Durga Singh and Others vs State of M.P. and Others

R.C. Lahoti, J.

A duly elected market committee has been ordered to be superseded by the Director of Mandis in exercise of the power conferred by Section 56 of M.P. Krishi Upaj Mindi Adhiniyam 1973 (hereinafter, the Act for short).

Three members of the committee have invoked the writ jurisdict on of this Court complaining gross violation of the principles of natural justice and exercise of drastic statutory power on msy, and non existent grounds, tantamounting to malicious action at law.

ft is iadeed a strange feature of the case that Rajnarayan and B.P., Singh, two of the members of the superseded committee have sought for intervention, not to support the petitioners but to support the order of supersession. However, the intervention was allowed inasmuch as this Court was of the opinion the members of the superseded committee do have an interest is the matter entitling them to an undiniable right of hearing when the life of the committee constituted by them was at stake.

The Director of Mandis and the State of M. P., in their return have opposed the petition and strongly supported the order of supersession.

We proceed to notice the relevant facts.

On 3-8-89, the Director issued a show cause notice (Annex. P/1) stating the "irregularities" said to have been committed by the committee during its tenure. In substance, the irregularities stated in the notice were:--

(i) The committee issued licence to traders without insisting on production of solvency certificates, which action was in clear violation of Section 17 (i) (a) of the Adhiniyam read with Bye-law No. 20 (2) (a);

(ii) One Chakresh Sharma was appointed sub-engineer on daily wages without previous permission of the Director, an act violating the general instructions issued by the Director earlier;

(iii) The trading slip No 149 contained an interpolation, converting linseed into wheat, meaning thereby that the committee was encouraging illegal trade; similarly, trading slip No. 14861 contained an interpolation changing tbe name of the trader;

(iv) An amount of Rs. 5,000/- was illegally parted with in favour of Lions Club pursuant to the resolution of the committee tantamounting to misuse of Mandi fund;

(v) The telephone register was not properly maintained consequent to which it was not possible to find out the purpose of the telephone calls and their nature whether they were private or official;

(v.) Resolution No 2 dated 2.11.1988 was passed authorising the President to take decision in the mater of renewal or otherwise of the licences which resolution was offensive of Section 32 (3) of the Adhiniyam.

The show cause notice concluded with an observation that the abovesaid acts were sufficient to demonstrate that the committee was not competent to perform its duties or was persistently making default in performance thereof.

The petitioners did show cause as per reply dated 8-4-1989 (Annex. P/2). The explanation offered to each of the charges may be noticed. It was stated : -

(i) A decision to renew without insisting on production of solvency certificates licences only of such traders as had been trading for more than 1" years and against whom there was no complaint as to their solvency was taken. However, this was done in anticipation of the approval of the Director, which having been denied, those traders too were directed to produce solvency certificates and it was also decided that for future their licences would not be renewed except on production of solvency certificate;

(ii) The market Committee had undertaken construction works estimated at about 10 lacs of rupees keeping which in view a Sub-Engineer on daily wages was appointed. However, the proposal was initiated by the then officer in-charge of the Mandi prior to the commencement of the term of the present committee and the appointment was approved by the director;

(iii) No illegal trading was encouraged. One trading slip contained an alteration but that was bonafide and meant only to rectify an inadvertent error by the concerned employee of the committee; the other trading slip did not contain any interpolation or alteration;

(iv) Not an amount of Rs. 5,000/- but only Rs. 500/- were released by way of advertise cent inserted in a magazine published by Lions Club wherein information as to licence renewals was publicised for the benefit of the public; The amount of Rs. 500/- spent on such advertisement was within the budgetary sanctions;

(v) The telephone register was properly maintained and the entries therein clearly demonstrate the official calls made and the private calls made by the traders promptly reimbursed to the Mandi Committee;

(vi) By resolution dated 2-11-1988 power to renew or not the trading licences was vested in the President merely for the sake of convenience. However, the implementation of the resolution was intercepted by the Deputy Director and hence the resolution was not carried out.

The reply was supported by a few documents

The documents filed with the return go to show that on 28-1-1989, B.P. Singh, the intervenor before us and an ex-President of the Committee had made a complaint consisting of 30 paragraphs, complaining of corruption and irregularities committed by the present President of the committee and his confederates. This complaint was ordered by the Director to be inquired into by the Deputy Secretary of the State Agricultural Marketing Board, Gwalior Division. Gwalior He held an inquiry. The report received from him was utilised by the Director for recording findings on the relevant charges forming part of the show cause notice (Annex. P/1) The document Annex. P2 riled with the return by the State goes to show that charges Nos. 2, 3, 4 and 5 were found not proved. Charges No. 1 and 6 alone were found proved. Let it be made clear here itself that even as regards the charge No 6 contained in Annex. P/1 the finding is only this much that the offensive resolution was passed but there is no finding, that pursuant to the resolution and during the period during which it had remained operative, there was any licence renewed or refused to be renewed by the President. In other words, there is no finding that the President or the committee had taken any action under the resolution and hence the only sin committed by them was bringing in existence on paper a resolution which should not have been passed. As to Charge No. 1, nothing has been found to demonstrate that any trader whose licence was renewed without insisting on production of solvency certificate had caused any loss or sufferance to any agriculturist or any person dealing with him or the Mandi Committee as such. Nothing has been found to hold that any one had at any time raised and grievance against the solvency of any such trader. On the material available, it cannot be said that any such trader from whom production of solvency ceritificate was not insisted upon was in fact not a solvent person and hence insistence on production of solvency certificate would have really made any material difference.

Before we proceed further, to examine the law and the relevant legal issues, let it also be noted that the enquiry report submitted by the enquiry officer, and relied on by the Director for finding the order of supersession consisted of 15 charges of which 9, as already noticed, did not form part of the show cause notice (Annex. P/1). In o her words, the superseded committee did not have any opportunity of hearing in respect of some of the charges forming foundation of the order of supersession. Let it also be placed on record that the members of the superseded Market Committee, specially the petitioners, were not party, collectively or individually to the proceedings of the enquiry. The enquiry report, that is, the result of the enquiry proceedings, conducted behind the back of the petitioners, not even substance thereof was made available to the petitioners though it was relied on by the Director for forming an opinion that the supersession of the Market committee was preeminently warranted.

The power of supersession of the governing bodies called by different names is to be found incorporated in several statutes governing Agricultural Market Committees, Municipalities panchayats, Co operative Societies & all democratic bodies. The object behind, broadly speaking is to prevent usurpation and abuse of powers at the hands of such bodies, which by their action or inaction, convincingly demonstrate that they were incapable of fulfilling the trust reposed in them by their electors. The power of supersession is a drastic one, to be utilised in exceptional cases alone, indeed within the four corners of law and not merely at the askance nor for extraneous considerations and never for achieving political ends.

Section 56 (1) of M.P. Krishi Upaj Mandi Adhiniyam, reads as under : --

56, Supersession of market committee.--(1) If in its opinion a market committee is not competent to perform or persistently makes default in performing the duties imposed on it by or under this Act, or abuses its powers the Director, may by order supersede such committee, for a period not exceeding two years in the first instance and may by order extend from time to time period of supersession provided that the total period of supersession shall not exceed three years :

Provided that before issuing an order under this sub-section the Director shall give a reasonable opportunity to the market committee for showing cause against the proposal and shall consider the explanations and objections if any, of the market committee.

Under Section 56 of the Act, condition precedent to the order of supersession is the formation of opinion by Director that the market committee tit was not compelent to perform the duties imposed on it by or under this Act, or (ii) was persistently making default in performing such duties, or (iii) was abusing its powers. It is clear that a casual offensive action, a casual default in performance of duties and a Casual lapse from legal virtue even if tanta nounting to abuse of power would not attract the applicability of Section 56 Casual faults and defaults are capable of being remedied by recourse to law. It is the habitual or persistent abuses, defau is and acts of incompetence which would attract the penalty of supersession the proviso enacted to Section 56 (1) obliges the Director to afford a reasonable opportunity to show cause against the proposed supersession, to consider the explanations offered and the objections raised by the answaring market committee and then alone to form an opinion. The proviso statutorily enacts several postulates of natural justice which would have been required to be read into the provision even if not enacted has much as the adverse civil consequences flowing from the order of supersession would have impliedly obliged the Director to act consistently with the principles of natural justice.

In the leading authority of S.L. Kapoor Vs. Jagmohan and Others, dealing with pari materia provision contained in Section 238 (I) of the Punjab Municipal Act, their Lordships observed : -

The status and office and the rights and responsibilities and the expectation of the Committee to serve its full term of office certainly creates sufficient interest in the Municipal Committee and their loss, if superseded entails civil consequences so as to justify an insistence upon the observance of the principles of natural justice before an order of supersession is passed.

A Full Bench of this Court in Municipal Committee and Another Vs. State of Madhya Pradesh, said :-

In a democratic society, it is of the essence that democratic institutions are allowed to function and not superseded on trumpery charges inadequately brought home or unreasonably accepted. The Courts will be vigilant to see that such over reaching powers are kept within the four corners of the statute granting them We think that the fact that a reasonable opportunity to show cause has been made a condition predecent to the exercise of the power and that reasons for the supersession have to be notified to the electorate shows that there is not to be subjective appraisal but that the reasons must be sufficient under the Act and an objective test is indicated. The requirements of the law are not satisfied by accepting insufficient or inadequate reasons for supersession.

In the same case i.e., Kareli Municipality (Supra), the Division Bench observed: -

The High Court may no doubt in its writ jurisdiction interfere if the order superseding a Municipality under S. 57 is mala fide, arbitrary, without jurisdiction, or in utter violation of the principles of law or natural justice. It cannot, however, be held that the Court is incompetent to consider the sufficiency or adequacy of the material upon which the charges were regarded as proved. The Act requires that supersession of a Municipal Committee may be done when one or more of the conditions laid down in S. 57 (2 are found to exist The reasons must have relation to those conditions and must be sufficient for the exercise of the power conferred on the Government The Court will not examine the reasons as in an appeal, but will certainly examine them with advartence to their reasonableness and sufficiency for the legitimate exercise of the power granted to the Government Whenever action has to be reasonable and the reasons for the action has to be recorded, the test is not entirely subjective unless the law says that it should be so.

In Municipal Council, Dhamtari v. Stale o/M.P. and Ors 1972 JLJ 334, the nature of power of supersession conferred by Section 328 of M.P. Municipalities Act, 1961 as also the meaning of phrase '' abuse of power" came up for consideration the Division Bench held : --

The power given u/s 328 of the Act or superseding or dissolving a Municipal Council is a drastic power and must be exercised strictly in conformity with the procedure laid down in the Section Provision of Section 328 (I) mandatorily requires that the reasons leading the State Government to take the action in question have to he stated in the notification published in the Gazette dissolving the Council. That provision oceans that the premises on the basis of which an adverse decision against a Municipal Council is desired to be reached must be found to have been established and those reasons must be stated in the order.

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To ''abuse'' means to misuse one''s talent or position. It does not consist of mere infraction of a rule of law. It has also an element of lack of bona fide and causing harm to others, or undeservedly benefitting another.

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The expression used in Section 328 (1) (a) is "or abuses is powers" The use of the expression "abuses" clearly indicates that there must be some amount of persistent continuity or a habit of abusing.

In Maursinha v. State of M.P. 1968 JLJ 307, the formation of opinion in the matter of supersession and the consequences of some of the charges founding the order of supersession being held not proved, came up for consideration Division Bench held :

''The words in the opinion of" in the context in which they are used in Section 208 (1) of the Madhya Bharat Municipalities Act, mean not purely subjective determination by the Government but have a reference to the tentative conclusions reached at an early stage with regard to all or any of the objective matters referred to in the Section. They do not leave the matter entirely at the subjective will of the Government. The High Court can interfere with an order of supersession of a Municipality where there is a failure to comply with the legal requirements or principles of natural justice are not followed or there is an error apparent on the face of the record.

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An order of supersession of a Municipality u/s 208 (1) of the M.B. Municpalities Act, if based on several charges, majority of which are un related to the Municipal Council, is bad as a whole.

In Sitaram v. Registrar, Co-operative Societies 1986 JLJ 656, irrelevant charges and findings reached without application of mind had formed part of the order of supersession of a co-operative body. The Division Bench held that if those were excluded, it could not be said that the Joint Registrar would have reached the same subjective satisfaction so as to pass an order of supersession. The order was held not sustainable and liable to be quashed.

Union of India and others Vs. Mohd. Ramzan Khan, was a case of departmental disciplinary enquiry. It was held to be quasi judicial in nature, attracting the principles of natural justice Their Lordships held that supply of a copy of the enquiry report along with recommendations if any in the matter of proposed punishment would be rules of natural justice if the enquiry was conducted not by the disciplinary authority but by an enquiry officer.

The formation of opinion is not subjective. It must satisfy objective test for the formation of such opinion is open to judicial review. This is a well sealed proposition of law. Reference may be made to The Barium Chemicals Ltd. and Another Vs. The Company Law Board and Others, , Rohtas Industries Vs. S.D. Agarwal and Others, , Mrs. Maneka Gandhi Vs. Union of India (UOI) and Another, Baldev Raj v. Union of India6 and Swadeshi Cotton Mills Vs. Union of India (UOI), The formation of an opinion within the meaning of Section (sic) AIR 19:4 SC 70 of the Act being outcome of a quasi judicial process, also a result of relevant and ex sung material, needless to say that the opinion has to be an opinion and not a pretence or apology for opinion

From what has already been stated hereinabove, it is as clear as daylight that charges most of the (sic) found to be non-existent at a later stage were framed against a duly elected democratic body putting it on explanation. There was no material adequate enough to hold habitual abuses, persistent defaults and incurable incompetence on the part of the superseded market committee. The singular document, ex-parte enquiry report, forming foundation of the order of supersession was not made available to the petitioners. Only the order of supersession was passed and made known to the petitioners. They did not even know that any such enquiry was being held against them as would be utilised for entailing adverse consequences on them. The Director freely utilised such facts as charges enabling supersession as never formed pare of notice to show cause against proposed supersession. The impugned order of supersession nor only violates the principles of natural justice but is definitely beyond the scope of power conferred on the Director by Section 56 of the Act

Before we may finally pronounce the striking down of the impugned order of supersession, in all fairness to the learned counsel for the intervenors, we may place on record and deal with the objection to the maintainability of this writ petition forcefully raised and pressed by the learned counsel. It is submitted that Section 59 of the Act confers power of revision on the Stale Government enabling it to examine the proceedings of the Director so as to satisfy itself as to the regularity of such proceedings and further to modify, annul, reverse or remand for reconsideration the order of the proceedings in any case or its being satisfied of the necessity of taking such decision. The learned counsel for the intervenors placed reliance on Dr K. George Thomas Vs. Commissioner of Income Tax , Kerala, and Assistant Collector of Central Excise, Chandan Nagar, West Bengal Vs. Dunlop India Ltd. and Others, As to the precedents relied on by the learned counsel, suffice it to observe that they merely lay down the well recognised rule of self-imposed discipline on writ Courts to not to show indulgence where alternative efficacious remedy was available to the petitioners. None of the cases deals with a situation as is at hand The learned counsel for the petitioners has in our opinion rightly placed reliance on the decisions to be noticed hereinafter in support of the maintainability of the petition. In the leading authority of State of U.P. v. Mohd. Nooh AIR 1958 SC 86, their Lordships have laid down the law in the following terms :--

There may conceivably be cases where the error, irregularity or illegality touching jurisdiction or procedure committed by an inferior Court or Tribunal of first instance is so patent and loudly obtrusive that it leaves on its decision an indelible stamp of infirmity or vice which cannot be obliterated or cured on appeal or revision. If an inferior Court or tribunal of first instance acts wholly without jurisdiction or patently in excess of jurisdiction or manifestly conducts the proceedings before it in a manner which is contrary to the rules of natural justice and ail accepted rules of procedure and which offends the superior Court''s sense of fair play the superior Court may, quite properly exercise its power to issue the prerogative writ of certiorari to correct the error of the Court or Tribunal of first instance, even if an appeal to another inferior Court or Tribunal was available and recourse was not bad to it or if recourse was bad to it, if confirmed what ex-facie was a nullity for reasons aforementioned. This would be so all the more if the Tribunals holding the original trial and the Tribunals hearing the appeal or revision were merely departmental Tribunals composed of persons belonging to the departmental hierarchy without adequate legal training and background and whose glaring lapses occasionally co (sic) e to the notice of the Supreme Court.

In B(sic) erulal v. Badrichan 1974 JLJ 408. a Division Bench of this Court held an alternative remedy of a revision not to be an efficacious alternative remedy excluding the power of the High Court conferred by Art. "26 of the Constitution where the error war apparent on the face of the record and interference under Art. 226 of the Constitution was justifiably warranted.

For the foregoing reasons, the petition is allowed. The impugned order of supersession dated 13-1-199 (Annex. P/5) passed by the Director of Mandis, M.P. in purported exercise of the power conferred by Section 66 of the Act superseding the Market Committee of Gohad Mand is set aside. The petitioners shall be entitled to their costs quantified at Rs. 500/- to be borne by the respondents and the intervenors in equal shares.

Order accordingly.