TaxTMI 
TaxTMI 
1990 (9) TMI 323
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.... the High Court rejecting those contentions, the writ petitions were filed in this Court directly for the same purpose. By one stroke, seemingly resorting to the Spoils System alien to our constitutional scheme, the Government of State of Uttar Pradesh has terminated by a general order the appointments of all Government Counsel (Civil, Criminal, Revenue) in all the districts of the State of U.P. w.e.f. 26.2. 1990 and directed preparation of fresh panels to make appointments in place of the existing incumbents. This has been done by Circular G.O. No. D-284-Seven-Law-Ministry dated 6.2.1990, terminating all the existing appointments w.e.f. 28.2. 1990, irrespective of the fact whether the term of the incumbent had expired or was subsisting. The validity of this State action is challenged in these matters after the challenge has been rejected by the Allahabad High Court. They have all been heard together since the common question in all of them is the validity of the Circular G.O. No. D284-Seven Law-Ministry dated 6.2.1990 issued by the Government of State of Uttar Pradesh. Leave is granted in the Special Leave Petitions and the appeals are also heard on merits along with the Wri....
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....iling side may contain the recommendations of names only three times of the presently sanctioned posts. 4. In the criminal side, five times of the names of the present sanctioned posts may be recommended. 5. The attested copies of Bio-Data of the Counsel recommended, attested details of their work during last two years, certificate of registration as an Advocate, certificate of birth and the attested copies of certificates of educational qualifications may also be sent. 6. The names of any such counsel, who has practice experience for less than 7 years, or who has more than 60 years of age as on 1.1. 1990, or the person who is already working at a salaried Government or non-Governmental posts, a full-time lecturer in a college, Notary, Marriage Officer, Executive Qazi or State, may not be included in the panels. However, on resignation from the present post, they can be included in the panel. 7. For preparation of new panel, a general notice which enlists the applic....
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.... in a confidential envelope through a special messenger by 25th February, 1990. sd/(A.K. Singh) Joint Legal Remembrancer" By the above-quoted circular letter dated 6.2. 1990, the decision of the State Government to terminate the engagement of all the Government Counsel engaged throughout the State of U.P. for civil/ revenue/criminal (including anti-dacoity) and urban ceiling work on and from 28.2. 1990 and to make appointments in their place on the basis of new panel prepared for the purpose was communicated to all the District Magistrates in the State. Admittedly, this circular was made applicable to all the Government Counsel throughout the State at the district level, howsoever designated such as district Government Counsel, Additional District Government Counsel, etc. There is no dispute that the circular related to and applied equally to all the Government Counsel throughout the State irrespective of their tenure whose appointments were terminated w.e.f. 28.2.1990 for being replaced by new appointees. The circular applied equally to not only those Government Counsel whose tenure had already expired or whose tenure was to expire before 28.2. 1990, but also to those whose tenure....
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.... cannot be continued against the will of either party, there is no scope for the argument that the State does not have the right to change the Government Counsel at its will. It is common ground that the appointment, termination and renewal of tenure of all Government Counsel in the districts is governed by certain provisions contained in the Legal Remembrancer's Manual, in addition to Section 24 of the Code of Criminal Procedure, 1973, applicable in the case of public prosecutors. The learned Additional Advocate General did not dispute that if Article 14 of the Constitution of India is attracted to this case like all State actions, the impugned circular would be liable to be quashed if it suffers from the vice of arbitrariness. However, his argument is that there is no such vice. In the ultimate analysis, it is the challenge of arbitrariness which the circular must withstand in order to survive. This really is the main point involved for decision by us in the present case. The nature of appointment of the Government Counsel in the districts on the civil, criminal and revenue sides was hotly debated during the hearing. It was urged on behalf of the petitioners/appellants that th....
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....vernment which includes the District Government Counsel (Civil, Revenue, Criminal) along with many others such as Judicial Secretary and Legislative Secretary. it is obvious that all of them including D.G.Cs. are described as holders of some `office' of the State Govt. Chapter VII contains the necessary provisions relating to District Government Counsel. Part A therein deals with appointment and conditions of engagement of the District Government Counsel. Para 7.02 deals with the power of Government to appoint Government Counsel in the districts which requires the Government to appoint District Government Counsel (Civil, Revenue, Criminal) and also, wherever necessary, in the interest of efficient and expeditious disposal of business, to appoint Additional or/and Assistant District Government Counsel to assist the District Government Counsel (Criminal) or (Civil) in discharge of his duties: Subordinate District Government Counsel for the conduct of civil cases in outlying towns of a district; and Assistant District Government Counsel in outlying towns of the district for the conduct of criminal or civil cases or both. Para 7.03 provides for applications and qualifications for appoi....
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....participate in political activities so long they work as such; otherwise they shall incur a disqualification to hold the post. 7.08 Renewal of term-(1) at least three months before the expiry of the term of a District Government Counsel, the District Officer shall after consulting the District Judge and considering his past record of work, conduct and age, report to the Legal Remembrancer, together with the statement of work done by him in Form No. 9 whether in his opinion the term of appointment of such counsel should be renewed or not. A copy of the opinion of the District Judge should also be sent along with the recommendations of the District Officer. (2) Where recommendation for the extension of the term of a District Government Counsel is made for a specified period only, the reasons therefore shall also be stated by the District Officer. (3) While forwarding his recommendation for renewal of the term of a District Government Counsel-(i) the District Judge shall give an estimate of the quality of the Counsels's work from the Judicial standpoint, keeping in view the different aspects of a lawyer's capacity as it is manifested before him in conducting State cases, and ....
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.... District Officer shall forward a copy of all the confidential reports, referred to in para 7.09(2) in respect of District Government Counsel (Criminal) to Home (Police) Section of Secretariat also for information. (4) Any shortcomings on the part of the District Government Counsel shall at once be brought to the notice of the Legal Remembrancer." These provisions show that the initial appointment is for a period of one year during which the work and conduct of the appointee is watched to adjudge his suitability and a report is required to be submitted at the end thereof by the District Officer after consulting the District Judge and on the same being found satisfactory, his engagement is made for a term not exceeding three years. Before expiry of the term of three years, the case of the incumbent is to be considered on the basis of his work, conduct and age for renewal and the Government is required to decide the question of his reappointment for a period not exceeding three years on the basis of the report of the District Officer and the opinion of the District Judge. If the Government agrees with their recommendations, the term of the existing incumbent is renewed for a perio....
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....best amongst those available, is the object sought to be achieved by these provisions, which, even otherwise, should be the paramount consideration in discharge of this governmental function aimed at promoting public interest. All Govt. Counsel are paid remuneration out of the public exchequer and there is a clear public element attaching to the `office' or `post'. The learned Additional Advocate General contended that clause 3 of para 7.06 says that the appointment of a District Government Counsel is only professional engagement terminable at will on either side and not appointment to a post under the Government; and the Government has the power to terminate the appointment at anytime `without assigning any cause'. He contended that this power to terminate the appointment at any time without assigning any cause and the clear statement that the appointment is only professional engagement terminable at will on either side is sufficient to indicate that the relationship is the same as that of a private client and his counsel. In our opinion, this provision has to be read not in isolation, but in the context in which it appears and along with the connected provisions, already refer....
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....during the subsistence of the term. The construction, suggested on behalf of the State of U.P. of this provision, if accepted, would amount to conceding arbitrary power of termination to the Government, which by itself is sufficient to reject the contention and thereby save it from any attack to its validity. We may now refer to some provisions of the Code of Criminal Procedure, 1973, relating to Public Prosecutors. Section 24 provides for appointment of Public Prosecutors in the High Courts and the districts by the Central Government or the State Government. We are here concerned only with the appointment of Public Prosecutors by the State Government in the districts. Sub-section 3 of Section 24 says that for every district, the State Government shall appoint a Public Prosecutor and may also appoint one or more Additional Public Prosecutors for the district. Sub-section 4 requires the District Magistrate to prepare a panel of names of persons considered fit for such appointments, in consultation with the Session Judge. Sub-section 5 contains an embargo against appointment of any person as the Public Prosecutor or Additional Public Prosecutor for the district by the State Govern....
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.... right and duty to exercise an employment or a position of authority and trust to which certain duties are attached; and such an engagement satisfied that test. Even though the decision was rendered in the context of disqualification under the Election Law by holding an `office of profit', yet it is useful for appreciating the nature of such an engagement or appointment of a counsel by the Government. In Mundrika Prasad Sinha v. State of Bihar, [1980] 1 SCR 759. the nature of appointment of Government Pleaders came up for consideration and it was said that the office of a Government Pleader. as defined in Section 2(7) of the Code of Civil Procedure.1908 is a public office. Krishna Iyer. J.. in that decision, also pointed out that the `Government under our Constitution shall not play with law offices on political or other impertinent consideration as it may affect the legality of the action and subvert the rule of law itself'. In that decision. an earlier Madras decision was quoted with approval. wherein. it was clearly held that the duties of the Government Pleader are of a public nature and that the office of a Government Pleader is a public office. The relevant extract is as unde....
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....rts will necessarily respect the right. for good reasons of public policy. to dismiss without assigned reasons. this should not. in my opinion, prevent them from examining the framework and context of the employment to see whether elementary rights are conferred on him expressly or by necessary implication. and how tar these extend ...... are. therefore. unable to accept the argument of the learned Additional Advocate General that the appointment of District Government Counsel by the State Government is only a professional engagement like that between a private client and his lawyer, or that it is purely contractual with no public element attaching to it. which may be terminated at an), time at the sweet will of the Government excluding judicial review. We have already indicated the presence of public element attached to the `office' or `post' of District Government Counsel of every category covered by the impugned circular. This is sufficient to attract Article 14 of the Constitution and bring the question of validity of the impugned circular within the scope of judicial review. The scope of judicial review permissible in the present case, does not require any elaborate cons....
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....stitution contains `Directives Principles of State Policy which are fundamental in the governance of the country and are aimed at securing social and economic freedoms by appropriate State action which is complementary to individual fundamental rights guaranteed in Part III for protection against excesses of State action to realise the vision in the Preamble. This being the philosophy of the Constitution, can it be said that it contemplates exclusion of Article 14--non-arbitrariness which is basic to rule of law--from State actions in contractual field when all actions of the State are meant for public good and expected to be fair and just? We have no doubt that the Constitution does not envisage or permit unfairness or unreasonableness in State actions in any sphere of its activity contrary to the professed ideals in the Preamble. In our opinion. it would be alien to the Constitutional Scheme to accept the argument of exclusion of Article 14 in contractual matters. The scope and permissible grounds of judicial review in such matters and the relief which may be available are different matters but that does not justify the view of its total exclusion. This is more so when the modern....
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....nstitution and thereafter permitting it to cast off its garb of State to adorn the new robe of a private body during the subsistence of the contract enabling it to act arbitrarily subject only to the contractual obligations and remedies flowing from it. It is really the nature of its personality as State which is significant and must characterize all its actions, in whatever field, and not the nature of function, contractual or otherwise, which is decisive of the nature of scrutiny permitted for examining the validity of its act. The requirement of Article 14 being the duty to act fairly, justly and reasonably, there is nothing which militates against the concept of requiring the State always to so act, even in contractual matters. There is a basic difference between the acts of the State which must invariably be in public interest and those of a private individual, engaged in similar activities, being primarily for personal gain, which may or may not promote public interest. Viewed in this manner, in which we find no conceptual difficulty or anachronism, we find no reason why the requirement of Article 14 should not extend even in the sphere of contractual matters for regulating t....
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.... re,dew of contractual powers and the other activities of the Government. Reference is made also to the recent decision of the Court of Appeal in Jones v. Swansea City Council, [1990] 1 W.L.R. 54, where the Court's clear inclination to the view that contractual powers should generally be reviewable is indicated, even though the Court of Appeal faltered at the last step and refrained from saying so. It is significant to note that emphasis now is on reviewability of every State action because it stems not from the nature of function, but from the public nature of the body exercising that function; and all powers possessed by a public authority, howsoever conferred, are possessed `solely in order that it may use them for the public good'. The only exception limiting the same is to be found in specific cases where such exclusion may be desirable for strong reasons of public policy. This, however, does not justify exclusion of reviewability in the contractual field involving the State since it is no longer a mele private activity to be excluded from public view or scrutiny. Unlike a private party whose acts uninformed by reason and influenced by personal predilections in contractual ....
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....p. SCC 559, while the discretion to change the policy in exercise of the executive power, when not trammelled by the statute or rule, was held to be wide, it was emphasised as imperative and implicit in Article 14 of the Constitution that a change in policy must be made fairly and should not give the impression that it was so done arbitrarily or by any ulterior criteria. The wide sweep of Article 14 and the requirement of every State action qualifying for its validity on this touch-stone, irrespective of the field of activity of the State, has long been settled. Later decisions of this Court have reinforced the foundation of this tenet and it would be sufficient to refer only to two recent decisions of this Court for this purpose. In M/s Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay,[1989] 3 SCC 293, the matter was reexamined in relation to an instrumentality of the State for applicability of Article 14 to all its actions. Referring to the earlier decisions of this Court and examining the argument for applicability of Article 14, even in contractual matters, Sabyasachi Mukharji, J. (as the learned Chief Justice then was), speaking for himself and Kania, ....
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....`whatever their mien' are amenable to constitutional limitations, the alternative being to permit them `to flourish as an imperium in imperio'. It was pointed out that `governmental policy would be invalid as lacking in public interest, unreasonable or contrary to the professed standards', if it suffers from this vice. It was stated that every State action must be reasonable and in public interest and an infraction of that duty is amenable to judicial review. The extent of permissible judicial review was indicated by saying that `actions are amenable to judicial review only to the extent that the State must act validly for a discernible reason, not whimsically for any ulterior purpose'. It is sufficient to quote from the judgment of Mukharji, 3. (as the learned Chief Justice then was) the following extract: " ..... Where there is arbitrariness in State action, Article 14 springs in and judicial review strikes such an action down. Every action of the executive authority must be subject to rule of law and must be informed by reason. So, whatever be the activity of the public authority, it should meet the test of Article 14 ......(emphasis supplied) This decision clearly shows t....
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....o more. The wisdom of the policy or the lack of it or the desirability of a better alternative is not within the permissible scope of judicial review in such cases. it is not for the courts to recast the policy or to substitute it with another which is considered to be more appropriate, once the attack on the ground of arbitrariness is successfully repelled by showing that the act which was done, was fair and reasonable in the facts and circumstances of the case. As indicated by Diplock, L.J., in Council of Civil Service Unions v. Minister for the Civil Service, [1984] 3 All ER 935, the power of judicial review is limited to the grounds of illegality, irrationality and procedural impropriety. In the case of arbitrariness, the defect of irrationality is obvious. In our opinion, the wide sweep of Article 14 undoubtedly takes within its fold the impugned circular issued by the State of U.P. in exercise of its executive power, irrespective of the precise nature of appointment of the Government Counsel in the districts and the other rights, contractual or statutory, which the appointees may have. It is for this reason that we base our decision on the ground that independent of any st....
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....nd Ors., [1967] 2 SCR 703, at p. 7 18-19, indicated the test of arbitrariness and the pitfalls to be avoided in all State actions to prevent that vice, in a passage as under: "In this context it is important to emphasize that the absence of arbitrary power is the first essential of the rule of law upon which our whole constitutional system is based. In a system governed by rule of law, discretion, when conferred upon executive authorities, must be confined within clearly defined limits. The rule of law from this point of view means that decisions should be made by the application of known principles and rules and, in general, such decisions should be predictable and the citizen should know where he is. If a decision is taken without any principle or without any rule it is unpredictable and such a decision is the antithesis of a decision taken in accordance with the rule of law. (See Dicey--"Law of the Constitution"-Tenth Edn., Introduction cx). "Law has reached its finest moments", stated Douglas, J. in United States v. Wunderlick, (*), "when it has freed man from the unlimited discretion of some ruler ... Where discretion is absolute, man has always suffered". It is in this sen....
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....ld be justified only on the basis of some extraordinary ground equally applicable to all Government Counsel in the districts throughout the State which is reasonable. No such reason appears in the circular. The impugned circular itself does not indicate the compelling reason, if any, for the drastic step of replacing all the Government Counsel in every branch at the district level throughout the State of U.P., irrespective of the fact whether the tenure of the incumbent had expired or not. The learned Additional Advocate General stated that the circular was issued because the existing panels were made in 1985, 1986 and 1987 and were considered to be not too proximate in point of time in the year 1990 for being continued. The reason, if any, for considering such en bloc change necessary has not been disclosed either in the circular or at the hearing in addition to what is said in para 29 of the counter-affidavit of A.K. Singh, which is referred later. On behalf of the petitiOners/appellants, it was alleged that the en masse change at the district level throughout the State of U.P. was made only for political reasons on account of the recent change in the State Government. We deem....
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....icts of the State of U.P. was required to be replaced in order to streamline the conduct of government cases and indeed. that is not even the case of the State which itself says that many of them were to be re-appointed. Non-application of mind to individual cases before issuing a general circular terminating all such appointments throughout the State of U.P. is itself eloquent of the arbitrariness writ large on the face of the circular. It is obvious that issuance of the impugned circular was not governed by any rule but by the whim or fancy of someone totally unaware of the requirements of rule of law, neatly spelled out in the case of John Wilkes, [1770] 4 Burr. 2528 more than two centuries back and quoted with approval by this Court almost a quarter century earlier in Jaisinghani's case (supra). We have considered it necessary to re-emphasize this aspect and reiterate what has been said so often by this Court only because we find that some persons entrusted with the task of governance appear to be unaware of the fact that the exercise of discretion they have must be governed by rule, not by humour, whim, caprice or fancy or personal predilections. It also disturbs us to find th....
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....rmination in one stroke on a reasonable ground has been shown. The submission on behalf of the State of Uttar Pradesh at the hearing that many of them were likely to be re-appointed is by itself ample proof of the fact that there was total non-application of mind to the individual cases before issuing the general order terminating all the appointments. This was done in spite of the clear provisions in the L.R. Manual laying down detailed procedure for appointment, termination and renewal of tenure and the requirement to first consider the existing incumbent for renewal of his tenure and to take steps for a fresh appointment in his place only if the existing incumbent is not found suitable in comparison to more suitable persons available for appointment at the time of renewal. In the case of existing appointees. a decision has to be first reached about their non-suitability for renewal before deciding to take steps for making fresh appointments to replace them. None of these steps were taken and no material has been produced to show that any existing incumbent was found unsuitable for the office on objective assessment before the decision to replace all by fresh appointees was taken....