thus making a differelnce of 15% between two samples from the same wagon. In seven samples, the percentages of broken rice were above 3 5 % . In 16 samples, the broken rice found ranged between 30% and_ 35 % . Of course, these different percentages may lead to the inference that some broken rice had been deliberately introduced unevenly between rice found in <]ifferent bags. But, once the principle is accepted that it is only the rice not covered by the permits which, under the orders of the Court, was to be confiscated, these variations do introduce a'Jl element of difficulty in determining precisely what that amount was. Sec. 6A of the Act, however, says that the Revenue officer (who exercised the powers of the Collector),

"if satisfied that there has been a contravention of the order", that is to say, the Control Order, "may order the confiscation of the essential commodities seized''. It is arguable that the power is there to confiscate whatever essential commodity may have been seized for the purposes of proceeding against the person who has cdntravened the Control Order, yet, it cannot be denied that this power is discretionary.

Therefore, we do not propose to intocfere with the order of the learned Sessions' Judge, to the effect that, as the Revenue Officer's order releasing the seized rice to the extent of about 12% had become final, it should not be interfered with except to the extent that the learned Sessions' Judge added 2% more for foreign matter. Thereby releasing slightly more in fuvour of the respondents.

For the reasons given above, we allow these appeals and set aside the judgment and orders of the High Court and restore those of the learned Sessions' Judge in the cases before us.

Appeal$ allowed.

M.R.

f •

STATE OF ANDHRA PRADESH

BATHU PRAKASA RAO

A. N. RAY, C.J.

M. H. BEG

JASWANT SINGH, JJ.

Essential Commodities Act, 1955

s. 6A

clause 3

Section 6A

Essential Commodities Act, 1955

According to Serial Grading Rules

Section 6

Essential Commodities Act

Section 6

clause 2(B)

clause 3

Section 106

Schedule 7

Schedule X

Schedule 14

Sec. 6A


MONOGRAM MILLS LTD. ETC.

THE STATE OF GUJARAT

May 7, 1976

[H. R. KHANNA, V. R. KRISHNA IYER AND P. K. GOSWAMI, JJ.]

Bombay Industrial Relations Act (Bom. I of 1947) as amended by Gujarat Act 21 of 1972, ss. 53A and 53B and rules thereunder-Whether State Legislature competent to enact ss. 53A and 53B-Pith and substance-Rules-Field of

) "" operation of. '

Sections 53A and 53B of the Bombay Industrial Relations Act, 1946, were inserted in that Act by the Bombay Industrial Relations and Industrial Disputes C (Gujarat Amendment) Act, 1972. They relate to the constitution of joint management councils, which include representatives of the employees also, for the purpose of forestalling and preventing industrial disputes.

Consequent amendments were made in the Bombay Industrial Relations (Gujarat) Rules.

The appellants challenged the two sections on the ground that the State Legisla ture was incompetent to enact them. According to the appellants, the impugned legislation falls under Entries 43, 44 and 52 of List I, VII Schedule to the Con

stitution, which relate to matters of incorporation etc.

Tho High Court held that they fall under Entries 22 and 24 of List III, which relate to labour welfare D and industrial disputes, and that the State Legislature was competent to enact them.

Dismissing the appeal to this Court,

HELD : It has been recognised during the last hundred years that the wage ear ners &h0uld have an effective voice in the management of the industry in which they E are working. The concept of joint management of industry by the employer and the employee may have a wide connotation, because, the joint management conn .. cils may not only perform such functions as .pertain to welfare of labour, that is, those relating to the various objectives mentioned in els. (a) to (f) of s. 53B(l), but may also claim to exercise such functiqns as can be discharged by the board of directors, This wider aspect of the joint management would however be impermissible under the impugned provisions, because the provisions should be so construed and implemented as would sustain their constitutional validity. They have been enacted by the State Legislature and so the functions which can be F performed by the joint management councils have to be of such a character as would pertain to welfare of labour or prevent industrial disputes. If the im pugned legislation, in pith and substance, relates to subjects which are within the competence of the State Legislature, the fact that there is an incidental encroach ment on matters which are the subject-matter of Entries in List I, would not affect the legislative competence of the State Legislature to pass the impugned legislation. [628A, 629EJ

Rules in the very nature of things can operate only m that field in which the parent Act can operate, and _hence, the impugned rules, likewise, relate to subjects which are within the competence of the State Legislature.

[628D]

CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 60()..601 and 1699-1714 and 877-878 of 1975.

Appeals by ial Leave from the Judgment and Order dated H 30th January 1975 of the Gujarat High Court in Sp!. Civil Applns.

Nos. 15, 1194, 88, 89, 90,, 107, 113, 121, 122, 124, 125, 166, 182,

202, 112, 123, 177,, 1757, 149, 150 of 1974 respectively.

A F. S. Nariman, K. S. Nanavati, P. C. Bhartari and J. B. Dadachanji, for Appellant (In CA 600/75).

K. S. Nanavati, P. C. Bhartari and J. B. Dadachanji, for the Appel- !ants (In CA 601/75 and CA 1700-1714/75).

V. M. Tarkunde, K. S. Nanavati, P. C. Bharatari and J. B. Dada• B chanji for the Appellant (in CA 1699/75).

V. N. Ganpule, for Appellants (In CA 877-878/75).

M. C. Bhandare and M. N. Shroff, for the Respondents (In CA 600-601 of 1975) and CA Nos. 1699-1714/75 and 877 to 878/75. ( ., The Jndgment of the Court was delivered by c KHANNA, J.- This judgment would dispose of civil appeals Nos. 600, 601, 877, 878 and 1699 to 1714 of 1975 which have been filed by special leave against the judgment of Gujarat High Court dismissing petitions under article 226 of the Constitution of India filed by the appellants.

The appellal}ts in these petitions assailed the validity of sections 53A and 53B of the Bombay Industrial Relations Act, 1946 (Bombay Act No. 1 of 1947) (hereinafter referred D to as the principal Act). These sections along with some other provisions were inserted in the principal Act by the Bombay Industrial Relations and Indus_trial Disputes (Gujarat Amendment) Act, 1972 (Gujarat Act No. 21 of 1972). The appellants also challenged the validity of the rnles which were added to the Bombay Industrial Relations (Gujarat) Rules, 1961 as per notification dated June 4, 1973.

Jn addition to that,. the appellants challenged the validitv of notifica- E !ion dated December 17, 1973.

The principal Act was enacted to regulate the relatioos of eml players and employees, to make provisions for settlement of indus-

'rial disputles .rand certain other purproses.

In 1956 the industrial policy resolution of the Government of India stated inter alla that in a socialist democracy labour is a partner in the common task of deve- F lopment and must participate in it with enthnsiasm. Emphasis was laid upon joint consnltation of workers and technicians and for associating progressively labour in the management of the industry.

Stress was again laid on joint management councils at the tripartite conference held in July 1957. Representatives of labour, management and Government were present at that conference. There was,, however, no statutory provision for joint management councils and G whatever was done, was on a voluntary basis.

Sections 53A and 53B were inserted in the principal Act by Gujarat Act 21 of 1972.

The two sections read as under : \

"53.A(l) If in respect of any industry, the State Government is of opinion that it is desirable in public interest to talce action under this section, it may, in the case of all under- H takings or any class of undertalcings in such industry, in which five hundred or more employees are employed or have been employed on any day in the preceding twelve months, by general or special order,, require the employer to constitute

in the prescribed manner and within the prescribed time limit a Joint Management Council, consisting of such number of members as may be prescribed, comprised of representatives of employers and employees engaged in the undertaking, so however that the number of representatives of employees on the Council shall not be less than the number of representatives of the employers. Notwithstanding anything contained in this Act, the representatives of the employees on the Council shal! be elected in the prescribed manner by the employees engaged in the undertaking from amongst thernselveg :

Provided that a list of industries in respect of which no order is issued under this sub-section shall be laid by the State Government before the State Legislature within thirty days from the commencement of its first Session of each year.

(2) One of the members of the Council shall be appointed as Oiairman in accordance with rules made in this behalf.

53B ( 1) The Council shall be charged with the general duty to promote and assist in the management of the undertaking in a more efficient, orderly and economical manner, and for that purpose and without prejudice to the generality of the foregoing provision, it shall be the duty of the council-

( a) to promote cordial relations between the employer and employees;

(b) to build up understanding and trust betwen them;

( c) to promote measures which lead to substantial increase in productivity;

( d) to secure better administration of welfare

measures and adequate safety measures; F

( e) to train the employees iu understanding the responsibilities of management of the under.taking and in _sharing such resJ'bnsibilities to the extent considered feasible; and

( ~) to do such other things as may be prescribed.

(2) The Council shall be consulted by the employer on all matters relating to the management of the undertaking specified in sub-section (1) and it shall be the duty of the Council to advise the employer on any matter so referred to it.

(3) The Council shall be entrus1ed by the employer with such administrative functions, appearing to be connecd with, or relevant to, the discharge by the Council of its duties under this section, as may be prescribed.

A ( 4 ! It shall be the duty of the employer to furnish to the Council ecessary information relating to such matters as may be prescribed for the purpose of enabling it to discharge its

duties under this Act. ·

( 5) The oundl shall follow SJ.1Ch :procedure in the discharge of its duties as may be prescribed."

Consequent upon the insertion of sections 53A and 53B in the principal Act, the Bombay Industrial Relations (Gujarat) Rules were also amended and certain new rules were added.

Rule 4 7 A relates to the manner of election of two persons. from amongst employees in disputes.

Rule 61 A reads as under :

"61-A. Constitution of Joint Management Council.-Any employer who is required by an order made under sub-section ( 1) of section 53-A to constitute a Joint Management Council shall constitute within a period of ninety days from the date of the said order a Joint Management Council consisting of ten members, out of which the number of representatives of the employer to be nominated by the employer and the number of representatives of employees engaged in the undertaking to be elected from amongst themselves shall be such as may be determined by the employer so however that the number of representatives of the employees on the Council shall not be less than the number of representatives of the employer."

Rule 61B to rule 61 T relate to election of employees representatives on the Management Council. Rule 61U prescribes for appointment of Chairman of the Council. Rule 61 V deals with , the constitution of the Council from time to time and the manner of filling in the vacancies.

Rule 61W relates to the number of meetings of the Council and provides that the Chairman shall also have a second or casting vote in the event of equality of votes.

Rule 61X makes other provisions for the meeting, while Rule 61 Y deals with annual returns.

Rules 61Z, 61ZA and 61ZB to which reference has been made during the course of arguments read as under :

"61-Z. Duties of the Council.-It shall be the endeavour of the Council :- •

(i) to improve the working conditions of the employees;

(ii) to encourage suggestions from the employees;

(iii)

(iv)

to assist in the administration of laws and agreements;

to serve generally as an authentic channel of communication between the management and the employees;

(v) to create in the employees a sense of participation;

(vi) to render advice, in the general administration of Standing Orders and their amendment when needed;

(vii) to render advice on matters pertaining to retrenchment or rntionalisa\ion, closure, reduction in or cessation of operations

61-Z-A. Administrative functions with which the Council shall be entrusted by Employer.-The Council shall be entrusted by the employer with administrative functions in respect of :

(i) operation of vocational training and apprenticeship schemes;

(ii) preparation of schedules of working hours and breaks and of holidays; and

(iii) payment of rewards for valuable suggestions received C from the employees.

61-Z-B. Matters in respect of which the Council shall be entitled to receive information.-Thc Council shalI be furnished by the employer with information in respect of :

(i) general economic situation of the concern;

(ii) the state of the market, production and sales programmes;

(iii) organisation and general running of the undertaking;

(iv) circumstances affecting the economic position of the undertaking;

( v) methods of manufacture and work;

(vi) the annual balance sheet and profit and loss of statement and connected documents and explanation; and

(vii) long term plan for expansion, re-employment etc." Imugned notification dated December 17, 1973 reads as under :

"No. KH-SH-1988/BIR-1073-JH- Whereas in respect of the industry specified in the Schedule annexed hereto the State Government is of opinion that it is desirable in public interet .to take action nnder section 53A pf the Bombay Industrial Relations Act, 1964 (Born. of 1947), in the case of all undertakings in the said industry in which five hundred or more employees are employed or have been employed any day in the preceding twelve months.

Now, therefore, in exercise of the powers conferred by sub-section ( 1) of the said section 53-A, the Government of Gujarat hereby requires , the employer of each such undertaking in the said indnstry to constitute a Joint Management Council in the manner and within the time limit specified in rule 61-A-G of the Bombay Industrial Relations (Gujarat) Rules,, 1961. 42-BJJSup. Cl/76

SCHEDULE

Cotton Textile Industry as specified_ in the Government of Bombay Political and Services Department, Notification No. 2847 /34-A, dated 30th May 1939 and the Government of Gujarat, Education and Labour Department, Notification No.

BIR-1361, dated the 17th July 1961."

Although a number of contentions were advanced before the High Court to assail the validity of sections 53A and 53B as well as the rules mentioned above, before us learned counsel for the appellaats have restricted their challenge to the impugned provisions only on tbc _ ground of lack of legislative competence of the State legislature.

So far as notification dated December 17, 1973 is concerned, we may state that the said notification is no longer in force and, inilead of that notification,, a fresh notification dated March 1, 1976 has been issued.

In the circumstances, no opinion need be expressed on tile validity of notification dated December 17, 1973. We also expreM& no opinion on the reasons given by the High Court in upholding the aforesaid notification. It is also, in our opinion not necesaary to express any opinion about the validity of notification dated March 1, 1976 as this notification was issued subsequent to the decision of the High Court and was not the subject matter of writ petitions before the High Court.

We may now advert to the question of the legislative competence of Gujarat legislature to enact sections 53A and 53B reproduced above.

In upholding the contention of the respondent-State that the impugned provisions were within the sphere of the legislative competence of the State legislature under entries 22 and 24 of List III in Seventh Schedule to the Constitution, the High Court has held that the subject matter of the above legislation was labour welfare even though it might have some incidental effect on corporate undertakings or controlled industries.

Dealing with rule 61ZB the High Court held that the information to be furnished should be of such a nature that its disclosure would not be harmful to the undertaking. The information, it was held, should not be confidential or relating to trade secrets.

Sections 53A and 53B, as already mentioned, were inserted in the principal Act by Gujarat Act No. 21 of 1972.

This Act was P'llh ed on October 19, 1972 after it had received the asent of the President.

According to the respondents, the above provisions have been enacted under entries 22 and 24 of List III of the Seventh Schedule to the Constitution.

Entrv 22 relates to trade unions; industrial and labour disputes, while entry 24 deals with "welfare of labour including conditions of work, provident funds, employers' liability. workmea's compensation, invalidity and old age pensions and maternity benefits':.

As against that, the contentions advanced on behalf of the appellants ts tbt the impugned legislation falls under entries 43, 44 and 52 of List I in the Seventh Schedule which relate respectively to "incorpcration, regulation and winding UJ? of , trading "?rporations including _bankig, insurance and financial corporatwns but not rncluding

.co-operative societies;" "incorporation, regulation and winding up of A corporations, whether trading or not, with objects not confined to one State, but not including universities;" and "industries, the control of

which by the Union is declared by Parliament by law to be expedient in the public interest".

We have given the matter our earnest consideration, and we find B no sufficient ground to interfere with the finding of the High Court that the impugned statutory provisions tall under entries 22 and 24 of List III in Seventh Schedule of the Constitution and that the State legislature was competent to enact .the same.

The impugned provisions. in our opinion, are intended in pith and substance to forestall and prevent industrial and labour disputes.

They constitute also in essence a measure for the welfare of the labour. c

From a conceptual viewpoint, workers' management of undertakings .._ or self-management represents the most far-reaching degree of association of workers in decisions concerning t!iem.

Probably the best known example of this type of workers' participation is the Yugoslav system of self-management.

Under that system, the workforce of the undertaking exercises the principal functions of management through the D -self-management organs, the organisation and powers of which have

beeu established sil)ce the sties by the statute or internal regulations of the undertaking, namely, t, he workers' assembly and the workers' council.

For varying lengths of time, in a large number of countries, c and by virtue of a legal obligation, workers' representatives have been included in management organs in the public sector as a whole or in certain nationalised undertakings. In the private sector, the system E which has pushed workers' representation to the furtherest degree is that of co-determination applied in the Federal Republic of Germany 1'ince the beginning of the fifties.

By an Act of 1951, equal representation of workers was established on the supervisory boards of large iron and steel and mining undertakings. These boards generally include five workers' representatives, five representatives of the shareholders, and an eleventh member nominated by mutual agreement. In addition, F one of the members of the directorate or management board, namely, the "labour director" who is generally responsible for personnel questions and social affairs, may only be nominated or dismissed in agreement with the majority of the workers' members of that board.

Under an Act of 1952, the workers' representation on the supervisory boards of the companies which do not belong to the above industries is onethird of the , total membership.

Pressure is, however, being brought by G the trade unions for equal representation of workers on the supervisory boards in sectors other than iron and steel and mining (see International Labour Organization Background Paper on Symposium on 'Yorkers' Participation in Decisions within Undertaking in Oslo in August 1974). The '?oject of wo:kers' par.ticipatio.n in jo}nt manaement councils is to enlist co-operation of workers wrth a vrew to bnng about improvement in the performance of indhstrial organisations. It H is assumed that the above scheme would give a robust feeling of partl, cipation o the workers in the manaement and thns result in improved functionin, g of the industrial undertaking.

Another ohjcct appears to

be to democratise the industrial milieu and ensure egalitarianism in the process.

It has not been disputed on behalf of the appellants that the

variou~ objectives mntioned in clauses (al to (f) of sub-section (!) of sectwn 53B pcrtam to welfare of labour.

What is however contended is that joint management councils may claim to cxercis~ such functions under the opening words of sub-section (I) of section 53B as can be discharged only by the Board of Directors.

This contention., in our opinion, is not well-founded.

The impugned statutory provisions, in our opinion, should be so construed and implemented as would sustain their constitutional validity.

The functions which can be performed by the joint management councils have to be of such a character as would pertain to welfare of labour or prevent industrial disputes.

Such functions would be analogous to those specified in clauses (a) to (f). If the impugned legislation in pith and substance relates to subjects which are within the competence of the State legislature, as it in fact does, the fact that there is an incidental encroachment on matters which are the subject matter of entries in List I would not affect the legislative competence of the State legislature to pass the impugned legislation.

The impugned rules, in our opinion, likewise relate to subjects which arc within the competence of the State legislature.

The rules in the very nature of things can operate only in that field in which the parent Act cn operate.

For about a hundred years the term industrial democracy has been often mentioned in the writings of socialists, trade unionists and social reformers.

Of late th<; industrialists have taken it over.

The reason for that is that industrialists have become conscious that any approach which has the effect of treating workers, as if they were commodities is unsound and wasteful economically.

The industrialists, it has been said, tried paternalism or benevolent autocracy, and they have found th"t this did not work, just as Frederick the Great and his followers found that benevolent political despotism did not work.

Democracy in political terms means the conseut of the governed in the governance of the country. In industry it means that wage earners shall have an effective voice. It has been observed by Edward Filence.

"labour .... , having experienced the advantages of democracy in government,, now seeks democracy in industry.

i~ any stranger that a man should bave a voice as to tbe conditions under which he works than that he should participate in the management of the city and the state and the nation ? If a voter on governmental problems, why not a voter on industrial problems?" (See page 339, Personnel and Labour Relations by Nash/Miner).

The above approach , postulates trade unions as a potential positive force.

For management and union to share the pluralist ideolo,'!V requires more than agreement about joint decision-making as such. It requires also that neither side enforces claims or imposes policies which are found excessively burdensome by its counterpart.

As observer!

by Alan Fox on page 303 of Beyond Contract Work and Trnst A Relations :

"It follows from this analysis that management will be readier to accept pluralistic forms of decision-making the greater its confidence that it will always be able, in the last resort, to bend employee claims towards acceptable compromises.

It may even be convinced of its ability to charm them away altogether or at l;:asr tnuch rcL\uc.: d1en1 t:y 'rational' argument and persuasion designed to bring out the 'tue' common interests.

In this sense a formal acceptance of pluralistic patterns may mask unitary convictions on managements past about the nature of the enterprise. It may regard joint decision-making and a fu]]y institutionalised handling of claims and grievances not as mechanisms for compromising genuine conflicts of interest but as devices which facilitate the 'working-through' of mistaken conceptions, psychological blockages, and organizational confusions by a process of 'rational' clarification."

It would appear from the above that the concept of joint management has a much wider connotation.

That wider aspect of joint management would plainly be [mpermis5i1'le under the impullfled legislation as it has been enacted by the State legislature.

Such legislation can operate only within a limited field because that is the only way in which its constitutional validity can be sustained against the • challenge on the ground of want of legislative competence by the State legislature.

With the above observations,, we dismiss the appeals, but in the circumstances leave the parties to bear their own costs throughout .

V.P.S.

Appeal dismissed.

MONOGRAM MILLS LTD. ETC

THE STATE OF GUJARAT

H. R. KHANNA

V. R. KRISHNA IYER

P. K. GOSWAMI, JJ.

Bombay Industrial Relations Act

ss. 53A and 53B

ss. 53A and 53B

Sections 53A and 53B

Bombay Industrial Relations Act, 1946

s. 53B(l)

article 226

Constitution of India

sections 53A and 53B

Bombay Industrial Relations Act, 1946

Sections 53A and 53B

Act by Gujarat Act

sections 53A and 53B

section 53

section 53A

Bombay Industrial Relations Act, 1964

section 53

sections 53A and 53B

sections 53A and 53B

Seventh Schedule

Sections 53A and 53B

Act by Gujarat Act

Seventh Schedule

Seventh Schedule

Seventh Schedule

section 53B


DEWAN SINGH

STATE OF HARYANA & ANOTHER

May 7, 1976

(H. R. KHANNA, V. R. KRISHNA IYER AND P. K. GOSWAMI, JJ.J

Natural ju:i; tice-Metuling of-If n1andatory-Punjab Pancliayat Sa1:1itis and Zilhi Parishad Act 1961-Sec. 124(2)-Reasonable opportunity before disr1iss~ ing lln en1ployee..

The appellant was a Veterinary Compounder serving under the Panchayat Samiti, Hansi. The Zilla Parishad Tribunal transferred him from Hansi to Sing-- Jif111i.

The Chairman of the Panchayat Samiti. Hansi. requested the Chairman of the Zilla Parishad to reconsider the decision of transfer. The Chairn1an of

Zilla Parishad Tribunal served a notice on the appellant to show cause why he should not be dismissed for not having handed over the charge of ihe dispensary to the person who \Vas appointed in his place and also on the ground that when the Secretary of the Zilla Parishad Tribunal with the help of the compounder, \Vho \Vas directed to take charge from the appellant, was preparing a list of stock, the appellant and others entered the office and one of the persons out of the appellant's group snatched the papers from the Secretary and manhandled him.

The appeJlant submitted an interim explanation and reserved his right to submit a final reply after inspection of certain records was given to hi1n.

The Zilla Parishatl 'fribunal did not give any opportunity to the appellant for inspectionof record nor sent any communication to him rejecting the request givmg any justifiable reasons.

However, the appellant was served with a letter dismising him from service.

Section 124(2) of the Punjab Panchayat Sam1tis & Zilla Parishad Act, 1961, authorises the Tribunal to impose any punishment including • the punishment of dismissal on any servant of the Panchayat Samiti or ZBla Parishad. The proviso, however, requires the Tribunal before passing any order of dismissal or removal tO"'-give a notice to the servant to show can11e against tho: action proposed to be taken against him.

The appellant filed a \Vrit petition in the High Court challenging the dismiss;1l order. The High Court dismissed the writ petition.

Allowing the appeal by special leave,

HELD: (!) A perusal of s. 124(2) goes to show that before any act10n is taken for dismissal or re.moval of an employee the Tribunal has (o enquire into his conduct justifying such action.

This enquiry must necessarily be made in the presence of the employee giving him an opportunity to rebut the ailegations made against him.

It is only after affording him a reasonable opportunity to rebut the allegations in the charge and after the Tribunal is satisfied that the misconduct is established, the question of final punitive action either of dismissal or removal has to be considered. The employee mu<; t be given a full and fair reasonable opportunity to meet the charges.

[633D-E1

(2) Tn the instant case apart from giving the show cause notice no other communication was made to the appellant except the order of. dismissal. This is a clear case where the reasonable opportunity envisaged under s. 124(2) has not been afforded to the appellant for making an effective representation to establish his innocence. Even in respect of the incident of 15-8-1967, the appellant "'as acquitted in a criminal case lodged against him. Jn the instant case the previsions of s. 124(2) which embody the principles of natural justice and v•hich are of a mandatory character have been violated, vitiating the order of dismissal.

[633G, 634A-CJ

( 3) In the ordinary ourse it would have been open to the authority to institute a fresh enquiry after the reinstatemept. But in this case, that procedure \Vas not permitted because the appellant was dismissed in December, 1967, and

' ;

DBW AN SINGH v. HARYANA (Goswami, !.) 6 31

has been out of employment for over 8 years. Secondly, he does not have mauy years to •erve. Thirdly, tho •eriom allegations regarding the incident of IS-8-1%7 have not been fomid to be e<tabli>hoo in a judicial trial. The Court, therefore, quashed tbe order of di>misoal and directed that tbe appa!lant should be treated on leave without pay and further directed that no furtlwr enquiry into the allealions forming tbe subject matter of charge should be made.

[634C-E]

ClvIL APPELLATE JURISDICTION: Qvil Appeal No. 27 of 1971.

(Appeal by special leave from the judgment and order dated 21st May 1970 _of the Punjab & Haryana High Court at Chandigarh in civil writ No. 197 of 1968)

J. Ramamurt/U, for the appellant ..

Naunit Lal and R. N. Sachthey, for respondents Nos. I and 2. c

. Bishamber Lal, for respondent No. 3.

The Judgment of the Court was delivered by

• GosWAMI, J,-This appeal by special leave is directed agaill!t the judgment of the Division Bench of the Punjab and Haryana High Court by which the appellant's application under article 226 of the D Cons'.itution was rejected.

The appellant was a veterinary compounder serving at the material time under the Chairman, Panchayat Samiti, Hansi-1.

The Zila Parishad Tribunal transferred him from Hansi-I Block to Singbani

(Loharu Block) by its resolution of June 30,

1967. The order appears to be transmitted by Memo No. 3201-A of July 6, 1967. On July 27, 1967,. the Chairman of the Panchayat Samiti, Han!ii-I, requested the Chairman of the Zila Parishad, Hissar, to reconsider the decision of transfer and to allow him to continue a-t his village Umra in public int. A copy of this letter written to the Zila Parishad was forwarded to the appellant.

Since the appellant did not comply with the order of transfer, the Chairman, Zila Parishad Tribunal, served a notice npon him on August 13, 1967,. to ehow cause as to why he should not be dismissed from service on the

grounds mentioned in the notice. lt is mentioned in the notice that this action has been taken under section 124 of the Punjab Panchayat Samitis and Zila Parishads Act, 1961 (briefly the Act).

The particulars of charge described in the show cause notice are briefly as under :-

( 1) You did not hand over charge of veterinary dispe113arY

to Balwan Singh, Veterinary Compounder, on 25-7-1967, in compliance with the transfer order dated 6-7-1967.

( 2) You also did not hand over charge to the District ADimal

Husbandry Officer who was ordered to personally take over charge from you on 26-7-1967.

(3) You were again asked by letter dated 2-8-67 lo hand

over charge to Balwan Singh Veterinary Compounder,

but you did not hand over the charge.

( 4) When Ch. Bir Singh Lamba,, Secretary, Zila Parisbad Tribunal, along with Balwan Singh reached Umra on. 10-8-67 between 4.30 and 5.00 P.M. in order to take charge from you they found you absent and the d_ispensary locked. '

(5) That on 15-8-67 at about 4.00 P.M. when Balwan Singh

went to take charge from him along with Ch. Bir Singh Lamba, Secretary, Zila Parishad Tribunal, along with Ch.

Balbir Singh, Chairman, Zila Parishad, Hissar and Kali Ram,, Member, Panchayat Samiti, Hissar, you refused to hand over charge to Balwan Singh Veterinary Compounder.

(6) When on 15-8-67 Ch. Bir Singh Lamba, Secretary Zila Parishad Tribunal, with the help of Balwan Singh. was preparing a list of stock in .the presence of the Chairman and others, you with Rattan Singh, Sarpanch, Gram Panchayat, Umra, Giani Ram of village Majahadpur and three or four other unknown villagers entered the office. , Giani Ram oun of your group snatched the paper from Ch. Bir Singh,, Secretary, Zila Parishad Tribunal and threatened , them to leave the dispensary before they manhandled him.

You are thus at the root of atl this incident. '

The appellant submitted a reply on September 13, 1967, describing it as an interim explanation and reserving his right to submit a final reply after inspection of certain records and he requested for a date for inspection of the records. In this reply he admitted to have received the .transfer order and pleaded that he did not hand over charge to Balwan Singh on 25-7-1967 under instructions from the Chairman, Panchayat Samiti, who, according to him, \yas the appointing authority and he was carrying out his orders. He particularly denied the incident of August 15, 1967, for which he was held principally responsible in the show cause notice.

It does not appear that the Zila Parishad Tribunal gave any opportunity to the appellant for inspection of records,, nor sent any communication to him rejecting the request giving any justifiable reason. The appellant seemed to have been waiting for some communication to his interim reply in order to submit final explanation when on December 5, 1967 he received the order of the Zila Parishad Tri.bunal dismissing him from service with immediate effect in pursuance of its resolution of December 1, 1967.

The resolution states :

"The Tribunal has come to a conclusion that your reply is not a satisfactory one.

And the allegations made against him (sic) seemed to be correct".

That led to the appellant's writ application in the High Court resulting in the impugned order.

The short question that arises for decision is whether the order of dismissal is in conformity with section 124 of the Act, or, in

( '

DEWAN SINGH v. HARYANA (Goswami, !.) 633

-0thr words, whether the same is in violation of tpe principles of A natural justice.

We may, therefore., read the material provision under sectio:i 124(21 of the Act:

124(2) : "The tribunal may suo motu or 011 the move of the Panchayat Samiti or the Zila Parishad or on the application of any servant of a Panchayat Samiti or Zila Parishad other than a government servant placed at' their disposal enquire into the conduct of any servant of the Panchayat Samiti or the Zila Parishad and after making such enquiry as it may deem fit pass such orders imposing any punishment including dismissal or removal as it may deem proper;

Provided that the tribunal shall not pass any such order in respect of a servant having a righ\ of appeal under section 116;

Provided further that the tribunal shall before passing any order of dismissal or removal give a notice to tl>e servant to show cause against the action proposed to he taken against him".

A persual of section 124(2) goes to show that before any acHon is taken for dismissal or removal of an employee the Tribunal has to

, enquire into his conduct justifying such action.

This enquiry must necessarily have to be made in the presence of the employee giving him an opportunity to rebu~ the allegations mentioned against him.

E It is only after affording him a reasonable opportunity tqrebut the allegations in the charge and the Tribunal is satisfied that the misconduct is established the question of final punitive action either of <lismissal or removal has to be considered.

Unlike as in article 311 of the Constitution, section 124(2) docs not in terms mention two stages of a departmental enquiry for mis- F conduct against an employee. Even so, the nature of an enquiry with an object to dismiss an employee is such that a full and fair reasonable opportunity must be given to him to meet the charges.

The second proviso to section 124(2) provides in unmistakable terms that \)efore passing any order of dismissal or removal a notice has 1to be given to the employee to show cause against the prnposed action.

The action of dismissal or removal cannot be pro- G posed, in all fairness, unless the Tribunal had reached a conclusion about the guilt after making a proper enquiry giving the employee a reasonable opportunity to defend.

In the instant case, apart from giving the show cause notice, no other communication was made to the appellant except the order of dismissal.

This is a clear case where the reasonable opportunity envisaged under section 124(2) has not been afforded to the appel- H !ant for making an effective representation to establish his innocence.

It is easv to see that the summary order of dismissal must have been

inffuenced by the allegations appertaining to the incident of August

15, 1967 for wliich, we understand, even a criminal case was instituted against the awellant.

That criminal case we are told, ended in acquittal. o~ \he appel!ant. and others on Jun~ 10, 1970. Al. any rate the said mc1dent being mcluded in the articles of charge against

te pel.ant he did not have any opportunity whatsoever to establlish hrn innocence when he had clearly denied the allegations even. in his interim reply.

The principles of natural justice are clearly ingrained in the pro-· visions of section 124(2). It is a clear case where the provisions of section 124(2), which are of a mandatory character in a departmental enquiries have been violated v>tiating the order of dismissal.

The . High Court, therefore, should have accepted the petition of the appellant under article 226 of the Constitution and quashed the order of dismissal.

Although in the ordinary course it would have been open to the authority to institute a. fresh enquiry his reinstatement,, after the order of dismissal has been set aside, we are clearly of opinion that this is not a case where that procedure should be permitted.

For one reason the appellant was dismissed in December 1967 and he had been out of employment for over eight years.

He has also not many • years to serve.

Besides, the serious allegations regarding the incident of August 15, 1967, which, according to us, must have inllu enced the authority to pass the order of dismissal, have not been fonndi to be established in a judicial trial.

While,, therefore, quashing the impugned order of dismissal, which we hereby do, we direot that the

appellant shall be reinstated in service with immediate effect and there shall be no further enquiry to the allegations forming the subject matter of charge against him.

The period of aboonce !hall be treated as leave without pay so that the appellant will not lose centinuity of his service.

I In the result the judgment of the High Court is set aside and the appeal is allowed with costs.

 P.H.P Appeal atlowea_

DEWAN SINGH

STATE OF HARYANA & ANOTHER

H. R. KHANNA

V. R. KRISHNA IYER

P. K. GOSWAMI, JJ

Zilhi Parishad Act 1961

Sec. 124(2)

Section 124(2)

Zilla Parishad Act, 1961

s. 124(2)

s. 124(2)

s. 124(2)

article 226

section 124

section 124

section 116

section 124(2)

article 311

section 124(2)

section 124(2)

section 124(2)

section 124(2)

section 124(2)

article 226