TaxTMI 
TaxTMI 
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2006 (8) TMI 653
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....Appeal No. _______ of 2006 (Arising out of SLP (C) No. 9393 of 2006) This appeal was filed by Mr. B. Srinivasa Reddy (hereinafter called Mr. Reddy) seeking leave to appeal against the final judgment and order dated 04.04.2006 passed by the High Court of Karnataka at Bangalore in Writ Appeal No. 86 of 2006. By the impugned order, the High Court dismissed the writ appeal filed by the appellant-herein against the order dated 10.01.2006 passed by a learned Judge of the said Court in Writ Petition No. 9852 of 2004 and has declared that the appellant is not entitled to hold the post of Managing Director of the Karnataka Urban Water Supply & Drainage Board (hereinafter called 'the Board') (respondent No. 4). 4. Civil Appeal No. ________ of 2006 (Arising out of SLP (C) No. 10388 of 2006) The above appeal was filed by the Government of Karnataka against the very same judgment passed by the Division Bench of the High Court in Writ Appeal No. 254 of 2006 whereby the Division Bench dismissed the writ appeal filed by the State. FACTS: 5. The Karnataka Urban Water Supply & Drainage Board Act, 1973 was enacted to provide for the establishment of water supply and drainage Board and th....
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....rsion of the writ petition before the High Court also challenging the above- mentioned amendment to the Regulation which relates to making of a provision of appointing the Chief Engineer of the Board as its Managing Director. The writ petition was further amended to include the challenge to the promotion/appointment of the appellant as the Managing Director of the Board pursuant to the said amendment. 8. The learned Single Judge of the High Court allowed the writ petition on 12.04.2002 and held: a) that the impugned amendment of the Regulations was illegal since the same was contrary to Section 7(1)(d) of the Act; b) that the appointment of the appellant is illegal since, being a Chief Engineer of the Board, he was disqualified under Section 7(1)(d) of the Act and hence his appointment was contrary to the provisions of Sections 7(1)(d), 68 and 69 of the Act, Rules and Regulations; c) that the appointment was further held to be illegal since it was also contrary to Regulation 27 of the Regulations as the appointment was not restricted to one year but until further orders. 9. The High Court quashed the appointment orders and directed the State to take immediate steps to appoi....
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.... made submissions on the following issues: 1. Writ petition as framed not maintainable at the instance of an unregistered Trade Union; 2. Locus of the writ petitioners Employees' Union; 3. No Writ of Quo Warranto unless there is violations of statutory provisions in making appointment; 4. No violation of Section 4(2) and or Rule 3 of Rules as held by the High Court; 5. Government has always the power to make contractual appointment until further orders and finding to the contrary is ex facie erroneous; 6. High Courts reliance on official Memorandum dated 23.12.1994 is erroneous; 7. Pleasure of the Government under Section 6(1) of the Act and Rule 3 of the Rules which envisages the qualifications; 8. Until further orders pleasure of the Government and discretion; 9. Legal malice finding is unsustainable; 10. Writ petition by R1, R2 was motivated as R1 had lodged a false complaint to the Lokayukta against the appellant Reddy which was found to be baseless. The above submissions will be dealt with in extenso in paragraphs infra. 12. Mr. Sanjay R. Hegde adopted the arguments of Mr. P.P. Rao. He invited our attention to Article 310(2) of the Constitution of Ind....
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....6. It was submitted that the appellant has no substantive right left qua the post of Managing Director of the Board since even as per his appointment order dated 31.01.2004 he is to have charge only "until further orders". In view of the above subsequent developments, learned Counsel for the Union submitted that the present appeal has become infructuous. According to Mr. Raju Ramachandran, though the power to appoint is vested with the State Government under Section 4(2) of the Act the same is not unfettered or uncontrolled. It cannot be based on mere ipse dixit of the Government the discretion of the Government cannot be said to be without any bounds. If the High Court on the facts of a particular case finds that such discretion has been mis-used, the High Court would be within its power to check such actions of the Government. According to him, a Writ of quo warranto would lie to challenge an appointment made until further orders on the ground that it is not a regular appointment. Merely because the appointment is for until further orders would oust the jurisdiction of the High Court to issue a Writ of quo warranto when it is found that the very appointment was illegal and not wa....
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....the writ petition Mr. Raju Ramachandran submitted that the High Court did not rely upon the status of the writ petitioners as registered trade union but rather accepted their locus standi as employees of the Board and their right to form trade unions associations though unregistered and on such basis permitted them to challenge the appointment in writ proceedings. According to him, the unregistered unions, in the eyes of law can contend that it has to come and knock the doors of this Court seeking justice by pointing out the illegalities of the State Government in appointing the appellant as Managing Director of a Statutory Board wherein public interest is involved. The purpose, according to him, is to espouse the cause of the workers. Therefore, the writ petitioners were employees of the Board and cannot be considered as wayfarers and that the employees approached the High Court in public interest and have been attempting to dissuade the Government from granting favour to the appellant herein by appointing him at the post of Managing Director of the Board for long. 18. We have carefully considered the rival submissions with reference to the entire records. 1) Locus of the unregi....
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.... should not be cancelled owing to the violation of the provisions of Section 28 of the Trade Union Act, 1925, by not submitting the Annual Return of the union for the year ending 31st December, 1991. AND whereas the union was not complied with the above requirements, even after notice, contravened the above provisions of law. Therefore in exercise of my powers conferred under Section 10(b) of the Act, I hereby order that the Registration of the Water Supply & Drainage Board Employees Association, Hubli Bearing Registration No. 544/85 be cancelled with effect from the date of this order. The General Secretary is hereby directed to surrender the certificate of registration. 20. In the instant case, the appellant was appointed w.e.f. 01.02.2004. The Employees Union filed the writ petition on 08.03.2004. On the said date, the respondent-Union was not a registered trade union and the Certificate of Registration of the Trade Union in Form 'C' was issued by the Government of Karnataka, Department of Labour only on 20.01.2005 which reads thus: It is hereby certified that the Karnataka Nagar Neru Sarbaraju Mathu Olcharandi Noukarar Sangha, Dharwa. has been registered under th....
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.... number of the instances of public interest litigation where large body of persons is having the grievance against inaction of the State. Even letters have been considered to be a writ petition but all these are the matters where large section of public is affected and the personal interest of any person or a smaller section as in the present case, is not involved. Even in the case of People's Union for Democratic Rights v. Union of India (1982)IILLJ454SC when the question of locus standi was considered, the Hon'ble Supreme Court had taken into consideration the poverty, illiteracy and the ignorance obstructing and impeding accessibility of the judicial process and on that ground it was considered that the writ petition can be filed. In D.S. Nakara and Ors. v. Union of India (1983)ILLJ104SC the old pensioners individually were unable to undertake journey through labyrinths of costly and protracted legal judicial process for allowing to espouse their cause. In case of S.P. Gupta and Ors. v. President of India [1982]2SCR365 poverty, helplessness and disability or social or economic disadvantaged, position was considered a sufficient ground for maintaining the writ petition. T....
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.... Act, 1973 (hereinafter referred to as 'the Act'). In the writ petition filed by respondent Nos. 1 and 2 their locus standi to challenge the appointment of the appellant was asserted in the following words: The petitioner Association is Trade Union registered under the Trade Unions Act, 1926. The petitioner is the only registered trade union existing in the 2nd respondent-Board. The Board has held several negotiations with the petitioner Union in regard to the service conditions of the employees of the 2nd respondent-Board since its formation in the year 1986. The Board has entered into several settlements with the petitioner Union with regard to their service conditions. The petitioner which is a recognized trade union is entitled to agitate the matter with regard to the appointment of the 3rd respondent to the Board. The petitioner is concerned about the functioning of the 2nd respondent-Board, and as such is entitled to question the appointment of the 3rd respondent as Managing Director on contract basis. Hence, the petitioner has locus standi to file this Writ Petition. (Emphasis supplied) These averments were established to be false. The registration of the first....
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....ees association approached the High Court with unclean hands. The employees who approaches the Court for such relief must come with frank and full disclosure of facts. If they failed to do so and suppress material facts their application is liable to be dismissed. 23. The Constitution Bench of this Court in Naraindas v. Government of Madhya Pradesh and Ors. 1974CriLJ924 held that if a wrong or mis-leading statement is deliberately and wilfully made by a party to a litigation with a view to obtain a favourable order, it would prejudice or interfere with the due course of judicial proceeding and thus amount to contempt of court. It is thus crystal clear that the Employees' Union have approached this Court by suppressing the material facts and has snatched an order on the basis of wrong averments when the employees union has no locus standi to maintain the writ petition on the date relevant in question. Courts cannot grant any relief to a person who comes to the Court with unclean hands and with mala fide intention/motive. The writ petition filed by the employees association is liable to be thrown out on this single factor. Though it is eminently a fit case for awarding ex....
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....t which was made on temporary basis has continued for nearly 2 years is wholly contrary to law particularly when the Act and the Rule do not stipulate maximum period of appointment. The High Court, in our view, gravely erred in issuing a Writ of Quo Warranto when there is no clear violation of law in the appointment of the appellant. 26. The official memorandum dated 23.12.1994 on a plain reading of it applies only to Government servants. It has no manner of the application to the employees or servants of the statutory boards. The appellant is not a retired government servant. His appointment as Managing Director of the Board is not a post in Government service. The High Court has erred in law in applying the said official memorandum to the appointment of the appellant which is governed only by the Act and the Rules, even otherwise the High Court has failed to appreciate that the official memorandum running counter to the statutory provisions are ineffective and at any event cannot be enforced in a quo warranto proceedings. 27. The appellant joined the services of the State in the public health engineering segment of its Power Works Department in the year 1967. From the time, the....
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....the post of Managing Director of the Board. 28. The law is well settled. The High Court in exercise of its writ jurisdiction in a matter of this nature is required to determine, at the outset, as to whether a case has been made out for issuance of a Writ of Quo Warranto. The jurisdiction of the High Court to issue a Writ of Quo Warranto is a limited one which can only be issued when the appointment is contrary to the statutory rules. The official memorandum dated 23.12.1994 deals with re-appointment of retired government servants and granting extension of service to retired government servants. As already stated, the appellant is not a government servant nor a retired government servant. The official memorandum is an administrative instruction which is contrary to the provisions of the Act and statutory Rules neither the Act nor the Rules prescribe any age of retirement for the Managing Director of the Board. On the other hand, having regard to the dis- qualification prescribed by Section 7(1)(d) of the Act to the effect that an officer or servant of the Board cannot be appointed as Managing Director. The High Court could not have read an additional dis-qualification that a retir....
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....and the High Court could not have gone beyond the limits of Quo Warranto so very well delineated by a catena of decisions of this Court and applied the test which could not have been applied even in a certiorari proceedings brought before the Court by an aggrieved party who was a candidate for the post. The judgment impugned in this appeal not only exceeds the limit of Quo Warranto but has not properly appreciated the fact that writ petition filed by the Employees' Union and the President of the Union Halakatte was absolutely lacking in bonafides. In the instant case, the motive of the second respondent Halakatte is very clear and the Court might in its discretion declined to grant a Quo Warranto. 30. This Court in A.N. Sashtri v. State of Punjab and Ors. (1988) Supp SCC 127 held that the Writ of Quo Warranto should be refused where it is an outcome of malice or ill-will. The High Court failed to appreciate that on 18.01.2003 the appellant filed a criminal complaint against the second respondent Halakatte that cognizance was taken by the criminal court in CC No. 4152 of 2003 by the jurisdictional magistrate on 24.02.2003, process was issued to the second respondent who was en....
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....thers; and (ii) avoidance of public mischief and to avoid mischievous petitions seeking to assail, for oblique motives, justifiable executive actions. In such case, however, the court cannot afford to be liberal. It has to be extremely careful to see that under the guise of redressing a public grievance, it does not encroach upon the sphere reserved by the Constitution to the executive and the legislature. The court has to act ruthlessly while dealing with imposters and busybodies or meddlesome interlopers impersonating as public spirited holy men. They masquerade as crusaders of justice. They pretend to act in the name of pro bono publico, though they have no interest to the public or even of their own to protect. 32. It is useful to refer to the case of The University of Mysore and Anr. v. C.D. Govinda Rao and Anr. [1964]4SCR575 and 581 As Halsbury has observed: An information in the nature of a quo warranto took the place of the obsolete writ of quo warranto which lay against a person who claimed or usurped an office, franchise, or liberty, to inquire by what authority he supported his claim, in order that the right to the office or franchise might be determined. Broadly ....
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....ed by such a person cannot be rejected on the ground of his having not the locus standi. In other words, if the person is found to be not merely a stranger having no right whatsoever to any post or property, he cannot be non-suited on the ground of his not having the locus standi. It is settled law that Writ of quo warranto does not lie if the alleged violation is not of a statutory nature. Three judgments relied on by Mr. P.P. Rao can be usefully referred to in the present context. 34. In A. Ramachandran v. A. Alagiriswami, Govt. Pleader High Court, Madras and Anr. AIR1961Mad450 , the Court observed in paragraphs 74 and 104 as under: ...Where an authority has power to make rules relating to a subject matter and also the power to decide disputes arising in the field occupied by that subject matter, the two powers and functions must be kept distinct and separate. This dispute must be decided with reference to the rules in force at the time the adjudication had to be made and, the rule making power cannot be invoked in relation to that adjudication. ...It was also contended that it was incumbent on the State Government to follow the principle of appointment as laid down in 1932....
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....If the teaching staff working in educational institutions of the Education Department are retiring in the middle of the academic year, the instructions given in O.M. No. DPAR 42 SSR 77 dated 15.12.1977 are applicable. 5. The procedure contained in the above paragraphs are also applicable to the Autonomous/Grant-in-Aid institutions, Boards and the Companies which are subordinate to or under the control of the Government." Sd/- (A.V. Ramamurthy) Joint Secretary to Government D.P.A.R.(SR) Paragraph 5 of the Memorandum makes it amply clear that Boards are included within the said memorandum and hence the procedure adopted for Government employees will equally apply to the Board. The initial appointment of the appellant as Managing Director was on 28.1.1998. He was relieved vide relieving Order dated 31.1.2004 as M.D. His pension order stated that he has retired as M.D. Thereafter he was re- appointed as M.D. on 31.1.2004. The said Notification reads as follows: In exercise of the powers conferred under Section 4(2) of the KUWS&D B Rules, 1973 (Karnataka Act 25/1974) Sri B. Srinivasa Reddy, No. 427 12th Main, RMV Extension, Bangalore 560 080 is appointed as Managing Director, K....
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....commercial matters. As per KUWSDB Rule 4(2), the Managing Director shall be a whole time officer of the Board and shall be paid remuneration as prescribed. 3. Therefore, it is necessary for the Government to appoint the Managing Director. The Managing Director can be a serving Officer of the Government who can be sent on deputation to the KUWSDB. It is even open to the Government to appoint a retired official to the post of Managing Director. But generally Government has not appointed any retired official either to KUWSDB or other Boards and Corporations of the Government. 4. A decision has to be quickly taken as the Managing Director of KUWSDB has to hold negotiations with the World Bank on 9.2.2004 regarding the new Water Supply and Sanitation Improvement Programme. 5. In my view, an Engineer in water supply/public health engineering would be most ideal for the post of Managing Director, KUWSDB. The file was placed before Shri S.M. Krishna, Chief Minister. The order passed by the Chief Minister is at page 2 of the File which reads thus: This is a critical juncture for Karnataka Urban Water Supply and Sewerage Board. Considering the projects on hand and the need to comple....
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....udgment of the High Court has to be set aside and the writ petition has to be dismissed. 39. The finding of disqualification given in the earlier round of litigation while the appellant was holding a lien on the post of Chief Engineer i.e. while he was an officer of the Board, ceased to hold good after the appellant retired from the service of the Board on 31.1.2004 (AN) and the appointment impugned in the second round of litigation was effective from 1.2.2004 after the appellant had ceased to be an officer of the Board. Contractual appointment/powers of the Government 40. Mr. Raju Ramachandran, learned senior counsel appearing for the Trade Union, fairly conceded that the Government has unrestricted power to make contractual appointment. Even otherwise, the Government, in our opinion, has the undoubted power to make a contractual appointment until further orders. The finding to the contrary is ex facie erroneous. The Notification dated 31.1.2004 clearly states that the appointment is on contract basis and until further orders. While laying down the terms of appointment in its order dated 21.4.2004, the Government of Karnataka clearly stated that "term of contractual appointmen....
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....on Bench of this Court held as under: The other question which was canvassed before the High Court and which has been pressed before us relates to the merits of the nominations made to the reserved seats. It seems to us that the appellants do not have any right to challenge the nominations made by the Central Government. They do not compete for the reserved seats and have no locus standi in the matter of nomination to such seats. The assumption that if nominations to reserved seats are not in accordance with the rules all such seats as have not been properly filled up would be thrown open to the general pool is wholly unfounded. But the High Court of Delhi in P.L. Lakhanpal v. Ajit Nath Ray AIR1975Delhi66 held as under: Another facet of the preliminary objection relates to the allegations of mala fides made in the petition. It will bear repetition to state that the preliminary objection is on the assumption and not admission that the appointment of Justice A.N. Ray was mala fide. It is indisputable that mala fide action is no action in the eye of law. But, to my mind, the mala fides of the appointing authority or, in other words, the motives of the appointment authority in mak....
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....ctor on 28.01.1998 was admittedly in contravention of Section 7(1)(d) of the Act. Yet, he continued till 31.1.2004. He, thereafter, withdrew his appeal thereby confirming that his entire tenure as M.D. from 1998 to 2004 was illegal and in contravention of the Act. ii) He was relieved from his duty as "Managing Director" and is receiving pension accordingly. iii) Reports pertaining to malpractices committed by the petitioner of which he has not exonerated so far reveal that he is not a person with an undoubtful character. iv) List of persons appointed at the post of Managing Director of the Board since its inception show that only IAS Officers or PWD officials have been appointed at this post. For the first time, a retired Board servant was brought as the Managing Director for "until further orders". v) The note sheet of the Chief Minister, though proposes certain exigencies, do not indicate that he is the only person who can cater to such demands. vi) There was no need for an appointment for "until further orders" where admittedly, the purpose of appointment would have been accomplished at the most by June, 2004. According to him something was done by the State without e....
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....en the Commission will look into the charges against the officer, therefore, the above ruling has no application at all in the present case. 46. The Division Bench noted that certain allegations were made against the appellant and observed in paragraph 3 that the complaint was stated to be pending before the Lokyukta in the matter relating to financial irregularities of the Board and that the Comptroller and Auditor General submitted a report for the year ending 31.3.2000 wherein the appellant has paid the amounts to contractor even before they became due resulting in loss of interest of Rs. 15.40 lakhs to the Board. However, the Division Bench did not take notice of that fact that Lokayukta had completely exonerated the appellant. Until further orders 47. Mr. Raju Ramachandran, learned senior counsel appearing for the respondents, submitted that the pleasure of the Government and discretion cannot be completely discretionary and at the ipse dixit of the executive. Even a contractual appointment has to be made with a certain ascertainable period and cannot be open-ended. According to him, use of words "until further orders" is not a safety notch but is rather prone to misuse. Ev....
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..... First, the post of Managing Director is a highly respectable post. It is a post of great confidence a lynchpin in the administration and smooth functioning of the administration requires that there should be complete rapport and understanding between the Managing Director and the Chief Minister. The Chief Minister as a Head of the Government is in ultimate charge of the administration and it is he who is politically answerable to the people for the achievements and failures of the Government. If the Chief Minister forfeits the confidence on the appellant, he may legitimately in the larger interests of administration appoint him until further orders as M.D. of the Board. It does not involve violation of any legal or constitutional rights. Secondly that the vast multitudinous activities in which a modern State is engaged, there are bound to be some posts which require for adequate discharge of their functions, high degree of intellect and specialized experience. It is always a difficult problem for the Government to find suitable officers for such specialized posts. There are not ordinarily many officers who answer the requirements of such specialized posts and the choice with the ....
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....separate conditions of service or tenure prescribed for 'Directors', which expression under the Act includes the Managing Director. Appointments at the pleasure of the Government are not the same as ordinary appointments. It was further submitted that ordinary principles of recruitment applicable to posts governed by Chapter I of Part XIV of the Constitution of India would not apply to the instant appointment being an appointment at the pleasure of the Government. This is also for the simple reason that ordinary appointments in public service entail security of tenure which has an essential feature of such appointment. These characteristics are noticeably absent in the instant case. 51. Our attention was also drawn to the conclusion reached by the High Court that the appellant was not qualified for the post and under Rule 3 of the Rules, the qualification for appointment is explicitly provided. No age of retirement is prescribed for Director including Managing Director. Neither any age limit for appointment is prescribed. These qualifications do not prescribe any age limit. Section 8 of the Act itself suggests that even a legal practitioner could be appointed as a Director....
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....n Bench that the appointing authority has no right to appeal in quo warranto proceedings is that the Court cannot probe the mind of the appointing authority in a motion for quo warranto. The High Court erred in probing the mind of the government and acted contrary to its own finding on the role of appointing authority in quo warranto proceedings. The reasons felt out by the learned Judges of the Division Bench are not sustainable in law and the impugned judgment is liable to be interfered with in these appeals. The learned Judges are not right in quashing the appointment of the appellant as Managing Director on the misconception that he has been re- appointed to the said office, whereas it was a fresh appointment under the provisions of the Act and in accordance with the prescribed qualification and eligibility under the Act. Further the appointee holds the office during the pleasure of the Government as provided under Section 6(1) of the Act. The learned Judges are not correct in holding that the Government is not affected by allowing the writ of quo warranto against the appointee and observed that the Government ought not have filed the appeal. It is unfortunate that the learned ....