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2011 (8) TMI 1228

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..... THAT, no incriminating material or documents were found in course of the search or survey action with respect to the allowability or otherwise of the expenditure or interest expenses for any of the years under consideration. In the original assessments framed under s. 143(3) of the Act for asst. yrs. 2002-03 to 2005-06, the AO after application of mind and detailed scrutiny of accounts had consciously allowed said expenses and interest On loan. However, later on while framing assessments under s. 144/153C for the said years, under identical circumstances vis-a-vis past, the AO opined that a part of such expenses and interest should have been capitalized to WIP. Accordingly, the same was added back by the AO under s. 144/153C merely on the basis of change of opinion in the guise of search assessment. Hence, CIT(A) has rightly deleted this addition. Accordingly, these two common issues of Revenue's appeals in IT(SS)A Nos. 15, 16, 17, 18, 19, 20 and 21/Kol/2011 are dismissed. THAT, AO alleged that the assessee company was specifically asked for explanation but had not complied. Thus, the said sum of Rs.,10 lacs was added as income of the assessee from undisclosed sources. w .....

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..... ral clause of Section 15(1) of the Advocates Act? (3) Whether Rules 121 and 122-A of the M.P. Rules are invalid for want of prior approval from the Bar Council of India? 3. The necessary facts are that the Parliament enacted the Advocates Act on 19th May, 1961. Section 15 of the Advocates Act empowers the State Bar Councils to frame Rules to carry out the powers conferred upon the State Bar Councils under Sections 15(1), 15(2), 28(1) and 28(2) read with Chapter II and other provisions of the Advocates Act. The State Bar Council of Madhya Pradesh (for short the State Bar Council ), with the approval of the Bar Council of India, made and published the M.P. Rules in 1962. These M.P. Rules came to be amended on 27th April, 1975. 4. Section 15 of the Advocates Act provides that the State Bar Councils can frame/amend the Rules with prior approval of the Bar Council of India. Section 15(2)(a) of the Advocates Act read with Part III and IX of the Bar Council of India Rules (for short, the Rules ) contemplates that election to the State Bar Council shall be held. In furtherance to this legislative mandate, the election to the State Bar Council were held in the year 2008 and Mr .....

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..... s per the constitution therefore and even otherwise they want re-election for the Committees. For both the requisition motion they have requested to call a special meeting and consider their vote of no confidence against Chairman, ViceChairman and Treasurer. For another requisition motion they have requested to call a special meeting and consider their proposal. When the meeting was started both the requisition motion were placed before the Hon ble Chairman. Shri Ganga Prasad Tiwari, Hon ble Treasurer, Shri Rameshwar Neekhra, Hon ble Chairman and Shri A.M. Trivedi, Hon ble ViceChairman stated that they offer their resignation subject to withdrawal of requisition of no confidence motion. There had been long discussion and members S/s Vinod Kumar Bhardwaj, Prem Singh Badhouria, Champa Lal Yadav, Pratap Mehta, Vijay Kumar Choudhary, Ghanshyam Singh, Z.A. Khan, Kuldeep Bhargava, Khalid Noor Fakhruddin, Rajesh Pandey Mrigendra Singh Bhagel, Prabal Pratap Singh Solanki expressed their views. There had been divergent views in respect of withdrawal of no confidence motion as well as conditional resignation offered by Hon ble Chairman, Vice-Chairman and Treasurer. As such it is resolv .....

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..... d for a period of three months unless the Council by 2/3 of majority of the Members present shall permit. The affect of this rule is also required to be considered by the Hon ble High Court and all these issues are open before the Hon ble High Court. So far as the presiding over of the meeting is concerned, Rule 14 of Chapter V says that in the absence of any provision the matter is to be decided by the majority. That being so the majority of the Members present have decided to consider the No Confidence Motion hence this meeting is now being presided over by Advocate General to whom the majority has decide to preside. Before the start of the Meeting Hon ble Member Shri Prabal Pratap Singh Solanki has asked Shri Rameshwar Neekhra, Chairman to kindly decide that the Members are ready to participate in the No Confidence Motion but at that time Hon ble Chairman quit the Meeting Hall along with his followers and also took away the Secretary saying that we are not going to participate in the No Confidence Motion. At this Juncture Shri Vinod Kumar Bhardwaj, Hon ble Member State Bar Council of Madhya Pradesh requested Shri R.D. Jain, Hon ble Advocate General and Ex Official .....

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..... tition No. 6372 of 2011. However, the copy of the proceeding was to be communicated to the Registrar General of the High Court of Madhya Pradesh. This Resolution had been signed by the members present. 10. One Pratap Chandra Mehta had filed this above-mentioned Writ Petition No. 6372 of 2011, challenging the vires of Rules 121 and 122-A of the M.P. Rules. These Rules related to the term of, and procedure for passing a no confidence motion against the Chairman, Vice-Chairman and the Treasurer etc. As already noticed, the Court had directed that the meeting of the State Bar Council could be held on 16th April, 2011, but the Resolution, if passed, would not be given effect to, till further orders. The matter was ordered to be listed for hearing on 25th April, 2011. In the meanwhile, another writ petition was also filed being Writ Petition No. 6628 of 2011 and the High Court in its final judgment observed that, in both the petitions same relief, on virtually the same grounds, had been claimed. The High Court had framed two basic points for decision: 1. Whether Rule 122-A, as framed under Section 15 of the Advocates Act was, ultra vires; and 2. Whether the second Resolution, .....

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..... of the delegates . However, the words of the Supreme Court immediately following the above quoted words bring out the implication. They read The effect of these principles is that the delegate cannot widen or constrict the scope of the Act or the policy laid down thereunder. It cannot, in the garb of making rules, legislate on the field covered by the Act . We do not find the rule in question to be widening or constricting the scope of either the Act or any policy laid down under the Act. Nor is the Rule in question legislating upon any field covered by the Act. To the same effect is cited the case of Addl. District Magistrate Vs. Sir Ra, (2005) 5 SCC 451 (para 16). 27. This brings us to the last point raised by the petitioners. The decisions of the Delhi and Kerala High Court reported respectively in AIR 1975 Del 200 Bar Council of Delhi Vs. Bar Council of Kerala Vs .. were read out before us. It was pointed out that in the Delhi case common law was used to justify an implied power of removal of the elected Chairman on the ground that the statute had not changed the common law. The correctness of the law laid down in that decision was assailed by placing reliance .....

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..... and rules. 13. The Parliament of India enacted the Advocates Act on 19th May, 1961 to amend and consolidate the laws relating to legal practitioners and to provide for the constitution of State Bar Councils and an All India Bar Council. The object of the Advocates Act is to constitute one common Bar for the whole country and to provide machinery for its regulated functioning. Though the Advocates Act relates to legal practitioners in its pith and substance, it is an enactment dealing with the qualifications, enrolment, right to practise and discipline of advocates. It is not only implicit but clear from the provisions of the Advocates Act that once an advocate is enrolled by any State Bar Council, he becomes entitled to practise in all courts including the Supreme Court. Therefore, this is a legislation which deals with persons entitled to practise before the Supreme Court. In the case of O.N. Mohindroo vs. Bar Council of Delhi Ors. [AIR 1968 SC 888] this Court held that: (10) The object of the Act is thus to constitute one common Bar for the whole country and to provide machinery for its regulated functioning. Since the Act sets up one Bar, autonomous in its characte .....

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..... he integration of the Bar into a single class of legal practitioners known as advocates; the establishment of a common roll of advocates, having a right to practise in any part of the country and in any court, including the Supreme Court; the prescription of uniform qualifications for the admission of persons to become advocates; the division of advocates into senior advocates and other advocates based on merit; and the creation of autonomous Bar Councils, one for the whole of India, i.e, the establishment of an All India Bar Council and one for each State. We may examine some of the relevant provisions of the Advocates Act. 15. Section 2(a) of the Advocates Act defines an advocate to mean an advocate entered in any roll under the provisions of the Advocates Act. Bar Council means a Bar Council constituted under the Advocates Act. On the other hand, the Bar Council of India means the Bar Council constituted under Section 4 for the territories to which the Advocates Act extends. The State Bar Council means a Bar Council constituted under Section 3 of the Advocates Act. The expression prescribed for the purposes of this Act means prescribed by the rules made .....

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..... ther functions conferred on it by or under this Act [Section 6(h)]. Section 6(i) of the Advocates Act allows the State Bar Councils to do all other things necessary for discharging their functions. 20. Functions of the Bar Council of India are of a wider spectrum than that of the State Bar Council. Bar Council of India has to lay down standards of professional conduct and etiquette for the advocates, the procedure to be followed in Disciplinary Committees and to safeguard the rights, privileges and interest of advocates. 21. The Bar Council of India may, under Section 7(k) of the Advocates Act, provide for the election of its members. This provision is identical to Section 6(g) of the Advocates Act. Similarly, Sections 6(h) and 6(i) are equivalent to Sections 7(l) and 7(m) of the Advocates Act. 22. The election to the Bar Councils is for a specified tenure, which is stated under Section 8 of the Advocates Act. The term of the office of an elected member of a State Bar Council, other than an elected member thereof referred to in Section 54, shall be for five years from the date of publication of the results. The Bar Council of India has been vested with the power of extendi .....

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..... shall have effect unless they have been approved by the Bar Council of India. 25. Chapter III of the Advocates Act deals with Admission and Enrolment of Advocates . Section 28 of the Advocates Act empowers the State Bar Councils to make rules to carry out the purposes of this Chapter, i.e., Chapter III. 26. Section 49 of the Advocates Act appears under Chapter VI, i.e., Miscellaneous and empowers the Bar Council of India to make rules for discharging its functions under this Act and besides providing for specific powers, the Bar Council of India may prescribe rules under the residuary provisions of Section 49(1)(j) of the Advocates Act, whereby the Council is empowered to make rules in regard to any other matter which may be prescribed. However, the rules framed would not come into force or take effect unless they have been approved by the Chief Justice of India and if the rules relate to Section 49(1)(e) of the Advocates Act they will not take effect unless they have been approved by the Central Government. Under Section 49A of the Advocates Act, the Central Government is vested with the general power of making rules and these rules could be framed for the whole of .....

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..... rer, and its consequences. The Rule 22 reads as under: On a motion of No confidence being passed by Bar Council of India by a Resolution passed by majority of not less than 3/4th of the Members present and voting and such majority passing No Confidence Motion is more than 2/3rd of the total number of Members constituting the Bar Council for the time being, the Chairman or Vice-Chairman or any other office bearer against whom the motion is passed shall cease to hold office forthwith. Notwithstanding anything contained in the Act or the Rules made thereon, the Chairman or Vice-Chairman shall not preside over the meeting in which motion of No Confidence is discussed against him and such meeting shall be convened on a notice of at least one month. The Chairman or the Vice-Chairman shall have the right to vote, speak or take part in the proceeding of the meeting. 29. The Committees excluding the Disciplinary Committees are to be constituted by the Bar Council of India under Chapter II. The framers of the Rules have taken a precaution that the decisions of the Bar Council of India should not be changed without reason and in violation of the relevant provisions. Rule .....

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..... st rule that falls under Chapter XVIII and it requires that a State Bar Council shall elect a Chairman and a Vice-Chairman from amongst its members for two years. Rule 118 of the M.P. Rules came to be amended and, as per the amended Rule, the State Bar Council has to elect a Chairman and a Vice-Chairman from amongst its members for 2 years vide Resolution No. 631 of 1998. 33. Rule 122-A of the M.P. Rules was amended by the State Bar Council sometime in the year 1975 and vide its Resolution dated 27th April, 1975, the amendments and newly added rules were sent for approval of the Bar Council of India. Again in its Resolution dated 9th March, 1980, the State Bar Council had recorded that to these amendments/newly added Rules, approval of the Bar Council of India had been obtained. It needs to be noticed that all the members of the State Bar Council had attended the meeting and were signatory to this Resolution. However, Rule 121, which was amended vide Resolution No. 631 of 1998 dated 24th January, 1998 is also stated to have received approval from the Bar Council of India. However, no notification in that regard is stated to have been issued as yet. There is some controversy whe .....

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..... above Rules deals with the removal of the Chairman, Vice-Chairman or the Treasurer of the State Bar Council by moving a no confidence motion . Existence of such a provision is not exceptional, but is a common provision in any electoral system. Our parliamentary system is the most significant example of a democratic process, where the no confidence motion under Article 75(3) of the Constitution is an integral part of the process of election. Similarly, under Rule 22 of the Rules, a provision has been made for moving a no confidence motion and where such motion is passed by a majority of not less than three-fourth of the members, present and voting, and such majority passing the no confidence motion is more than two-third of the total number of members constituting the State Bar Council for the time being, it results in the removal of the Chairman, Vice-Chairman or any other office bearer. Upon passing of such a resolution, the person shall cease to hold the office forthwith. Every democratic process is based upon the freedom to elect and freedom to remove, in accordance with law. Rule 122-A of the M.P. Rules contemplates moving of a no confidence motion and upon such motio .....

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..... te as in the absence of a constitutional restriction it is within the power of a legislature to enact a law for the recall of officers . Its existence or validity can be decided on the provision of the Act and not, as a matter of policy. In the American Political Dictionary the right of recall is defined as, a provision enabling voters to remove an elected official from office before his or her term expired . American Jurisprudence explains it thus, Recall is a procedure by which an elected officer may be removed at any time during his term or after a specified time by vote of the people at an election called for such purpose by a specified number of citizens . It was urged that recall gives dissatisfied electors the right to propose between elections that their representatives be removed and replaced by another more in accordance with popular will therefore the appellant could have been recalled by the same body, namely, the people who elected him. Urged Shri Sunil Gupta, learned counsel, that since, A referendum involves a decision by the electorate without the intermediary of representatives and, therefore, exhibits form of direct democracy the removal of the appellant by .....

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..... out the scope of the section or it is found to be sufficiently difficult and ambiguous to justify the construction of its evaluation in the statute book as a proper and logical course and secondly the object of the instant enquiry should be to ascertain the true meaning of that part of the section which remains as it was and which there is no ground for thinking the substitution of a new proviso was intended to alter . But considerations stemming from legislative history must not, however, override the plain words of a statute . Neither Section 47-A nor 87-A on plain reading suffer from such defect as may necessitate ascertaining their intent and purpose from the earlier sections as they stood. That shall be clear when relevant part of the sections are extracted. But even otherwise there appears no merit in the submission and for that purpose it appears appropriate to narrate, in brief, the history of these sections. When Act 2 of 1916 was enacted it provided for election of Chairman of the Board by a special resolution passed by the members under Section 43(1) of the Act. Sub-section (2) provided for ex-officio nomination by the Government of the Chairman in some municipalitie .....

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..... on the other. This has greatly prejudiced the normal working of the Boards . Section 47-A of the Act was substituted completely and it is in this shape that the section stands today. Section 43(1) was amended, once again, by Act 47 of 1976 and election of President by electorate was revived. In 1982 another change was made in this section by Act 17 and election of President by the members of Board was confined to municipalities other than a city declared as such under Section 3 having a population of less than one lakh inhabitants. Sub-section (2) provided for election of President of Board of such a City Municipality by the electorate directly. From 1982 onwards, therefore, the direct election of President by the electorate is confined to smaller Municipalities. 10. Even the strained construction of the proviso does not result in coming to the conclusion that there was a legislative omission of not providing for removal, by vote of no-confidence of a President elected by the electors. Merely because the proviso to Section 47-A prevents a Board from holding election of the President in those cases where he had made representation to the Government to supersede the Board, it ca .....

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..... ate to the legislature and even the expression conduct of elections in Article 324 specifically points to this wide meaning and the meaning which can be read consistently into other provisions occurring in the Constitution. In this case, the election process as contemplated under the relevant laws is that the members of a State Bar Council are elected by the electorate of advocates on the rolls of the State Bar Council from amongst the electorate itself. The elected members then elect a Chairman, a ViceChairman and the Treasurer of the State Bar Council as well as constitute various committees for carrying out different purposes under the provisions of the Advocates Act. 39. In other words, the body which elects the Chairman or Vice-Chairman of a State Bar Council always consists of members elected to that Council. The democratic principles would require that a person who attains the position of a Chairman or Vice-Chairman, as the case may be, could be removed by the same electorate or smaller body which elected them to that position by taking recourse to a no confidence motion and in accordance with the Rules. The body that elects a person to such a position would and ought .....

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..... a restricted meaning or by a strict interpretation. The State Bar Council has to be given wide jurisdiction to frame rules so as to perform its functions diligently and perfectly and to do all things necessary for discharging its functions under the Act. The term of office of the members of the State Bar Council is also prescribed under Chapter II, which shall be five years from the date of publication of the result of the election. On failure to provide for election, the Bar Council of India has to constitute a special committee to do so instead. Section 15(2) then provides that without prejudice to the generality of the foregoing powers, rules may be framed to provide for the preparation of electoral rolls and the manner in which the result shall be published. In terms of Section 15(2)(c), the manner of the election of the Chairman and the Vice-Chairman of the Bar Council and appointment of authorities which would decide any electoral disputes is provided. The expression manner of election of the Chairman again is an expression which needs to be construed in its wide connotation. The rules so framed by the State Bar Council shall become effective only when approved by the Bar .....

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..... eneric terms and expressly states that the Bar Council is empowered to frame rules in particular and without prejudice to the generality of the foregoing powers . If one reads the provisions of clauses (a), (c), (g), (h) and (i) of Sub-section (2) of Section 15 of the Act, then, it is clear that framing of rules thereunder would guide and control the conduct or business of the State Bar Councils and ensure maintenance of the standards of democratic governance in the said Councils. Since the office bearers like the Chairman and the Vice-Chairman are elected by a representative body i.e. by the advocates who are the elected members of the Council, on the basis of the confidence bestowed by the advocates/electorate in the elected members, there seems to be no reason why that very elected body cannot move a no confidence motion against such office bearers, particularly, when the rules so permit. 41. The Bar Council of India, as already noticed, has also framed rules and permitted moving of no confidence motion against its Chairman/Vice-Chairman subject to compliance of the conditions stated therein. Similarly, Rule 122-A of the M.P. Rules contemplates the removal of a Chairman/ .....

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..... making power to carry out the purposes of the Act. When such a power is given, it may be permissible to find out the object of the enactment and then see if the rules framed thereunder satisfy this test of functionality. This test will determine if the rule falls foul of such general power conferred on the delegatee. If the rule making power is expressed in usual general form, then it has to be seen if the rules made are protected by the limits prescribed by the parent Act. Still in the case of Global Energy Ltd. v. Central Electricity Regulatory Commission [(2009) 15 SCC 570], this Court was concerned with the validity of clauses (b) and (f) of Regulation 6A of the Central Electricity Regulatory Commission (Procedure, Terms and Conditions for Grant of Trading Licence and other Related Matters) Regulations, 2004 and dealing with this aspect, the Court expressed the view that in some cases guidelines could be assumed, by necessary implication, as already laid down and, while relying upon the case of Kunj Behari Lal Butail (supra), the Court held as under: 26. We may, in this connection refer to a decision of this Court in Kunj Behari Lal Butail v. State of H.P.1 wherein a .....

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..... d in consonance with democratic principles and keeping the high professional standards of advocates in mind. Thus, it is not a power which falls beyond the purview and scope of Section 15 of the Advocates Act read in conjunction with other provisions, particularly Chapter II and also keeping in view the object of the Act. 45. Purposive construction, to a large extent, would help to resolve the controversy raised in the present case. The purpose of the Advocates Act is the democratic and harmonious functioning of the State Bar Councils, to achieve the object and purposes of the Act. We are unable to see how the provisions of Rule 122-A fall foul of the ambit and scope of Section 15 of the Advocates Act and, for that matter, any other provisions of that Act. On the contrary, they are in line with the scheme of the parent Act. 46. Having dealt with the primary aspect of this case, now we would consider the contention that the recall of the Chairman/Vice-Chairman, by a smaller and distinct body of members of the State Bar Council, does not fall within the purview of the authority of the delegatee Council, under Section 15(2)(c) of the Advocates Act, i.e. to legislate on the mann .....

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..... s which weighed with this Court for upholding the validity of subsection (2) of Section 87-A of the U.P. Municipalities Act, 1916 relating to the removal of the President of a Municipal Board in Mohan Lal Tripathi are, in our opinion, also applicable to the removal of the Pradhan of the Gram Sabha. Although under Section 14 of the Act the power of removal of a Pradhan is conferred on the members of the Gram Panchayat, which is a smaller body than the Gram Sabha, but the members of the Gram Pancyhayat, having been elected by the members of the Gram Sabha, represent the same electorate which has elected the Pradhan. The removal of a Pradhan by two-third members of the Gram Sabha through their representatives. Just as the Municipal Board is visualized as a body entrusted with the responsibility to keep a watch on the President, whether elected by it or by the electorate, so also the Gram Panchayat is visualized as a body entrusted with the responsibility to keep a watch on the Pradhan who is not elected by it and is elected by the members of the Gram Sabha. An arbitrary functioning of a Pradhan is disregard of the statute or his acting contrary to the interests of the electorate could .....

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..... under: No matter once decided shall be reconsidered for a period of three months unless the Council by a two-third majority of the members present, so permits. 50. Though the language of the above Rule clearly shows that no matter once decided shall be reconsidered for a period of three months but clearly makes an exception that wherever 2/3rd majority of the members present of the State Bar Council permits, this bar will not operate. In other words, there is no absolute bar and the Rule makes out an exception when the matters could be reconsidered. But that is not the situation in the present case. The first pre-requisite under this rule is that matter should be once decided , and then alone, the bar of reconsideration would operate; that too depending on the facts and circumstances of a given case. Once decided obviously means the matter should be concluded or finally decided in contradistinction of being kept pending or deferred . Therefore, we must now examine, whether the matter in relation to no confidence motion had been finally decided at any point of time before the date on which the no confidence motion is stated to have been passed. This also we are .....

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..... ants, the limitation contained in Rule 15 of the M.P. Rules shall vitiate the decision of passing a no confidence motion . This argument is also misconceived in law and on the facts of the present case. Election is not a decision as contemplated under Rule 15 of the M.P. Rules. It is not a matter on which the State Bar Council decides, as firstly, this matter falls within the discretion of individual advocates on the rolls of the State Bar Council to elect the representative members of the said Councils, and secondly it falls within the discretion of such elected representatives to elect a person as Chairman/Vice-Chairman. It is not a decision which relates to the matters as contemplated under the M.P. Rules. Passing of a no confidence motion in law, therefore, cannot be termed as reconsideration of the decision taken. 53. Once the Council is constituted in terms of the Act and the Rules framed thereunder, then it has to take decisions in the role of a Council in relation to various matters, including rejecting or passing a no confidence motion . This is even clear from the case of Ram Beti (supra) wherein it was held that the smaller representative body is better equipp .....

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..... considered view, even on this issue, the appellants cannot succeed. 57. Then it is contended that removal from an office is punitive. It being punitive, there has to be a just cause and adherence to the principles of natural justice by granting hearing before the removal from office is given effect to. To clarify, it is submitted that removal from an elected office, even in face of a valid rule, would have to meet these twin requirements of just cause and hearing, before a person can be removed from office. On the other hand, the learned counsel appearing for the respondents, while relying upon the judgment of the Delhi High Court in the case of Bar Council of Delhi v. Bar Council of India [AIR 1975 Del 200], contended that by application of the General Clauses Act, 1897 even in absence of any specific provision, the right of persons to elect a Chairman/Vice-Chairman would include the right to undo the same by moving a no confidence motion . 58. It needs to be noticed at the very threshold of consideration of this submission that no confidence motion cannot be equated in law to removal relatable to a disciplinary action or as a censure. It is stricto senso not removal from .....

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..... a motion of no confidence. There is no legal bar to the passing of a motion of no confidence against an authority in the absence of any charge of impropriety or lapse on the part of that authority. The essential connotation of a no-confidence motion is that the party against whom such motion is passed has ceased to enjoy the confidence of the requisite majority of members. We may in the above context refer to page 591 of Practise and Procedure of Parliament, Second Ed. by Kaul and Shakdher wherein it is observed as under: A no-confidence motion in the Council of Ministers is distinct from a censure motion. Whereas, a censure motion must set out the grounds or charge on which it is based and is moved for the specific purpose of censuring the Government for certain policies and actions, a motion of no confidence need not set out any grounds on which it is based. Even when grounds are mentioned in the notice and read out in the House, they do not form part of the noconfidence motion. 60. Still, in another case, titled B.P. Singhal v. Union of India Anr. [JT 2010 (5) SC 640], the Court, while dealing with the doctrine of pleasure in relation to the term of the office .....

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