TaxTMI 
TaxTMI 
1988 (3) TMI 452
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....f the Institute dated April 21, 1986 in Writ Petition (Civil) No. 439 of 1987. As disposal of Writ Petition (Civil) No. 431 of 1987 wherein the constitutional validity of the Act has been challenged and Writ Petition (Civil) No. 439 of 1987 in which the legality of the order of termination of service of the said Dr. Jagadanand Jha has been challenged will virtually mean disposal of the other writ petitions and appeals, we propose to deal with these two writ petitions. The Institute, Lalit Narayan Mishra Institute of Economic Development and Social Change, Patna, hereafter referred to as 'Institute', was initially named Bihar Institute of Economic Development and was started in 1973 under the Chairmanship of Dr. Jagannath Mishra, the then Minister of Irrigation and later on the Chief Minister of Bihar. It was named as Lalit Narayan Mishra Institute of Economic Development and Social Change to commemorate the memory of late Shri Lalit Narayan Mishra, once upon a time, Union Railway Minister. It may be noticed at this stage that the name of the Institute and the name of the Society are the same. The Institute was basically started as a research institute. In 1974, the Ma....
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....F PRIVATE EDUCATIONAL INSTITUTIONS OF THE STATE OF BIHAR . WHEREAS, the State of Bihar has bright prospects of rapid growth of Industrial and Economic Development, the relevancy and importance of specialised knowledge of Business Management has assumed great importance AND, WHEREAS, for that purpose it is necessary to ensure a high level of educational and training facilities and the co-ordination of the training with important industrial and business units; AND, WHEREAS, it has been resolved to nationalize this branch of education in phases." Clause (a) of section 2 of the Act defines "Private Educational Institutions" as follows: "S. 2(a). "Private Educational Institution" means a private educational college, institute or school, affiliated to any University of the State of Bihar or recognised by the State Government and imparting education, and/or training in Business Management or Business Administration or matter connected with Economic and Social Development and/or conducting degree or diploma course in one or the other branch of education mentioned above;" Chapter II of the Act relates to taking over of Private College/ Institute. Section 3 of chapter II runs as fol....
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....ent and will be actually vested in it free from all encumbrances. The Schedule mentions only one Institute and in view of section 3(1) it has vested in the State Government. It is said that the first phase relates to the taking over of the Institute and that has been done. Section 3(2) also provides for amendment of the Schedule by including any institution. In other words, the other institutions which answer the description of private educational institutions as defined in clause (a) of section 2 of the Act will also be nationalised, not at a time, but in phases, the first phase having started with the take over of the Institute. This, in short, is the scheme of the Act. The first attack to the validity of the Act and the said two ordinances is founded on the plea of violation of Article 14 of the Constitution. It is submitted by Mr. Sorabjee, learned Counsel appearing on behalf of the petitioner-Society, that while it is true that Article 14 forbids class legislation, it does not, however, forbid reasonable classification. We are reminded of the principle of law as laid down in State of Rajasthan v. Mukandchand, [1964] 6 SCR 903; Maganlal Chaganlal (P) Ltd. v. Municipal Corpor....
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....l may be treated as a class by himself. The other decision that has been relied upon by the petitioner is B.S. Reddy v. Chancellor, Osmania University, [1967] 2 SCR 214. What happened in that case was that section 5 of the Osmania University (Second Amendment) Act, 1966 introduced into the Osmania University Act, 1959 a new section 13A whereby it was provided that the person then holding the office of the Vice-Chancellor of the University could only hold that office until a new Vice-Chancellor was appointed, and that such new amendment must be made within 90 days of the commencement of the said amendment Act whereupon the old Vice-Chancellor would cease to hold office. It was held by this Court that there was no justification for the impugned legislation, that is, the provision of section 13A, resulting in a classification of the Vice-Chancellors into two categories, namely, the appellant as the existing Vice-Chancellor and the future Vice-Chancellors to be appointed under the Osmania University Act. It was held that both these categories constituted one single group or class, and that even assuming that the classification of these two types of persons as coming under two differ....
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....anner. All the institutions which answer the description as given in section 2(a) of the Act are to be nationalised. It is, therefore, not correct to say that the Institute has been singled out for the purpose of nationalisation. There can be no doubt that when nationalisation has to be done in a phased manner, all the institutions cannot be taken over at a time. The nationalisation in a phased manner contemplates that by and by the object of nationalisation will be taken over. Therefore, in implementing the nationalisation of private institutions in a phased manner, the Legislature has started with the Institute. Therefore, the question of singling out the Institute or treating it as a class by itself does not arise, for as the provisions of the Act and the ordinances go, all the private educational institutions, as defined in section 2(a) of the Act, A will be nationalised in a phased manner. It is the legislative decision that the Institute should be taken over in the first phase of the nationalisation. The Legislature has not left it to the discretion of the executive Government for the purpose of selecting the private educational institution for the first phase. It is ve....
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....tioned. A steering committee under the chairmanship of the Education Minister was constituted. It is not disputed that since June, 1975 every expenditure for maintaining and running the Institute has been incurred by the State of Bihar. It is submitted by Mr. Kacker that the facts disclosed in the writ petition have brought out prominently the interest the State had taken in not only financing, but also controlling the entire development and running of the Institute. The total amount of money spent by the State Government in nurturing the Institute works out to about Rs. 1.60 crores. Facts also disclose that not only the State had changed the name of the Institute, but also provided the site for the Institute, got the building constructed through its own agencies and funds and even supervised the prescription of syllabi. There is much force in the contention of Mr. Kacker that in a sense the State Government was running the entire Institute without nationalisation and when it decided to nationalise such institutions for the purposes mentioned in the Preambles of the Act and ordinances, this Institute was chosen to be the very first with all sense of justification and propriety. In ....
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.... of Bihar, it has been stated, inter alia as follows: "Since the validity of the Act is under cloud, being the subject matter of challenge before this Hon'ble Court, the State Government has not yet taken over other Institutes. However, it is submitted that the proposal to take over two other institutes in the second phase is at the final stage and is awaiting the final decision with regard to the validity of the Act. When the cloud is cleared, further step for taking over other institutes imparting education in similar branch will be taken." It is common knowledge that when any litigation ensues and remains pending, the Government generally does not take any step till the final disposal of the litigation. It is also the case of the respondents that because of the pendency of the litigation challenging the validity of the ordinances and the Act, the Government did not take any steps for nationalisation of similar institutes for the second phase. A grievance has been made on behalf of the petitioner- Society that even after the promulgation of the ordinances, three other Institutes, the details of which have been set out in the additional affidavit, have been recognised....
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....of discrimination or discriminatory treatment of the Institute does not arise and the contention of the petitioner-Society in this regard is rejected. The next attack of the petitioner-Society to the impugned Act is founded on violation of the provision of Article 19(1)(c) of the Constitution. It is urged on behalf of the petitioner-Society that in taking over the Institute, there has been an infraction of the fundamental right of the Society to form association. It is contended that by the impugned Act the management of the Society has been totally displaced and its composition changed. All assets and properties are vested in the State Government and the Commissioner is deemed to have taken charge of the Institute. It is submitted that all incidents of ownership and management have been taken over by the State and what is being left to the company is paper ownership and management and, as such, in substance and effect the right of association of the Society is clearly affected. It is submitted that the Act is not saved under Article 19(4) of the Constitution because the fundamental right of the Society to form association has been interfered with not in the interests of the sov....
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....nce is the loss or injury caused to the citizens and not merely what manner and method has been adopted by the State in placing the restriction. The above principles, as laid down in those two decisions, are well settled and no exception can be taken to them. It is true that the provisions of the Constitution, particularly the provisions relating to the fundamental rights, should not be construed in a pedantic manner, but should be construed in a manner that would enable the citizens to enjoy the rights in the fullest measure. But, that does not surely mean and it was not the intention of this Court to lay down that in construing the provisions relating to fundamental rights, it should be stretched to the extent of covering even certain extraneous matters which would be far from the ambit and scope of the fundamental rights. Article 19(1)(c) confers a right on the citizens to form association. In exercise of such a right the petitioner-Society has constituted itself into an association. That right of the Society remains unimpaired and uninterfered with by the impugned Act and ordinances. It is, however, complained that the only activity of the Society was its right of management....
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....the Society, which was the owner of the Institute, has lost all control and ownership of the Institute. It may be equally true that the Institute was the only activity of the Society, but we are concerned with the right of the Society to form association. So long as there is no interference with the Society, its constitution or composition, it is difficult to say that because of the taking over or acquisition of the Institute, which was the only property or activity of the Society, the fundamental right of the Society to form association has been infringed. Mr. Sorabjee, learned Counsel for the petitioner- Society, has placed strong reliance upon the decision of this Court in Damyanti Naranga v. Union of India, [1971] 3 SCR 840. In that case, by a legislative enactment, namely, the Hindi Sahitya Sammelan Act, 1962, the institution known as the Hindi Sahitya Sammelan was declared an institution of national importance. By the said Act a statutory Sammelan was constituted as a body corporate by the name of the Hindi Sahitya Sammelan. Under section 4(1) of the Act, the Sammelan was to consist of the first members of the Hindi Sahitya Sammelan, which was a registered Society founded ....
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....er to a decision of this Court in All India Bank Employees' Association v. National Industrial Tribunal, [1962] 3 SCR 269. Ayyangar, J, speaking for the Court, observes that the right guaranteed by Article 19(1)(c) of the Constitution does not carry with it a concomitant right that unions formed for protecting the interests of labour shall achieve their object such that any interference to such achievement by any law would be unconstitutional unless it could be justified under Article 19(4) as being in the interests of Public order or morality. The right under Article 19(1)(c) extends only to the formation of an association or union and in so far as the activities of the association or union are concerned or as regards the step which the union might take to achieve its object, they are subject to such laws as may be framed and such laws cannot be tested under Article 19(4). This observation supports the view we have taken that the fundamental right guaranteed under Article 19(1)(c) does not extend to or embrace within it the objects or purposes or the activities of an association. In other words, it does not carry with it a further guarantee that the objects or purposes or acti....
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....ry 66, List I, or in Entry 25, List III. The Act only provides for the taking over of private educa- tional institutions in phases and has taken over the Institute to start with for the first phase. It may be that the purpose of such taking over or nationalisation of private educational institutions is to ensure a high level of educational and training facilities and the co-ordination of the training with important industrial and business units. An Entry in any of the Lists of Seventh Schedule will apply when a law is enacted by the Legislature on any of the subjects mentioned in the Entry. In the instant case, as has been noticed already, the impugned Act does not lay down any law touching the subject referred to in Entry 66, List 1, or Entry 25, List III. In our opinion, therefore, neither of these two Entries applies. Even assuming that one of these two Entries applies. then it is Entry 25, List III, and not Entry 66, List I; as contended on behalf of the respondents. The impugned legislation if held to be one on education or technical education, is surely not relating to any matters referred to in Entry 66, List I. We are, however, of the view that Entry 25 also has no appli....
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....and the form and the manner in which such compensation is to be given", so the said observation was made. This means that the learned Counsel is of the view that after the repeal of Article 31(2) of the Constitution, no compensation is compulsorily payable for the acquisition of property. In other words, the point is not ultimately pressed. In the circumstances, we are not called upon to decide the point or express any opinion on the same. Now we may deal with the case of Dr. Jagadanand Jha, Registrar of the Institute. The first ordinance, namely, ordinance No. 15 of 1986, was promulgated by the Governor on April 19, 1986 and the service of Dr. Jha were terminated by an order dated April 21, 1986 which is extracted below: "The Governor of Bihar in exercise of power under section 6 and sub-sections (2), (3) &(4) of Bihar Private Educational Institutions (Take over) Ordinance, 1986 and Bihar Ordinance No. 15 of 1986 and Education Department Notification No. 99/C has considered the report of the Committee and has come to the conclusion appointment and promotion of officers and workers was not done as per rules of the University, nor in accordance with Government directions and n....
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.... a decision under sub-paragraphs (3) and (4) is taken by the Government. Under sub-paragraph (2) of para- graph 6, the State Government is to set up one or more committees of experts and knowledgeable persons for the purpose of ascertaining whether or nor appointment, promotion or confirmation of each member of the teaching staff was made in accordance with the University Regulation or Government direction/circular and to submit its report to the State Government. Sub-paragraph (3) of paragraph 6 enjoins the State Government to decide in respect of each member of teaching staff on the merits of each case whether to absorb him in Government service or to terminate his service or to allow him to continue on an ad-hoc basis for a fixed term or on contract etc. Subparagraphs (2) and (3) relate to the members of teaching staff of the concerned institution. Sub-paragraph (4) of paragraph 6 of the ordinance deals with the cases of other categories of staff of the institution. It provides that the State Government shall similarly determine the term of appointment and other conditions of service of other categories of staff of the institution. It is clear that there is some distinction b....
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....with the principles of natural justice may not be read into such direction and, if such terminations are effected without giving the employees concerned an opportunity of being heard, no exception can be taken to the same. But, in the instant case, sub-paragraph (4) of paragraph 6 of the ordinance does not contain any direction for the termination of services of the members of non-teaching staff. Even in spite of that, if the State Government wants to terminate the services of the petitioner Dr. Jha, it cannot be done without giving him a reasonable opportunity of being heard, for such act on the part of the State Government would be an administrative act. In this connection, we may refer to our decision in K.I. Shephard v Union of India & Ors., [1987] 4 SCC 431 wherein it has been held that the scheme-making process under section 45 of the Banking Regulation Act, 1949 being administrative in nature, the rules of natural justice are attracted, as the scheme provides for the termination of services of the employees. It is clear from the provision of sub-paragraph (4) of paragraph 6 that the services of the members of non-teaching staff have been intended to be continued. The petitio....