TMI Blog1978 (9) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... nquired into by the various departments of the Government, measures and actions had already been taken, as such those matters could not form the subject-matter of further inquiry by the said Commission. 3. The petitioner is a public limited company under the Indian Companies Act, 1913. It is one of the largest paper producing concern in India, On May 1, 1967 the Government announced to appoint a committee to go into basic question regarding the functioning of licensing system during the last 10 years. On July 22, 1967 the Government appointed an expert committee headed by Prof. M. S. Thacker to inquire into the working of licensing system during the last 10 years with a view to ascertain whether larger industrial houses have secured undue advantage over the other applicants in the matter of issue of licenses. After resignation of Prof. Thacker, Sri Subimal Dutt became the Chairman of the committee. In July 1967 Sri Chandrasekhar, a member of Parliament, submitted a memorandum to the Prime Minister containing various allegations against Birla companies including the petitioner. Allegations were also made against the petitioner with regard to licence capacity of the paper mill uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to appoint a Commission of Inquiry in respect of the cases where the Dutt committee had stated that it was not possible for them to give their views as all the facts were not before them and affected parties were not given opportunity to place their cases. On August 28 1969, the proposal to appoint the Commission of Inquiry was brought before the Central Cabinet and the Cabinet approved the proposal of such appointment at a meeting held on 28th August, 1969. On August 29, 1969 the Government at the highest level decided to appoint a commission of inquiry, announcement of which was made through a statement by the Minister of Industrial Development, Internal Trade and Company Affairs in Rajya Sabha. It was stated by the Minister that in view of certain lapses, improprieties and acts of commission and omission as referred to in the Dutt committee's report which were definite matters of public importance, a fun and comprehensive inquiry was necessary in respect of the above cases, It, was, therefore, decided to set up a commission of inquiry under the Commissions of Inquiry Act, 1952 to go into all these matters. On February 18, 1970 a notification was Issued by the Central Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommission and if, how-ever, the petitioner felt that the view taken by the Commission was not correct, then the only course was for the petitioner to go to Court and have the validity of interpretation of Item No. 4 of Schedule 'C' determined. It was, therefore, decided that if the petitioner did not move the Court within a week, the Commission would be compelled to serve upon the petitioner summons and other processes necessary to get informations and documents required by it. Thereafter, on 8th May, 1974 the petitioner filed the present application under Article 226 of the Constitution and obtained a Rule and a limited order of injunction by which the enquiry with respect to the matters referred to in Schedule 'C' to the notification had been stayed. As a matter of fact the Commission did not conclude its inquiry into the matters referred to in Schedules 'A' and 'B' to the notification. 4. In Schedule 'C' to the notification dated 18th February 1970 it is stated allegations relating to the Birla Group of concerns on which further investigation needs to be made in the public interest . In the Preamble of the said notification it is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action has arisen within the jurisdiction of this Court. The Registered Office of the Company is in Orissa, The notification was published in Delhi. The Commission sent the requisitions addressed to Orissa Office of the petitioner company. There is nothing in the petition to show that what part of the cause of action has arisen within the territorial limits of this Court. 6. Mr. Roychowdhury, appearing on behalf of the petitioner contended that it would appear from the cause title of the petition that the respondents 2, 3 and 4 i.e, the Commission has a regional office and it functions within the jurisdiction of this Hon'ble Court, It is further submitted that requisitions have been made from the Calcutta Regional Office to the petitioner at its Calcutta Office and have been answered by the Calcutta Office and sent to the Regional Office of Commission. My attention was drawn to page 142 of the petition. A letter dated 29th September, 1973 written by the Joint Director (Inspection) from Regional Office of the Commission at 15, Ganesh Chandra Avenue, Calcutta-13, to the Principal Officer M/s. Orient Paper Mills Ltd., 9/1, R. N. Mukherji Road, Calcutta-1, Letter dated 2nd April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there could be injury only if there is trial or punishment. If the entire proceeding is found to be without jurisdiction and the conditions precedent for appointing the Commission under Section 3 of the Act were not fulfilled as alleged by the petitioner, in that case subjecting the petitioner to such a proceeding itself is a substantial injury. In Gulab Kanwar v. Enforcement Officer AIR1977Cal383 this Court observed: It will be unjust to compel the petitioner to appear before the authorities in respect of the proceedings which I have held to be initially void. 11. If the petitioner can satisfy the court that the subject-matter of the inquiry is not definite matters of public importance, in that case the Commission shall have no power to inquire into the matters with respect to which the requisitions have been sent. So, in my view, the petitioner's writ petition comes under Article 226(1)(b) of the Constitution. 12. It is next argued by Mr. Chakravorty that there has been inordinate delay in moving this Court inasmuch as the notification was issued in February, 1970 and the petitioner came before this Court in May, 1974. No explanation has been offered by the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that reason the petition cannot be thrown out, where the jurisdiction of the Commission to inquire into the matters has been challenged in the present petition. Moreover, the question of delay does not arise where a writ of prohibition is asked for. 19. Lastly it is contended by the respondents that the petitioner has submitted to the jurisdiction of the Commission. Letters and requisitions issued by the Commission have been been complied with by the petitioner from time to time and as such the petitioner is estopped from challenging the jurisdiction of the Commission in the present application inasmuch as it cannot approbate and reprobate, 20. In the instant case the petitioner has challenged the jurisdiction of the Commission. It is well settled that by acquiescence no jurisdiction can be conferred in a case where there is an inherent lack of jurisdiction. If the petitioner can satisfy the Court that the appointment of Commission is without jurisdiction in that case, their acquiescence might not itself be a bar for denying the relief asked for. It does not appear from the conduct of the petitioner that it is approbating and reprobating. 21. All the preliminary objection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Industrial Development who is authorised to authenticate under Rule 2 (I) of the Authentication (Order and other Instruments) Rules, 1958. The proposal to appoint a Commission of Inquiry concerned was brought before the Central Cabinet and the Central Cabinet approved the proposal of such appointment at a meeting held on Aug-28, 1969. At a meeting of the Cabinet dated 6th January, 1970, it was decided that urgent steps should be taken to see that the Commission starts functioning early. This was done under the Transaction of Business Rule made by the President under Article 77(3) of the Constitution. The document relating to the appointment of the Corn-mission of Inquiry made under the said order/notification dated 18-2-1970 relate to the affairs of the State and I claim privilege for non-production of the same records under Section 123 of the Indian Evidence Act. Under Article 77 all executive actions of the Government of India shall be expressed to be taken in the name of the President. Article 77(2) provides that orders and other instruments made and executed in the name of the President shall be authenticated in such a manner as may be specified in rules to be made by the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, public peaca and security and good neighbourly relations, Thus, if the contents of the documents were such that their disclosure would affect either the national defence or public security or good neighbourly relations they could claim the character of a document relating to affairs of State. There may be another class of documents which could claim the same privilege not by reasons of their contents as such, but by reasons of the fact that, if the said documents were disclosed, they would materially affect the freedom and candour of expression of opinion in the determination and execution of public policies. 25. It is well settled that the privilege should not be claimed under Section 123 because it is apprehended that the document if produced would defeat the defence raised by the State. In the supplementary affidavit when privilege is claimed concerning a particular document, the Court has to determine the character or class of the document. If it comes to the conclusion that the document does not relate to the affairs of the State then, it should reject the claim for privilege and direct its production. 26. The first clause of Section 162 of the Evidence Act requires t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is next contended by Mr. Roychowdhury that under Section 3 the power of the Government is discretionary when it acts on its own, whereas it is mandatory to appoint a commission if so directed by a resolution of the House of People. It is argued that the Government could not exercise its discretionary power under Section 3 of the Act contrary to the decision of Parliament itself, when a resolution moved in the both houses of Parliament for appointing a Commission with respect to the allegations of Sri Chandra Sekhar which are the subject matter of Schedule 'C' to the notification were defeated in Rajya Sabha and Lok Sabha on 10th of March, 1969 and 25th April, 1969 respectively. Under Rule 182 of the Rules of Procedure and Conduct of Business in Lok Sabha a resolution on the same matter could not be moved before one year i. e. before 25th of Apra, 1970. The Government which is a creature of Parliament and is responsible to it decided in the aforesaid circumstances to appoint a Commission on 8th of February, 1970. It is contended that the scheme of Section 3 of the Act makes it abundantly clear that concurrent sources for appointing the commission must be simultaneously a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it cannot be exercised simultaneously. There is no bar to appoint a Commission by the Government in exercising its discretionary power even when a resolution to appoint a Commission is lost in Parliament inasmuch as it does not attract the other part of Section 3 of the Act. 33. It is next urged by Mr. Roychowdhury, that the matters referred to in Schedule 'C' to the notification are not definite matters of public importance and no opinion was formed by the Government that it was necessary to appoint a Commission of Inquiry. According to Mr. Roychowdhury the conditions precedent for exercising powers under Section 3(1) of the Act did not exist and had not been complied with. The allegations made in the three memoranda of Sri Chandra Sekhar could not constitute any material for formation of any opinion for appointment of a Commission of Inquiry in view of the fact that with respect to most of those allegations thorough investigation by the different agencies of the government had already been made. On investigation it was found that the allegations were baseless. The resolution for appointment of a Commission under the Act with respect to those allegations was put to vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, the question arises as to the scope and ambit of the power which is conferred by it on the appropriate Government. The answer is furnished by the statute itself, for Section 3 indicated that the appropriate Government can appoint a commission of inquiry only for the purpose of making an inquiry into any definite matter of public importance and into no other matter. In other words the subject matter of the inquiry can only be a definite matter of public importance. The appropriate Government, it follows, is not authorised by this section to appoint a Commission for the purpose of holding any inquiry into any other matter. 36. In Dalmia's case [1959]1SCR279 the Supreme Court held that an inquiry could be directed if there exists matter of public importance. Once there is a definite matter of public importance and the conditions precedent for appointment of the Commission are satisfied, then the Government may require the commission to perform such ancillary or incidental functions as may be specified in the notification. The functions specified in the notification of the Commission can only be those which are in aid of or for the purpose of conducting the inquiry into a def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted judgment, the learned single Judge of the Punjab and Haryana High Court observed that the ratio of Barium Chemicals [1967]1SCR898 and Rohatas Industries' case [1969]3SCR108 are not applicable for setting up a Commission of Inquiry under Section 3 of the Commissions of Inquiry Act inasmuch as no circumstances as envisaged in Sub-clause (b) of Section 237 of the Companies Act exist for setting up a Commission of Inquiry under Section 3 of the Commissions of Inquiry Act. 40. In Dalmia's case [1959]1SCR279 the Supreme Court referred to the condition precedent for exercise of powers under Section 3 of the Act and said that the Government can order an inquiry only into a definite matter of public importance and no other matters. In Karnataka State v. Union of India [1978]2SCR1 Kailasam, J. observed referring to the decision of the Court in Dalmia's case, The Court also held that the Act does not delegate to the Government any arbitrary and/or uncontrolled power and does not offend Article 14 of the Constitution. The Court further observed that the discretion given to the Government to set up a Commission of Inquiry is guided by the policy laid down in the Act and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1967]1SCR898 and Rohataa Industries' case [1969]3SCR108 is not applicable to a case under Section 3 of the Commissions of Inquiry Act, 1952, under Section 237(b) of the Companies Act, discretion has been conferred upon the Central Government. Three, circumstances are set out in Sub-clause (i), (ii) or (iii). The formation of opinion is no doubt subjective but there must exist the circumstances upon which that opinion could be formed. Similarly under Section 3 of the Commissions of Inquiry Act, the formation of opinion of the Government is also subjective but only one condition or circumstance has been prescribed viz. the subject-matter of the inquiry must be definite matter of public importance. So, the exercise of power or formation of opinion under Section 3 of the Act is limited or restricted only to definite matters of public importance. Factual existence of those materials absolutely necessary. Those matters might be spelled out from the face of the order itself or by disclosing matters in the affidavit of the Government when a challenge is thrown by the aggrieved party about the non-existence of definite matter of public importance. 44. There is no bar to appoint a Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not indicate any indefiniteness. 47. In Krishna Ballavh Sahay v. Commission of Inquiry 1969CriLJ520 , the Supreme Court considered the charges and found them to be Specific. In paragraph 11 the Court observed We have read the charges which are to be investigated. * * * We can only say that each charge refers in detail to events with date, names of persons concerned, particulars of action taken and the conduct which is to be considered. The charges are such that we think that an inquiry can be ordered. If charges were vague or speculative suggesting a fishing expedition we would have paused to consider whether such an inquiry should be allowed to proceed. A perusal of the grounds assures us that the charges are specific and the records rather than oral testimony will be used to establish them. We agree with the High Court that the affidavit-in-opposition makes a specific case for inquiry. 48. The ratio of the above decisions laid down the following principles:-- (a) the courts are competent to decide whether the matters to be inquired into are definite matters of public importance, (b) the power conferred upon the Central Government under Section 3 of the Act is neither u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the detailed particulars pertaining to the matters which shall be placed before it by the State Government and such detailed particulars were in fact placed by State Government before the Commission. In the present case there is no such stipulation in the impugned notification. 52. The memoranda of Shri Chandra Sekhar was placed before the Court. In all there are 88 allegations and five sub-allegations. These allegations can be grouped under the following heads (a) Customs and Central Excise (b) Income Tax (c) Foreign Exchange Regulation Act (d) Insurance (e) Capital (f) Favour shown by separate State Governments (g) Employment of relatives and retired high Government officials on large salaries (h) Employment of sons and wives of high executives (i) Manufacture of sub-standard products and high profiteering. Seven items have been referred to the State Government. They related to undue favours shown by the States concerned, (a) With respect to 20 items -- no prima facie case was made out on preliminary enquiry (b) with respect to 11 items, facts alleged were found substantially correct on preliminary inquiry but there was no illegality or impropriety calling for further action, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stration and in the political life of the State and not the character assassination of Biren Mitra and Biju Patnaik Ministries and their group as alleged by the petitioners. In Bakshi Gulam Mohammad's case AIR1967SC122 the Supreme Court found that the matters referred to the Commission were definite matters of public importance and these were definite as they were not vague. The Supreme Court observed that public men should be called upon to face the consequences if they fail in their duty. The Commission was concerned with 38 instances dealing with abuse of official position and of the assets of Bakshi Gulam Mohammad. The Supreme Court observed: this was necessary for the purpose of ensuring cleanliness of public life. 56. In Krishna Ballav Sahay's case 1969CriLJ520 , the Commission of Inquiry was directed against Ex Chief Minister by the succeeding Ministry. The Supreme Court found on perusal of the grounds given in the notification that the charges were specific. The Court further found that the affidavit-in-opposition filed on behalf of the Government had made out a sufficient case for inquiry. 57. The petitioner has prepared an elaborate and comprehensive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y which particulars of cost of construction of roads, culverts, drains, paths etc. were asked for without even indicating as to how the same are relevant under the said item. 60. The retention of foreign ex-change abroad by manipulation of invoice values are also utterly vague. Reference was made to a speech of Sri Morarji Desai in Parliament where he said Four allegations related to Birla Companies abroad. The first two are too general. They say, they are doing under-invoicing or over-invoicing. Now, how am I to find out anything from there? There is nothing mentioned. They say that they are keeping moneys there. Now nothing can be found out. How am I to find a phantom? As regards the Swiss firm we made inquiries there and nothing could be found and the banks would not help, these banks would not give us any information. If there is anything shown from which we can take wen some clue then something can be found; but there is nothing to be found here. (Statement made on 5th March, 1969 in Rajya Sabha). 61. Reference was also made to the statement of Late Fakiruddin Ali Ahemed wherein he said Action is being taken against the persons responsible for the several infringement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to conduct of erstwhile ministers. The Supreme Court emphasised that a Commission of inquiry is necessary to establish cleanliness in public life but must relate to the definite matters of public importance. 67. My attention was drawn by Mr. Roychowdhury to the Ministerial speech made before Parliament. A question may arise how far and to what extent the Minister's speech in Parliament is relevant for determination of definite matters of public importance. The Minister's speech is neither conclusive nor binding on the Courts for determination whether the matters referred to by the Minister before Parliament are definite matters of public importance or not. But those speeches are relevant for the purpose of knowing the mind of the Government and its own opinion on the matters discussed about. 68. Dalmia's case [1959]1SCR279 relates to the affairs of the company. The dominant purpose of setting up the Commission of Inquiry under the Commission of Inquiry Act is to preserve the purity and integrity of public administration and to take legislative and administrative measures on the recommendation of the) Commission to eradicate the evil found or to implement the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d into the said notification mala fide and on extraneous consideration. There was a split in the Congress Party and consequent depletion of the support in Parliament to Mrs. Indira Gandhi as a result of which her Government became a minority Government, only 221 members in the Lok Sabha supporting her. Young Turks in the circumstances, had to be placated by the appointment of the Sarkar Commission. The mala fide would further be evident from the fact that both Rajya Sabha and Lok Sabha had refused to appoint a Commission and ignoring the wishes of Parliament and contrary to decision taken by Parliament the Government set up a Commission of Inquiry and referred to certain allegations of Sri Chandra Sekhar which constitute the items referred to in Schedule 'C' for inquiry knowing fully well that in the opinion of the Government those matters were not definite matters of public importance. 71. Reference was also made to the statement made by Sri George Fern-andes, Minister for Industry in Rajya Sabha on 15-12-1977. 72. Mr. Fernandas said The terms of reference are also so worded that a Commission was asked to find out from 1956 to 1968 in respect of the large houses and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lready been taken and disposed of. In my view, it cannot. It might fulfil one part of the conditions that these are definite matters. But do not satisfy the requirement of other part viz. the public importance. I have carefully gone through each and every item for the purpose of finding out whether it constitutes any definite matter of public importance or not. But these matters are neither definite nor of any public importance. Those are absolutely vague and general in nature, on the basis of which no bona fide opinion could be formed that those matters are definite matters of public importance and for that, purpose a Commission of Inquiry is required. So, in my view, the conditions precedent for exercising powers under Section 3 of the Act have not been fulfilled with respect to the impugned items referred to in Schedule 'C' to the notification inasmuch as the matters are neither definite nor of any public importance . In view of my above findings, it is not necessary for me in this case to deal in details the point of mala fide raised by the petitioner in the instant case. That point is left undecided. 75. In the result, this Rule is made absolute. The impugned ite ..... X X X X Extracts X X X X X X X X Extracts X X X X
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