TaxTMI 
TaxTMI 
TaxTMI 
1999 (8) TMI 981
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....blic Administration with the participation of foreign and Indian experts for examining various aspects of the matter relating to establishment of Ombudsman institution in this country; (ii) Pass an appropriate writ, order or orders directing that the institutions and organisations of the Comptroller and Auditor General of India, Chief Vigilance Commissioner, and the Central Bureau of Investigation should indicate to the Hon'ble Court the specific steps which they will take for effectively overcoming any inadequacies and weaknesses in the operations of these important institutions which presently hamper effective and efficacious check on prevalence of corrupt practices in the country and to curb corruption at all political and bureaucratic levels; (iii) Pass an appropriate writ, order or orders appointing a Commission or Commissioner to urgently undertake comprehensive study of the present inadequacies in the Prevention of Corruption Act 1947 for making specific recommendations to strengthen this enactment for achieving the objective of curbing and checking corruption at the political and bureaucratic levels in the country. (iv) Pass an appropriate writ, order or orders di....
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.... petrol and patronage flow together". It is not possible for us to take any action on the press report. On our suggestion the Solicitor General takes notice of this news item and states that he would have the matter examined in the Ministry concerned and shall file an affidavit of the Secretary concerned in the Ministry reacting to this news item. He may file the affidavit within the period of eight weeks. The Writ Petition is adjourned to 13.10.95." The petition, thus, was diverted towards Captain Satish Sharma who was, at that time, Minister of State for Petroleum and Natural Gas in the Central Government. By Judgment dated September 25, 1996, [(1996) 6 SCC 530] all the 15 petrol outlets, allotted by the Minister to various persons out of his discretionary quota, were cancelled and the following directions were issued to Captain Satish Sharma (petitioner) :- "Capt. Satish Sharma shall show-cause within two weeks why a direction be not issued to the appropriate police authority to register a case and initiate prosecution against him for criminal breach of trust or any other offence under law. He shall further show-cause within the said period why he should not, i....
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....ddin, JJ. on 28.1.1997 when the Court directed "Issue notice on the Review Petition." On notice being served on Mr. H.D. Shourie, he filed his reply to the Review Petition on 21.2.1997. The office report dated 30th June, 1997 is to the following effect : "In the matter above-mentioned, this Court on 28th January, 1997 directed to issue notice of the Review Petition. Accordingly, notice was issued to both the respondents and hence the service of notice is complete as both the respondents are represented by Mr. H.D. Shourie, Respondent in person and Ms. Anil Katiyar, Advocate for Respondent No.2. Mr. Ashok K. Mahajan, Advocate has filed Application for impleadment on behalf of Mr. Arun K.Gupta resident of Kothi No. 68, Sector VIIIA, Chandigarh and also seeking stay of further investigation by CBI during pendency of Review Petition. Since the said Application was not served on other side, a letter dated 4th March, 1997 and another letter dated 30th June, 1997 was issued to Mr. Ashok K. Mahajan to serve it on Mr. H.D. Shourie, Respondent No. 1 and Mrs. Anil Katiyar representing Respondent No. 2 and Mr. P.H. Parekh, Advocate. He was also requested to furnish proof of....
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.... JJ. when the following order was passed : "Since the argument on this petition is likely to take some time it is directed that the matter may be listed on a non- miscellaneous day. The Registrar Judicial will take appropriate directions from Hon'ble the Chief Justice for listing the matter before an appropriate bench." It was thereafter that the matter was placed before this Bench. We have heard learned counsel for the parties. We have also heard Mr.Gopal Subramaniam, Senior Counsel, (Amicus Curiae). Mr. K.Parasaran, learned Senior Counsel for the applicant, has contended that since the applicant was Minister of State for Petroleum in the Central Government and it was in his capacity as an essential component of the Central Government, that he had made allotment of Petrol Pumps out of his discretionary quota, his act in making the allotments shall be treated to be the act of the Central Government with the result that even if such allotments were cancelled on the ground of arbitrary exercise of power, the Court could not have legally directed exemplary damages to be paid by the Government to itself. He also contended that the jurisdiction of this Court under Arti....
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....oposition placed before us. The Executive power of the Union is vested in the President under Article 53 of the Constitution. The extent of the Executive power is indicated in Article 73. The next Article, namely, Article 74 provides for a Council of Ministers to aid and advise the President. Article 75(3) speaks of the collective responsibility of the Cabinet which provides that the Cabinet shall be responsible to Parliament. Article 77 provides for the conduct of business of the Government of India and clause (3) thereof empowers the President to make rules for the convenient transaction of its business and for allocation amongst Ministers of the said business. It is in exercise of this power that rules for allocation of business have been framed under which various divisions of work to different Ministries have been indicated. Distribution of petroleum products, including petroleum outlets, is also one of the subjects which has been allocated to the Ministry of Petroleum. The functions of the Govt. are carried out in the name of the President by Ministers appointed by him on the advice of the Prime Minister. The Executive consists of : (a) Prime Minister and Ministers who ar....
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....Council of Ministers with the Prime Minister at the head to aid and advise the President in the exercise of his functions. The President has thus been made a formal or constitutional head of the executive and the real executive powers are vested in the Ministers or the Cabinet. The same provisions obtain in regard to the Govt. of States; the Governor ... occupies the position of the head of the executive in the State but it is virtually the council of Ministers in each State that carries on the executive Govt. In the Indian Constitution, therefore, we have the same system of parliamentary executive as in England and the Council of Ministers consisting, as it does, of the members of the legislature is, like the British Cabinet, `a hyphen which joins, a buckle which fastens the legislative part of the State to the executive part'. The Cabinet enjoying, as it does, a majority in the legislature concentrates in itself the virtual control of both legislative and executive functions; and as the Ministers constituting the Cabinet are presumably agreed on fundamentals and act on the principle of collective responsibility, the most important questions of policy are all formulated by the....
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.... in Articles 77(3) and 166(3), include "all executive business". Seervai in his treatise "Constitutional Law of India", Silver Jubilee Edition, Fourth Edition, on page 2037 has, after a critical analysis of the Judgment, extracted the following principles on the "business of the Government of India and allocation of business among Ministers" :- "(i) The expressions "business of the Government of India" and "the business of the Government of the State" in Arts. 77(3) and 166(3) includes "all executive business". (j) "Where the Constitution required the satisfaction of the President or the Governor for the exercise of any power or function by the President or the Governor as the case may be ... the satifaction required by the Constitution is not the personal satisfaction of the President or the Governor but is the satisfaction of the President or of the Governor in the constitutional sense under the Cabinet system of government .... It is the satisfaction of the Council of Ministers on whose aid and advice the President or the Governor generally exercises all his powers and functions...." Arts. 77(3) and 16....
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....ffice" and payment of exemplary damages to the Govt. The other aspect of the matter as argued by Mr. K. Parasaran as to the "collective responsibility" of the Cabinet with regard to the allotment of petrol outlets made by the petitioner in exercise of his discretionary quota may now be considered. It is contended by Mr. K. Parasaran that under the scheme of the Constitution, any order passed by the Minister shall be treated to be an order passed by the Cabinet which is collectively answerable to the House of the People under Article 75 (3). It is contended that an order passed by the Minister individually in favour of various persons to whom petrol outlets were allotted cannot be questioned as it was not raised before the House of the People to whom the Cabinet, as a whole, was answerable. The whole series of allotments made by the petitioner could then have been debated before the House and since this was not done, it is not open to question those allotments in this Court by a writ petition and the proceedings were meant only to embarrass and harass the Cabinet. It is also contended that the petitioner had the jurisdiction to make allotments of petrol outlets and t....
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.... the advice of the Prime Minister, who constitute the Council of Ministers. Article 75(3) provides that the Council of Ministers shall be collectively responsible to the House of the People. The concept of "collective responsibility" is essentially a political concept. The country is governed by the party in power on the basis of the policies adopted and laid down by it in the Cabinet Meeting. "Collective Responsibility" has two meanings: The first meaning which can legitimately be ascribed to it is that all members of a Govt. are unanimous in supprot of its policies and would exhibit that unanimity on public occasions although while formulating the policies, they might have expressed a different view in the meeting of the Cabinet. The other meaning is that Ministers, who had an opportunity to speak for or against the policies in the Cabinet are thereby personally and morally responsible for its success and failure. In the British Constitution & Politics 5th Edition by J. Harvey and L. Bather, it is said as under : "Except when a minister explains the reasons for his resignation, parliament hears nothing of the Cabinet's current deliberations. These....
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....ter's responsibility for his permanent officials or for his personal mistakes." In this connection, an extract from "The British Cabinet" by John P. Mackintosh, 1962 Edn., is set out below as it is also extremely relevant for this case. "Much has been said and written about the responsibility of ministers. The discussion can easily become confused because of the different meanings that are attached to the word "responsible". Collective responsibility will be discussed below, and the first task is to consider whether there is any separate element of individual responsibility. The most common political meaning is that a certain minister will answer parliamentary questions on a given subject. A second sense arises when those in political circles appreciate that a particular policy is largely the idea of the minister, rather than the traditional policy of the party in power, and they may single out the minister for attack. For instance, in 1903-05 Wyndham was purusing his land purchase schemes for Ireland in a manner which alarmed many Conservatives and would certainly have been unlikely under any other Chief Secretary. A third sense is simply that ....
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....s or criminal acts. This liability may be enforced either by means of ordinary criminal or civil proceedings or by means of impeachment, a remedy which is probably obsolete. They are also subject to the judicial review jurisdiction of the courts. [See: Halsbury's Laws of England - Fourth Edition (Re-issue), Volume 8(2), Para 422]. Learned counsel for the petitioner contended that neither could the Court award exemplary damages against the petitioner nor could it order any C.B.I. investigation as the petitioner in making the allotment of petrol outlets had not committed any offence, much less an offence of breach of trust. It is also contended that the petitioner while making allotments out of his discretionary quota available to him as Minister of State for Petroleum, had not committed the tort of misfeasance in public office and, therefore, he was not liable to pay any damages. Mr. K.Parasaran also argued that exemplary damages under law can be awarded in addition to the damages for the "tort" alleged to have been committed but where not even damages have been awarded, there is no question of awarding exemplary damages. It is also contended that action for tort coul....
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....o the writ jurisdiction of this Court under Article 32 or the High Courts under Article 226 and can be validly scrutinised on the touchstone of the Constitutional mandates. In a broad sense, therefore, it may be said that those branches of law which deal with the rights/duties and privileges of the public authorities and their relationship with the individual citizens of the State, pertain to "public law", such as Constitutional and Administrative Law, in contradistinction to "private law" fields which are those branches of law which deal with the rights and liabilities of private individuals in relation to one another. The distinction between private law and public law was noticed by this Court in Life Insurance Corporation of India vs. Escorts Limited & Ors., 1985 Supp. (3) SCR 909 = (1986) 1 SCC 264 = AIR 1986 SC 1370, in which the Court observed as under:- "Broadly speaking, the Court will examine actions of State if they pertain to the public law domain and refrain from examining them if they pertain to the private law field. The difficulty will lie in demarcating the frontier between the public law domain and the private law field. It is impossibl....
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....= 1994 (2) SCR 67). Duty to act fairly in respect of contracts was also the core question in Mahabir Auto Stores vs. Indian Oil Corporation, 1990 (1) SCR 818 = (1990) 3 SCC 752 = AIR 1990 SC 1031, in which this Court relied upon its earlier decisions in E.P.Royappa vs. State of Tamil Nadu, 1974 (2) SCR 348 = (1974) 4 SCC 3 = AIR 1974 SC 555; Menka Gandhi vs. Union of India, (1978) 1 SCC 248 = 1978 (2) SCR 621 = AIR 1978 SC 597; Ajay Hasia vs. Khalid Mujib Sehravardi, (1981) 1 SCC 722 = 1981 (2) SCR 79 = AIR 1981 SC 487; R.D. Shetty vs. The International Airport Authority of India, 1979 (3) SCR 1014 = (1979) 3 SCC 489 = AIR 1979 SC 1628, as also Dwarka Das Marfatia & Sons vs. Board of Trustees of the Port of Bombay , (1989) 3 SCC 293 = 1989 (2) SCR 751 = AIR 1989 SC 1642. Public law remedies have also been extended by this Court to the realm of tort. In exercise of jurisdiction under Article 32 of the Constitution, this Court has awarded compensation to the petitioners who suffered personal injuries at the hands of the officers of the Government and the causing of injuries which amounted to tortious act was compensated by this Court. In Rudul Sah vs. State of Bihar, 1983 (3) SCR 5....
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.... barring functions such as administration of justice, maintenance of law and order and repression of crime etc. which are among the primary and inalienable functions of a Constitutional Government, the State cannot claim any immunity. The determination of vicarious liability of the State being linked with negligence of its officers, if they can be sued personally for which there is no dearth of authority and the law of misfeasance in discharge of public duty having marched ahead, there is no rationale for the proposition that even if the officer is liable the State cannot be sued. The liability of the officer personally was not doubted even in Viscount Canterbury. But the Crown was held immune on doctrine of sovereign immunity. Since the doctrine has become outdated and sovereignty now vests in the people, the State cannot claim any immunity and if a suit is maintainable against the officer personally, then there is no reason to hold that it would not be maintainable against the State." The difference between public and private law was again examined by this Court in Nilabati Behera vs. State of Orissa (supra). Dr. Anand, J. (as His Lordship then was) in his separate concurri....
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.... of the citizen, notwithstanding the right of the citizen to the remedy by way of a civil suit or criminal proceedings. The State, of course has the right to be indemnified by and take such action as may be available to it against the wrongdoer in accordance with law - through appropriate proceedings. Of course, relief in exercise of the power under Article 32 or 226 would be granted only once it is established that there has been an infringement of the fundamental rights of the citizen and no other form of appropriate redressal by the court in the facts and circumstances of the case, is possible. The decisions of this Court in the line of cases starting with Rudul Sah vs. State of Bihar granted monetary relief to the victims for deprivation of their fundamental rights in proceedings through petitions filed under Article 32 or 226 of the Constitution of India, notwithstanding the rights available under the civil law to the aggrieved party where the courts found that grant of such relief was warranted. It is a sound policy to punish the wrongdoer and it is in that spirit that the courts have moulded the relief by granting compensation to the victims in exercise of their writ jurisdi....
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....t and under Article 32(2) of the court has the implicit power to issue whatever direction, order or writ is necessary in a given case, including all incidental or ancillary power necessary to secure enforcement of the fundamental right. The power of the court is not only injunctive in ambit, that is, preventing the infringement of a fundamental right, but it is also remedial in scope and provides relief against a breach of the fundamental right already committed vide Bandhua Mukti Morcha case. If the court were powerless to issue any direction, order or writ in cases where a fundamental right has already been violated, Article 32 would be robbed of all its efficacy, because then the situatiuon would be that if a fundamental right is threatened to be violated, the court can injunct such violation but if the violator is quick enough to take action infringing the fundamental right, he would escape from the net of Article 32. That would, to a large extent, emasculate the fundamental right guaranteed under Article 32 and render it impotent and futile. We must, therefore, hold that Article 32 is not powerless to assist a person when he finds that his fundamental right has been violated. ....
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....2 SCC 716 and In Re: Death of Sawinder Singh Grover (1995) Supp. 4 SCC 450, cannot be pressed in aid as in the earlier case, criminal trial was pending while in the latter case the matter had not been finally investigated. In view of the natural affinity with the British legal system, particularly as both the learned counsel have referred to and relied upon the cases relating to public law decided by the Courts in England, we may consider the question from that angle and in that light. In England, the position is not much different. In 1977, when certain procedural changes were brought about on the recommendations of the Law Commission and Order 53 was introduced, it became possible for a litigant to make an application for judicial review and claim, in such application, damages also against public bodies. Under the remedy of judicial review, it is possible to review not only the merits of the decision in respect of which the application for judicial review is made, but the whole decision-making process also. A decision of inferior court or a public authority could be quashed by an order of Certiorari made on an application for judicial review where that court or authority acted ....
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....Prohibition and Mandamus only lay against persons or bodies with judicial or quasi judicial functions and did not apply to an Authority exercising administrative powers. But this distinction between judicial and administrative activities was obliterated by the decision of the House of Lords in Ridge v. Baldwin 1964 AC 40 = 1963 (2) All ERs 66. The effect of this decision is that the judicial review lies not only against an inferior court or tribunal, but also against persons or bodies which perform public duties or functions. Thus, judicial review would lie against persons and bodies carrying out public functions. But it would not lie against a person or body carrying out private law and not public law functions. In such cases, the proper remedy is by way of action for a declaration and, if necessary, an injunction. There is also a self-imposed restriction on the exercise of power of judicial review which is to the effect that the courts would not normally grant judicial review where there is available another avenue of appeal or remedy. In R. v. Epping & Harlow General Commissioners 1983 (3) All ERs 257, the court observed : "It is a cardinal principle that, save in the m....
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....t at common law for wrongs committed by its servants in the course of employment not even for wrongs expressly authorised by it. (See: Canterbury (Viscount) A.H. General (1842) 1 Ph 306; High Commr. for India & Pakistan v. Lall, (1948) 40 Bom LR 649 = AIR 1948 PC 121 = 75 IA 225). Even the heads of the department or superior officers could not be sued for torts committed by their subordinates unless expressly authorised by them (See: Raleigh v. Goschen (1898) 1 Ch.73); only the actual wrongdoer could be sued in his personal capacity. In practice, the action against the officer concerned was defended by the Treasury Solicitor and the judgment was satisfied by the Treasury as a matter of grace. Difficulty was, however, felt when the wrongdoer was not identifiable. (See: Royster v. Cavey (1947) KB 204). The increased activities of the Crown have now made it the largest employer of men and the largest occupier of property. The above system was, therefore, proving wholly inadequate and the law needed a change which was brought about by the Crown Proceedings Act, 1947. (See: Home Office v. Dorset Yacht Co. (1970) AC 1004 = (1970) 2 All ER 294 [HL]). Nothing in the Act authorises proceedi....
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....o acquire, retain and govern territories, to raise and maintain armies and to make peace and war with native States. East India Company was subsequently taken over by the Crown and Govt. of India Act, 1858 was passed by the British Parliament. Section 68 of the Act allowed the Secretary of the State in Council to sue or be sued marking a departure from the common law rule that no proceedings, civil or criminal, could be filed against the Crown. In spite of the above provision, the Supreme Court of Calcutta in The Peninsular & Oriental Steamship Navigation Co. vs. The Secretary of State for India 1868-69 Bombay H.C. Reports Vol. V. Appendix-A P.1 held that the rule of immunity was applied by drawing a distinction by the acts done by the public servants in the delegated exercise of sovereign powers and acts done by them in the conduct of other activities. Peacock, CJ, who delivered the judgment observed : "It is clear that the East India Company would not have been liable for any act done by any of its officers or soldiers in carrying on hostilities, or for the act of any of its naval officers in seizing as prize property of a subject, under the supposition that it was the pr....
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....s led to a greater impact on the citizen. For the estabishment of a just economic order industries are nationalised. Public utilities are taken over by the State. The State has launched huge irrigation and flood control schemes. The production of electricity has practically become a Government concern. The State has established and intends to establish big factories and manage them. The State carries on works departmentally. The doctrine of laissez faire - which leaves every one to look after himself to his best advantage has yielded place to the ideal of a welfare State - which implies that the State takes care of those who are unable to help themselves." The Commission after referring to various provisions in the legislation of other countries also observed: "The old distinction between sovereign and non-sovereign functions or governmental and non-governmental functions should no longer be invoked to determine the liability of the State. As Professor Friendman observes: 'It is now increasingly necessary to abandon the lingering fiction of a legally indivisible State, and of a feudal conception of the Crown, and to substitute for it the principle of legal liabil....
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.... and in the alternative for compensation. This Court, speaking through Gajendragadkar, CJ, observed as under : "The act of negligence was committed by police officers while dealing with the property of Ralia Ram which they had seized in the exercise of their statutory powers. Now, the power to arrest a person, to search him, and to seize property found with him, are powers conferred on the specified officers by statute and in the last analysis, they are powers which can be properly characterised as sovereign powers, and so, there is no difficulty in holding that the act which gave rise to the present claim for damages has been committed by the employees of the respondent during the course of their employment; but the employment in question being of the category which can claim the special characteristic of sovereign power, the claim cannot be sustained." The earlier decision of this Court in Mst. Vidyavati's case (supra) was distinguished on the ground that it was based on a tortious liability not arising from the exercise of Sovereign power. The decision in Kasturilal's case (supra), has, apart from being criticised (See: Constitutional Law of India by Seervai....
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....e case law was reviewed by R.M. Sahai, J. in his illuminating judgment in N. Nagendra Rao & Co. vs. State of A.P. AIR 1994 SC 2663 = (1994) 6 SCC 205 in which the case of Neelabati Behera (supra) was followed and it was observed, inter alia, as under : "But there the immunity ends. No civilised system can permit an executive to play with the people of its country and claim that it is entitled to act in any manner as it is sovereign. The concept of public interest has changed with structural change in the society. No legal or political system today can place the State above law as it is unjust and unfair for a citizen to be deprived of his property illegally by negligent act of officers of the State without any remedy. From sincerity, efficiency and dignity of State as a juristic person, propounded in Nineteenth Century as sound sociological basis for State immunity the circle has gone round and the emphasis now is more on liberty, equality and the rule of law. The modern social thinking of progressive societies and the judicial approach is to do away with archaic State protection and place the State or the Government at par with any other juristic legal entity. Any watertigh....
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....hat are traditional Sovereign functions of the State was considered by this Court in State of Bombay vs. Hospital Mazdoor Sabha AIR 1960 SC 610 and Corporation of the City of Nagpur vs. Employees Fulsing Mistry N.H. Majumdar AIR 1960 SC 675 = (1960) 2 SCR 942 and in both these decisions, observations of Lord Watson in Richard Coomber vs. The Justices of the County Berks (1883-84) 9 AC 61 that traditional Sovereign functions were the making of laws, the administration of justice, the maintenance of order, the repression of crime, carrying on of war, the making of treaties of peace and other consequential functions, were approved. For the reasons stated above, we are of the view that the allotment of petrol outlets by the petitioner cannot be treated as "act of the State" and the rule of immunity invoked by Mr. Parasaran cannot be accepted. The next submission of Mr. Parasaran relates to the tort of misfeasance in public office which has been held to have been committed by the petitioner and for which he has been directed to pay ₹ 50 lakhs as exemplary damages. It is contended by Mr.Parasaran that the ingredients of the tort of misfeasance in public office were not m....
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....l property, such as ouster, trespass, nuisance, waste, subtraction, disturbance; (c) torts to personal property, consisting (i) in the unlawful taking or detaining of or damage to corporeal personal property or chattels; or (ii) in the infringement of a patent, trade mark, copyright, etc.; (d) slander of title; (e) deprivation of service and consortium. The second class includes deceit and negligence in the discharge of a private duty. The third class includes those cases in which special damage is caused to an individual by the breach of a duty to the public." Winfield's classic definition provides as under:- "Tortious liability arises from the breach of a duty primarily fixed by the law; such duty is towards persons generally and its breach is redressible by an action for unliquidated damages." Apart from tort which may be committed by a private individual, the officers of the Govt. would also be liable in damages for their wrongful acts provided the act does not fall within the purview of "act of the State." So also, the administrative bodies or authorities, which deal in administrative matters and take decisions specially for the implementatio....
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....er malice or knowledge by the council of the invalidity of its resolutions. In New Zealand, also a company failed in a claim for damages resulting from a minister's refusal of permission for it to obtain finance from a Japanese concern. The minister's refusal was quashed as ultra vires, but it was held that this alone was not a cause of action. Nor does it appear that claims of this kind can be strengthened by pleading breach of statutory duty. The Court of Appeal reinforced these decisions in a case of importance, but since shown to be of doubtful authority, under European Community law. A ministerial revocation order had prohibited the import of turkey meat from France and was held unlawful by the European Court as being in breach of Article 30 of the Treaty of Rome, which is binding in British law under the European Communities Act 1972. French traders who had suffered losses under the ban then sued the ministry for damages. On preliminary issues it was held that they had no cause of action merely for breach of statutory duty, as already related. Likewise there was no cause of action merely because the minister's order was unlawful: it could be quashed or declared ....
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....lic office or authority. Bad faith on the part of a public officer or authority will result in civil liability where the act would constitute a tort but for the presence of statutory authorisation, as Parliament intends statutory powers to be exercised in good faith and for the purpose for which they were conferred. Proof of improper motive is necessary in respect of certain torts and may negative a defence of qualified privilege in respect of defamation, but this is not peculiar to public authorities. There exists an independent tort of misfeasance by a public officer or authority which consists in the infliction of loss by the deliberate abuse of a statutory power, or by the usurpation of a power which the officer or authority knows he does not possess, for example by procuring the making of a compulsory purchase order, or by refusing, or cancelling or procuring the cancellation of a licence, from improper motives. However, where there has been no misfeasance, the fact that a public officer or authority makes an ultra vires order or invalidly exercises statutory powers will not of itself found an action for damages." de Smith in Judicial Review of Administrative Action, whi....
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....y wrongful because it is ultra vires. The history of the tort shows that a public officer whose action has caused loss and who has acted without power is not liable for the loss merely by reason of an error in appreciating the power available. Something further is required to render wrongful an act done in purported exercise of power when the act is ultra vires." With regard to the MENTAL ELEMENT, the High Court of Australia stated as under:- "The further requirement relates to the state of mind of the public officer when the relevant act is done or the omission is made. An early case is Ashby v. White, in which Ashby complained that the constables of the borough in which an election was held had refused to permit him to vote "fraudulently and maliciously intending to damnify him". Lord Holt CJ, whose judgment ultimately prevailed in the House of Lords, held that malice was essential to the action. Malice has been understood to mean an intention to injure. In this context, the "injury" intended must be something which the plaintiff would not or might not have suffered if the power available to the public officer had been validly exercised. (It is in....
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....in public office. If the impugned conduct then causes injury, the cause of action is complete." In Dunlop v. Woollahra Municipal Council (1981) 1 All ER 1202 (PC), it was held that mere invalidity of the order would not give rise to any liability for payment of damages in an action in tort to the aggrieved party. It was, however, held in the same case that if the action of the authority is actuated by malice, it would amount to "tort of misfeasance by a public officer." In Asoka Kumar David v. M.A.M.M.Abdul Cader (1963) 1 WLR 834 (PC), it was held that the tort of misfeasance will also be committed even in the absence of malice if the public officer knew both that what he was doing was invalid and that it will injure the plaintiff. (See also : Bourgoin SA & Ors. vs. Ministry of Agriculture Fisheries & Food (1985) 3 All ER 585 (CA). In Jones v. Swansea City Council (1989) 3 All ER 162 (CA), it was held that if the public officer acts with malice, i.e., with an intent to injure and thereby damage results, the liability would arise and the officer could be sued for the tort of misfeasance in public office. The legal propositions in that case were not dissented from by ....
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....s an honest and reasonable man would make as to the probability of such damage. (5) If the states of mind in (3) and (4) do not amount to actual knowledge, they amount to recklessness which is sufficent to support liability under the second limb of the tort. (6) Where a plaintiff establishes (i) that the defendant intended to injure the plaintiff or a person in a class of which the plaintiff is a member (limb one) or that the defendant knew that he had no power to do what he did and that the plaintiff or a person in a class of which the plaintiff is a member would probably suffer loss or damage (limb two) and (ii) that the plaintiff has suffered loss as a result, the plaintif has a sufficient right or interest to maintain an action for misfeasance in public office at common law. The plaintiff must of course also show that the defendant was a public officer or entity and that his loss was caused by the wrongful act." So far as malice is concerned, while actual malice, if proved, would render the defendant's action both ultra vires and tortious, it would not be necessary to establish actual malice in every claim for misfeasance in public office. In Bourgoin SA vs. Minis....
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....ce of the officers by the English Courts. Even in England where award of exemplary or aggravated damages for insult etc. to a person has now been held to be punitive, exception has been carved out if the injury is due to `oppressive, arbitrary or unconstitutional action by servants of the Government' (Salmond and Heuston on the Law of Torts). Misfeasance in public office is explained by Wade in his book on Administrative Law thus : "Even where there is no ministerial duty as above, and even where no recognised tort such as trespass, nuisance, or negligence is committed, public authorities or officers may be liable in damages for malicious, deliberate or injurious wrong-doing. There is thus a tort which has been called misfeasance in public office, and which includes malicious abuse of power, deliberate maladministration, and perhaps also other unlawful acts causing injury." (Emphasis supplied) After quoting from Wade, the Court proceeded to consider the question of award of exemplary damages in the light of the decision in Cassell & Co. Ltd. v. Broome & Anr. 1972 (1) All ER 801 as also the earlier decision in Rookes v. Barnard 1964 (1) All ER 367 and other English....
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....o deal with the people's property in a fair and just manner. He cannot commit breach of the trust reposed in him by the people. We have no hesitation in holding that Capt. Satish Sharma in his capacity as a Minister for Petroleum and Natural Gas deliberately acted in a wholly arbitrary and unjust manner. We have no doubt in our mind that Capt. Satish Sharma knew that the allottees were relations of his personal staff, sons of Ministers, sons/relations of Chairmen and members of the Oil Selection Boards and the members of the Oil Selection Boards themselves. The allotments made by him were wholly mala fide and as such cannot be sustained." The Court further found as under : "We are further of the view that Capt. Satish Sharma acted in a wholly biased manner inasmuch as he unfairly regarded with favour the cases of 15 allottees before him. The relevant circumstances available from record and discussed by us leave no manner of doubt in our mind that Capt. Satish Sharma deliberately acted in a biased manner to favour these allottees and as such the allotment orders are wholly vitiated and are liable to be set aside." The Court also found : "The orders of t....
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....was given in the context of deciding the Writ Petition which challenged the validity and correctness of the allotments. There was no prayer in the Writ Petition making any personal claim against me either civil or criminal and the entire record of the case was placed before this Hon'ble Court. In addition, affidavits were filed by responsible officers of the Department, therefore, I did not avail the option to file any affidavit. The respondent was ready and willing to leave the question of validity of the allotments made by him to be determined by this Hon'ble Court on the basis of the entire record. At that stage, I had no notice that any relief was claimed against me personally by any one or that I would be called upon to face civil or criminal proceedings. I respctfully state that in the matter of discretionary allotments based on Compassionate grounds, individual assessment and perception are bound to differ from person to person. There is no material to suggest that I made any allotments for any pecuniary advantage or illegal gain. Thus, I submit that before deciding on my personal liability to pay compensation or face criminal trial, I should be permitted to place m....
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....osed direction to the police authorities is concerned, it is respectfully submitted that : (a) No offence u/s 405 or 406 of the IPC has been made out. (b) Any direction, based on these facts, and expressing a prime-facie satisfaction of this Hon'ble Court that any criminal offence has been committed would be violative of Article 21 of the constitution, and (c) Any adjudication, even in to the existence of a prima- facie case by this Hon'ble Court would necessarily introduce disclosure by the answering deponent of defence he may have in the trial which may ensue - which procedure would be violative of Article 21." The Court by its judgment dated 4.11.1996 disposed of the matter as follows: "3. Pursuant to the above-quoted direction, a show- cause notice was issued to Capt. Satish Sharma. He has filed affidavit in reply to the show-cause notice. 4. We have heard Mr. Salve, learned counsel appearing for Capt. Satish Sharma. There are two parts of the directions quoted above. This Court has called upon Capt. Satish Sharma to show cause why a direction be not issued to the appropriate police authority to register a case and initiate prosecution against him f....
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....ionary quota is available to almost all Ministers of the Govt. of India. This obviously is based on a policy decision to allow discretionary quota not only to the Prime Minister but also to other Ministers so that serious difficulties, problems of disabilities or unemployment may be overcome at the earliest by providing immediate help. The Constitution through its various provisions, including Directive Principles of State Policy has laid down the basic principles of governance. Socio-economic growth, aid to the poor, upliftment of the down trodden, the Backward masses and Weaker sections of the society are some of the rules of governance embodied in the Constitution. The philosophy behind the "discretionary quota" available to the Prime Minister and other Minister or Members of Parliament appears to be to provide immediate relief in a case of acute personal hardship. The list of discretionary quotas available with the Prime Minister and other Ministers has been placed before us and is set out below: "DETAILS OF DISCRETIONARY ALLOTMENTS BEING EXERCISED BY VARIOUS MINISTERS IN GOVERNMENT OF INDIA UNION MINISTERS 1. Prime Minister : Directives being sent to var....
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....ernational Ships at all Ports across country. 2. Permits for Buses etc. 15. Minister for Urban Developments Discretionary Allotment of : 1. DDA Flats/Houses. 2. Shops in DDA/NDMC 3. Plots in DDA. MEMBERS OF PARLIAMENT 1. 100 Gas Connections for Discretionary Allotments. 2. 15 Telephone Connections for Discretionary Allotments." The above list will show that not only to the Minister of Petroleum, but beginning from the Prime Minister, down to other Ministers, including Members of Parliament, a discretionary quota has been made available to them. So far as the Minister of Petroluem is concerned, the allotments made by the petitioner were challenged in this Court in Centre for Public Interest Litigation vs. Union of India & Ors. (Writ Petition (C) No. 886 of 1993, decided on March 31, 1995) [since reported in 1995 Supp.(3) SCC 382], but the Court did not set aside or quash any of the allotments and instead framed guidelines for the exercise of discretionary allotment of petroleum products' agencies. These guidelines were settled with the assistance of the Attorney General who submitted a draft of the proposed guidelnes. After considering the guidelines, the ....
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....ourt, in sofar as it purports to set aside the 15 allotments made by the petitioner, will not be reviewed by us as the review applications filed by the allottees have already been rejected. We, therefore, cannot entertain any plea which even indirectly aims at setting aside the judgment under review on that question. Significantly, it is not even suggested that the guidelines issued by the Court in 1995 Supp. (3) SCC 382 were violated in any subsequent allotment or that allotments were made in excess of the quota after that judgment. In a case relating to manufacturer's discretionary quota concerning Maruti-800, this Court had to intervene. The then Attorney General who happened to be none other than Mr. K.Parasaran, arguing before us as Senior Counsel today, was requested by the Court to provide the draft guidelines which was done and the guidelines were approved by the Court and the Court fixed the guidelines for the exercise of manufacturer's five per cent discretionary quota concerning allotment of `Maruti 800' cars. (See: Ashok K. Mittal vs. Maruti Udyog Ltd.& Anr. (1986) 1 SCR 585). While conceding discretionary quota to the manufacturers, the Court fixed the gu....
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..... Had there been any other applicant for the same petrol outlet for which an application was made to the Minister, the question that he deliberately made the allotment in favour of one so as to injure the other person would then have positively arisen. The petitioner cannot be said to have made the allotment in favour of one out of malice towards the other as there was none else to contest or compete with the claim of the person who made the application for allotment. Nor could it be said that the petitioner made the allotment of petrol outlet in favour of the applicant with the knowledge that such allotment was likely to injure the interest of any other person. The petitioner before the Court was "Common Cause". It was a registered Society. It was not one of the applicants for allotment of petrol outlet. Had the "Common Cause" approached the Civil Court for damages on account of tort of misfeasance in public office, its suit would have been dismissed on the ground that it was not one of the applicants for a petrol outlet; its own interest was not injured in any way nor had the petitioner made allotment in favour of one of the applicants maliciously or with the....
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....lets would not constitute "Misfeasance" unless other essential elements were present. These allotments have already been quashed as having been arbitrarily made and we appreciate the efforts of "Common Cause" for having caused this exposure. But the matter must end here. It cannot be ignored that the allotments made by the petitioner under the discretionary quota were challenged in this Court but the Court did not interfere with those allotments and instead settled the guidelines for future allotments. It is not alleged nor has it been found that any allotment was made in violation of the guidelines. It cannot also be ignored that the petitioner is not alleged to have intereferred with any allotment made through the Oil Selection Boards or the process of selection carried out by the Boards. At this stage, Mr. Gopal Subramaniam drew our attention to the following passage from the judgment under review : "The orders of the Minister reproduced above read: "the applicant has no regular income to support herself and her family", "the applicant is an educated lady and belongs to Scheduled Tribe community", "the applicant is an uneduca....
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....Members, Oil Selection Board or their son, etc., and reflects a wanton exercise of power by the petitioner. This Court has already used judicial vituperatives in respect of such allotments and we need not strain our vocabulary any further in that regard. Suffice it to say that though the conduct of the petitioner was wholly unjustified, it falls short of "misfeasance in public office" which is a specific tort and the ingredients of that tort are not wholly met in the case. That being so, there was no occasion to award exemplary damages. Since exemplary damages have been awarded, we would, in spite of our finding that the petitioner had not committed the tort of misfeasance in public office, consider the question relating to "Exemplary Damages" on its own merit. "Damages", as defined by Mcgregor "are the pecuniary compensation, obtainable by success in an action, for a wrong which is either a tort or a breach of contract, the compensation being in the form of a lump sum which is awarded unconditionally." This definition was adopted by Lord Hailsham L.C. in Broome v. Cassell & Co. (1971) 2 All ER 187. The definition in Halsbury's Laws of ....
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....intiff for the harm done to him, while the secondary object is to punish the defendant for his conduct in inflicting the harm. The secondary object can also be achieved in awarding, in addition to normal compensatory damages, damages which are variously called as exemplary damages, punitive damages, vindictive damages or retributory damages. They are awarded whenever the defendant's conduct is found to be sufficiently outrageous to merit punishment, for example, where the conduct discloses malice, cruelty, insolence or the like. It will thus be seen that in awarding punitive or exemplary damages, the emphasis is not on the plaintiff and the injury caused to him, but on the defendant and his conduct. Exemplary Damages made their appearance on the English legal scene in 1760s when in two cases, namely Huckle vs. Money and John Wilkes vs. Wood, (1763) 2 Wils. KB 205 and (1763) Lofft 1 respectively, exemplary damages were awarded. These cases were followed by two other cases, namely, Benson v. Fredrick (1766) 3 Burr. 1845 relating to the tort of assault and Tullidge vs. Wade (1769) 3 Wils. KB 18 relating to the tort of seduction, and in both the cases, exemplary damages were allo....
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....r materials en route to the Soviet Union. Acting on orders received from the Admiralty, which had mistakenly formed the impression that the convoy was about to be attacked, Broome directed the ships to scatter in every direction. The result was calamitious. Left unprotected from attack, large numbers of ships and men and vast quantities of material were lost. Broome's action was vindicated; the error was the Admiralty's not his. Many persons wrote about the catastrophe, including Sir Winston Churchill and the war's official historian, but none faulted Broome for it until Cassell & Co. Ltd. published "The Destruction of P.Q. 17". (b) The book, advertised as "the true story of biggest- ever Russian convoy that the Royal Navy left to annihilation", blamed Broome for the disaster, accusing him of disobeying orders and deserting the convoy. The book had earlier been rejected by its author's regular publisher, who had said : 'As written, the book is a continuous witch hunt of the plaintiff, filled with exaggerated criticisms of what he did or did not do... We could not possibly publish the book as it is unless you took out insurance against any....
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....d no place in the civil code, and ought to be eliminated from it; but, as they could not be eliminated altogether, they ought to be confined within the strictest possible limits, no matter how illogical those limits were..... I think the difficulties presented by Rookes v. Barnard are so great the judges should direct the juries in accordance with the law as it was understood before Rookes v. Barnard. Any attempt to follow Rookes v. Barnard is bound to lead to confusion." Matter went up in appeal before the House of Lords. (Cassell & Co. Ltd. vs. Broome & Anr. (1972) 1 All ER 801 = 1972 A.C. 1027 ). Lord Hailsham L.C. did not agree with the Court of Appeal and held that Rookes vs. Barnard (supra) was correctly decided. All the observations of Lord Denning including that Rookes v. Barnard was decided per incuriam were diluted, rather overruled. It is in this background that category (2) set out by Lord Devlin was specified. Cassell & Company had published the book in spite of the knowledge that an action for libel was likely to be instituted against them. They were fully conscious that damages were likely to be awarded against them for publishing that book. But they published....
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....cess is not, in any way, affected. They must feel independent and keep themselves in an excellent frame of mind so that the administrative files are cleared in time and the Officers dealing with those files are not hesitant even in taking bold decisions which have sometimes to be taken in the interest of administration. It is true that the fear of being proceeded against in a court of law for tort of misfeasance in public office may keep them on the right path and they may not falter, but there is already the fear of departmental action or proceedings being initiated against them departmentally which itself is a safeguard for proper administration. Departmentally, they are answerable for their lapses; Ministers, or, for that matter, even the Government is answerable to Parliament. If they were constantly under the fear or threat of being proceeded against in a court of law for even slightest of lapse or under constant fear of exemplary damages being awarded against them, they will develop a defensive attitude which would not be in the interest of administration. In Yuen Kun Yev & Ors. v. Attorney General of Hong Kong (1987) 2 All ER 705, Lord Keith observed as under : "the ....
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....corpus, mandamus, prohibition, quo-warranto and certiorari, whichever may be appropriate, for the enforcement of the fundamental rights. Obviously, the fundamental rights would be enforced against the Govt. or its executive or administrative officers or other public bodies. It is in the matter of enforcement of fundamental rights that the Court has the right to award damages to compensate the loss caused to a person on account of violation of his fundamental rights. The decisions in which orders have been passed by this Court for damages under Article 32 of the Constitution for violation of fundamental right coupled with, in some cases, tortious liability, have already been specified above. The State itself cannot claim the right of being compensated in damages against its officers on the ground that they had contravened or violated the fundamental rights of a citizen. Petitioner, as Minister of State for Petroleum and Natural Gas, was part of the Central Govt. By directing petitioner to pay a sum of ₹ 50 lakhs to the Govt., the Court has awarded damages in favour of the Govt. of India in proceedings under Article 32 of the Constitution which is not permissible as the Court ....
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....that he had made allotments in favour of various persons for extraneous considerations, the Court awarded an amount of ₹ 50 lakhs as punitive damages. How did the Court arrive at this figure is not clear. Why it could not Forty nine lacs fifty thousand? Let us now examine the direction for investigation by the C.B.I. into the offence of "criminal breach of trust" or "any other offence." This direction obviously consists of two parts : (a) Investigation by the C.B.I. into the offence of criminal breach of trust; and (b) Investigation by the C.B.I. into any other offence. We will take up the first part first. The basis for the direction relating to investigation into the offence of "criminal breach of trust" are the following observations of the Court : (a) "A Minister who is the executive head of the department concerned distributes these benefits and largesses. He is elected by the people and is elevated to a position where he holds a trust on behalf of the people. He has to deal with the people's property in a fair and just manner. He cannot commit breach of the trust reposed in him by the people. (b) The allotments have been mad....
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....iminal liability and the whole matter will have to be decided on the principles of criminal jurisprudence, one of which is that the criminal liability has to be strictly construed and offence can be said to have been committed only when all the ingredients of that offence as defined in the Statute are found to have been satisfied. The matter may be examined from another angle. Election to the State Legislature or the House of the People are held under the Constitution on the basis of adult suffrage. On being elected as a Member of the Parliament, the petitioner was inducted as Minister of State. The Department of Petroleum and Natural Gas was allocated to him. Under the allocation of business rules, made by the President of India, the distribution of petroleum products, inter alia, came to be allocated to the petitioner. This allocation of business under the Constitution is done for smooth and better administration and for more convenient transaction of business of Government of India. In this way, neither a "trust", as ordinarily understood or as defined under the Trust Act, was created in favour of the petitioner nor did he become a "trustee" in that sense. ....
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.... Furthermore, the Secretary of State for India in Council, though by statute made capable of suing and being sued in that name, had not been made a body corporate. All that had been done had been to provide that the Secretary of State for the time being should be the agent of the Crown for the distribution of the property. James LJ regarded the consequences of holding that there was a trust enforceable in the courts as `so monstrous that persons would probably be startled at the idea'. He referred to matters such as the right of every beneficiary to sue for the administration of the trust and have the accounts taken, and `imposing upon the officer of State all the obligations which in this country are imposed upon a person who chooses to accept a trust'. He also emphasised the words at the end of the Royal Warrant as showing clearly that questions were to be determined, not by the courts, but by the Secretary of State, with an ultimate appeal to the Treasury, as advising the Queen. Baggallay and Bramwell LJJ delivered concurring judgments, with the latter emphasising the `monstrous inconvenience' and `enormous expense of litigation' if there were a trust enforceable....
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....touching the discharge of such trust, or wilfully suffers any other person so to do, commits 'criminal breach of trust'." A trust contemplated by Section 405 would arise only when there is an entrustment of property or dominion over property. There has, therefore, to be a property belonging to someone which is entrusted to the person accused of the offence under Section 405. The entrustment of property creates a trust which is only an obligation annexed to the ownership of the property and arises out of a confidence reposed and accepted by the owner. This is what has been laid in The State of Gujarat v. Jaswant Lal Nathalal AIR 1968 SC 700. In Rashmi Kumar vs. Mahesh Kumar Bhada (1997) 2 SCC 397, the essential ingredients for establishing the offence of criminal breach of trust, as defined in Section 405, have been spelt out as follows: "(i) entrusting any person with property or with any dominion over property; (ii) the person entrusted dishonestly misappropriating or converting to his own use that property; or dishonestly using or disposing of that property or wilfully suffering any other person so to do in violation of any direction of law prescribing the ....
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.... word "property", used in Section 405 IPC, has to be interpreted in wider sense as it is not restricted by any qualification under Section 405. It was held that whether an offence defined in that Section could be said to have been committed would depend not on the interpretation of the word "property" but on the fact whether that particular kind of property could be subject to the acts covered by that Section. That is to say, the word "property" would cover that kind of property with respect to which the offence contemplated in that Section could be committed. Having regard to the facts of the case discussed above and the ingredients of the offence constituting criminal breach of trust, as defined in Section 405, or the offence as set out in Section 409 IPC, we are of the opinion that there was no case made out against the petitioner for any case being registered against him on the basis of the Judgment passed by this Court nor was there any occasion to direct an investigation by the CBI in that case. The other direction, namely, the direction to the C.B.I. to investigate "any other offence" is wholly erroneous and cannot be sustained. Obvi....
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....Subramaniam contended that the Court has itself taken care to say that the C.B.I. in the matter of investigation, would not be influenced by any observation made in the Judgment and that it would independently hold the investigation into the offence of criminal breach of trust or any other offence. To this, there is a vehement reply from Mr. Parasaran and we think he is right. It is contended by him that this Court having recorded a finding that the petitioner on being appointed as a Minister in the Central Cabinet, held a trust on behalf of the people and further that he cannot be permitted to commit breach of the trust reposed in him by the people and still further that the petitioner had deliberately acted in a wholly arbitrary and unjust manner and that the allotments made by him were wholly mala fide and for extraneous consideration, the direction to the CBI not to be influenced by any observations made by this Court in the Judgment, is in the nature of palliative. The CBI has been directed to register a case against the petitioner in respect of the allegations dealt with and findings reached by this Court in the Judgment under review. Once the findings are directed to be trea....