Since a decision rendered by a Bench of three Judges which constituted the Full Bench in Hafiz Ataullah Ansari has been doubted, the reference comes before this Bench of five Judges.
No Acts & Articles mentioned in this case
AFR
RESERVED
Writ C No 8179 of 2015
Paras Jain
Vs
State of U P & 5 Ors
Appearance:
For the petitioner: Mr Vivek Kumar Singh, Advocate
For the respondents: Shri C B Yadav, Additional Advocate General,
with Shri Shashank Shekhar Singh, Addl CSC
for the State
Shri Anurag Khanna, Advocate with
Shri Nipun Singh, Advocate for the caveator
Hon'ble Dr Dhananjaya Yeshwant Chandrachud, Chief Justice
Hon'ble Dilip Gupta, J
Hon'ble Manoj Kumar Gupta, J
Hon'ble Suneet Kumar, J
Hon'ble Yashwant Varma, J
(Per Dr D Y Chandrachud, CJ)
The issue in controversy
A Division Bench of this Court, finding itself “unable to accept the
law” laid down in a decision of a Full Bench in Hafiz Ataullah Ansari Vs
State of U P
1
, referred the following questions for determination by a larger
Bench:
“(a) Whether the Full Bench judgment in the case
of Hafiz Ataullah Ansari Vs. State of U.P. (supra) lays
down the correct law;
(b) Whether in view of the language of the proviso
1[2011 (3) ADJ 502 (FB)]
2
to Section 48(2) of the U P Municipalities Act, there can
be any proceedings for removal of the President without
his financial and administrative powers ceasing, under the
proviso;
(c) Whether cessation of financial and
administrative powers of the President follows
automatically with the issuance of a show cause notice
under Section 48 (2) calling upon him to show cause as to
why he may not be removed;
(d) Whether any separate order for cessation of
financial and administrative powers of the President is
required to be made while issuing a notice under the
proviso to Section 48(2) or such cessation follows
automatically; and
(e) Whether in view of the specific language of
Section 48(2), the question of opportunity of hearing
before cessation of the financial and administrative
powers of the President stands excluded.”
Since a decision rendered by a Bench of three Judges which
constituted the Full Bench in Hafiz Ataullah Ansari has been doubted, the
reference comes before this Bench of five Judges.
Removal of the President of a Municipality
The issue which falls for determination, turns upon the provisions of
Section 48 of the Uttar Pradesh Municipalities Act, 1916
2
. Sub-section (2) of
Section 48 deals with the removal of the President of a municipality and is in
the following terms:
“48. Removal of President.- (1) …... [omitted]
2Municipalities Act
3
(2) Where the State Government has, at any time, reason
to believe that -
(a) there has been a failure on the part of the President in
performing his duties, or
(b) the President has-
(i) incurred any of the disqualifications
mentioned in Sections 12-D and 43-AA; or
(ii) within the meaning of Section 82
knowingly acquired or continued to have,
directly or indirectly or by a partner, any share
or interest, whether pecuniary or of any other
nature, in any contract or employment with, by
or on behalf of the Municipality; or
(iii) knowingly acted as a President or as
a member in a matter other than a matter
referred to in Clauses (a) to (g) of sub-section
(2) of Section 82, in which he has, directly or
indirectly, or by a partner, any share or interest
whether pecuniary or of any other nature, or in
which he was professionally interested on
behalf of a client, principal or other person; or
(iv) being a legal practitioner acted or
appeared in any suit or other proceeding on
behalf of any person against the Municipality or
against the State Government in respect of
nazul land entrusted to the management of the
Municipality or acted or appeared for or on
behalf of any person against whom a criminal
proceeding has been instituted by or on behalf
of the Municipality; or
(v) abandoned his ordinary place of
residence in the municipal area concerned; or
4
(vi) been guilty of misconduct in the
discharge of his duties; or
(vii) during the current or the last
preceding term of the Municipality, acting as
President or as Chairman of a Committee, or as
member or in any other capacity whatsoever,
whether before or after the commencement of
the Uttar Pradesh Urban Local Self-
Government Laws (Amendment) Act, 1976, so
flagrantly abused his position, or so willfully
contravened any of the provisions of this Act or
any rule, regulation or bye-laws, or caused such
loss or damage to the fund or property of the
Municipality as to render him unfit to continue
to be President; or
(viii) been guilty of any other misconduct
whether committed before or after the
commencement of the Uttar Pradesh Urban
Local Self-Government Laws (Amendment)
Act, 1976 whether as President or as member;
or
(ix) caused loss or damage to any
property of the Municipality; or
(x) misappropriated or misused
Municipal fund; or
(xi) acted against the interest of the
Municipality; or
(xii) contravened the provisions of this
Act or the rules made thereunder; or
(xiii) created an obstacle in a meeting of
the Municipality in such manner that it
becomes impossible for the Municipality to
5
conduct its business in the meeting or instigated
someone to do so; or
(xiv) willfully contravened any order or
direction of the State Government given under
this Act; or
(xv) misbehaved without any lawful
justification with the officers or employees of
the Municipality; or
(xvi) disposed of any property belonging
to the Municipality at a price less than its
market value; or
(xvii) encroached, or assisted or
instigated any other person to encroach upon
the land, building or any other immovable
property of the Municipality;
it may call upon him to show cause within the time to be
specified in the notice why he should not be removed
from office.
Provided that where the State Government has
reason to believe that the allegations do not appear to be
groundless and the President is prima facie guilty on any
of the grounds of this sub-section resulting in the issuance
of the show-cause notice and proceedings under this sub-
section he shall, from the date of issuance of the show-
cause notice containing charges, cease to exercise,
perform and discharge the financial and administrative
powers, functions and duties of the President until he is
exonerated of the charges mentioned in the show-cause
notice issued to him under this sub-section and
finalization of the proceedings under sub-section (2-A)
and the said powers, functions and duties of the President
during the period of such ceasing, shall be exercised,
6
performed and discharged by the District Magistrate or an
officer nominated by him not below the rank of Deputy
Collector.”
Sub-section (2) of Section 48 enables the State Government to issue a
notice to show cause to the President of a municipality to explain why he
should not be removed from office where the State Government has “reason
to believe” that any of the provisions of clauses (a) or (b) are attracted.
Broadly speaking, the reason to believe relates to any one of the breaches
specified in clause (a) or in sub-clauses (i) to (xvii) of clause (b) of sub-
section (2). Each of them has a bearing on the discharge or the failure to
discharge duties on the part of the President of a municipality or conduct of
a nature which is proscribed therein. In the event that the State Government
has reason to believe that any of those stipulations is attracted, it is
empowered to call upon the President to show cause why he should not be
removed from office.
The proviso to Section 48 (2) entails that where its conditions are
fulfilled, the President of a municipality shall cease to exercise, perform and
discharge the financial and administrative powers, functions and duties of
the President until he is exonerated of the charges mentioned in the notice to
show cause and the finalization of the proceedings under sub-section (2-A).
In order that the proviso be attracted, several stipulations have to be
fulfilled. These stipulations are – firstly, that the State Government must
have reason to believe that the allegations do not appear to be groundless;
secondly, the State Government must have reason to believe that the
7
President is prima facie guilty of any of the grounds contained in the sub-
section resulting in the issuance of the notice to show cause and proceedings
thereunder; and thirdly, that the notice to show cause must contain the
charges against the President of the municipality. Where these three
conditions have been fulfilled, the consequence entailed by the proviso to
sub-section (2) comes into being and the President shall cease to exercise,
perform and discharge the financial and administrative powers, functions
and duties of the President until exonerated of the charges mentioned in the
notice to show cause and finalization of the proceedings under sub-section
(2-A).
The judgment of the Full Bench
In Hafiz Ataullah Ansari, a Full Bench of this Court held that
Section 48(2) may envisage two situations – the first, where the financial
and administrative powers of a President do not cease and the other, where
they cease. The Full Bench held that a ceasing of the financial and
administrative powers of the President can take place only where the
conditions specified in the proviso to Section 48 (2) apply. As the Full
Bench held:
“54. The intention of the legislature is clear from
the language of the provision. It envisages two kinds of
proceedings under section 48(2) of the Municipalities
Act:
One, simpliciter where financial and administrative
powers of the President do not cease;
The other, where his financial and administrative
powers cease. This can happen only if the conditions
8
under proviso to section 48(2) are satisfied.
55. The proviso to Section 48(2) is meant to apply
in the serious situation where it is expedient to cease the
financial and administrative powers of the President. It is
not to apply in every case. It is for this reason that extra
precautions have been provided in the proviso to Section
48(2) of the Municipalities Act.”
Dealing with the conditions which have been spelt out in the proviso to
Section 48 (2), the Full Bench observed as follows:
“73. The proviso to Section 48(2) of the
Municipalities Act prescribes conditions that have to be
fulfilled before the right of a President to exercise
financial and administrative powers can cease. It states
that:
(i) The State Government should have reasons to
believe that:
The allegations do not appear to be
groundless; and
The President is prima facie guilty of any of
the grounds mentioned in Section 48(2) of the
Municipalities Act.
(ii) The State Government should also issue
show cause notice for removal under Section 48(2)
of the Municipalities Act and it must contain
charges.
74. The phrase 'reasons to believe' is often used in
statutes and has been repeatedly held by the Courts (for
citation of the rulings see below)
3
to mean that reasons for
3 Joti Parshad v. State of Haryana, 1993 Supp (2) SCC 497: AIR 1993 SC 1167; Pratap Singh (Dr) v.
Director of Enforcement, (1985) 3 SCC 72: 1985 SCC (Cri) 312: AIR 1985 SC 989; Jai Shanker v. State of
HP, (1973) 3 SCC 83: AIR 1972 SC 2267; Sheo Nath Singh v. Appellate CIT, (1972) 3 SCC 234: AIR 1971
SC 2451; S Narayanappa v. CIT, AIR 1967 SC 523; ITO v. Lakhmani Mewal Das, (1976) 3 SCC 757: 1976
SCC (Tax) 402: AIR 1976 SC 1753; CST v. Bhagwan Industries (P) Ltd., (1973) 3 SCC 265: 1973 SCC
9
the formation of the belief must have a rational
connection or relevant bearing on the formation of the
belief. Rational connection postulates that there must be a
direct nexus or live link between the material and
formation of the belief.”
On the applicability of the principles of natural justice before the financial
and administrative powers of the President of a municipality cease, the Full
Bench emphasised that such an order envisages civil consequences which
cannot be cured merely by a post-decisional hearing:
“In the case, where a head of a local body is
deprived to exercise financial and administrative power,
and ultimately the proceeding for removal are dropped
then in such an event his loss can never be compensated.
A post decisional hearing cannot cure the harm/damage
done to him.”
The Full Bench opined that it was necessary to furnish an opportunity of
submitting an explanation to the head of the local body and this would
eliminate an arbitrary exercise of power, besides bringing about fairness in
procedure. In the view of the Full Bench:
“...The principles of natural justice or the yardstick
of fairness would be met if the explanation of the affected
head of the local body or his point of view or version is
considered before recording the satisfaction or finding of
prima facie guilt before issuing notice and passing order
for ceasing financial and administrative powers.”
The Full Bench has explained that such an opportunity to submit an
(Tax) 177: AIR 1973 SC 370.
10
explanation need not be as detailed as in a regular enquiry and all that is
necessary is to enable the elected head of the municipality to have his point
of view or version considered. The conclusions which were arrived at by the
Full Bench were as follows:
“133. Our conclusions are as follows:
(a) There can be proceeding for removal of
President under Section 48(2) of the Municipalities Act
without ceasing his financial and administrative power
under its proviso;
(b)The following conditions must be satisfied
before cessation of financial and administrative powers of
a President of a Municipality can take place:
(i) The explanation or point of view or the
version of the affected President should be obtained
regarding charges and should be considered before
recording satisfaction and issuing notice/order
under proviso to Section 48(2) of the
Municipalities Act;
(ii) The State Government should be
objectively satisfied on the basis of relevant
material that:
The allegations do not appear to be
groundless; and
The President is prima facie guilty of any of
the grounds under Section 48(2) of the
Municipalities Act.
(iii) The show-cause notice must contain the
charges against the President;
(iv) The show-cause notice should also
indicate the material on which the objective
satisfaction for reason to believe is based as well as
11
the evidence by which charges against the
President are to be proved. Though in most of the
cases they may be the same;
(c) It is not necessary to pass separate order under proviso
to Section 48(2) of the Municipalities Act. It could be
included in the notice satisfying the other conditions
under proviso to Section 48(2). In fact it is not even
necessary. It comes into operation by the Statute itself on
issuance of a valid notice under proviso to Section 48(2)
of the Municipalities Act.
(d) In case a notice/order ceasing financial and
administrative powers is held to be invalid on any ground
then this does not mean that the proceeding of removal
are also invalid. They have to continue and taken to their
logical end. The proceeding to remove can come to an
end only if the charges on their face or even taken to be
proved do not make out a case for removal under Section
48(2) of the Municipalities Act.
(e) It is not necessary to involve the President with
the process of collecting material or give President the
copies of the material before asking his explanation or
point of view or version of the President to the charges.”
Legislative history
The legislative history of Section 48 has a bearing on the issue in
controversy.
By the Uttar Pradesh Municipalities (Amendment) Act, 1964
4
, sub-
sections (2-A) and (3) were introduced into Section 48. Sub-section (2-A)
confers upon the State Government the power to remove the President of a
4U P Act 26 of 1964
12
municipality from his office. The proviso to sub-section (2-A) enabled the
State Government to issue a warning instead of removing the President in
stipulated situations. Sub-section (3) empowered the State Government to
suspend a President.
Sub-sections (2-A) and (3), as introduced by U P Act 26 of 1964 were
in the following terms:
“(2-A) After considering any explanation that may
be offered by the President and making such enquiry as it
may consider necessary, the State Government may for
reasons to be recorded in writing, remove the President
from his office:
Provided that in a case where the State Government
has issued notice in respect of any ground mentioned in
clause (a) or sub-clause (ii), (iii), (iv), (vi), (vii) or (viii)
of clause (b) of sub-section it may instead of removing
him give him a warning.
(3) The State Government may place under
suspension a President who is called upon to show-cause
in respect of any ground mentioned in clause (a) or sub-
clause (vi), (vii) or (viii) of clause (b) of sub-section (2)
or against whom a prosecution for an offence which in the
opinion of the State Government involves moral turpitude
is commenced until the conclusion of the enquiry or the
prosecution, as the case may be, and where a President
has been so suspended he shall not, for so long as the
order of suspension continues, be entitled–
(a) to exercise the powers or perform the
duties of a President conferred or imposed upon him
by or under this Act or any other enactment for the
time being in force, or
13
(b) to take part in any proceedings of the
board.”
Upon the Seventy-third and Seventy-fourth Constitutional
Amendments being brought into force, the Uttar Pradesh Urban Local Self-
Government Laws (Amendment) Act, 1994
5
was enacted. The amending
legislation omitted Section 48(3). As a result, the power to suspend the
President of a municipality during the pendency of a proceeding for his
removal was deleted.
Subsequently, by the Uttar Pradesh Municipalities (Amendment) Act,
2001
6
, sub-section (2-A) of Section 48 was amended to delete the proviso
that empowered the State Government to issue a warning instead of a
removal.
In 2004, the Uttar Pradesh Municipalities (Amendment) Act, 2004
7
was enacted by the state legislature. By the Amending Act, a provision
which was numbered as sub-section 2-A was introduced in Section 48 in the
following terms:
“(2-A) Where in an inquiry held by such person
and in such manner as may be prescribed, if a President
or a Vice-President is prima facie found to be guilty on
any of the grounds referred to in sub-section (2), he shall
cease to exercise, perform and discharge the financial
and administrative powers, functions and duties of the
President or the Vice-President, as the case may be,
which shall, until he is exonerated of the charges
mentioned in the show-cause notice issued to him under
5U P Act 12 of 1994
6U P Act 22 of 2001
7U P Act 6 of 2004
14
sub-section (2), be exercised and performed by the
District Magistrate or by an officer nominated by him not
below the rank of the Deputy Collector.”
The reason which led to the introduction of sub-section (2-A) in the
above terms was spelt out in the Statement of Objects and Reasons
accompanying the introduction of the Bill in the state legislature. The State
of Objects and Reasons provided as follows:
“Section 48 of the Uttar Pradesh Municipalities
Act, 1916 (U.P. Act No. 2 of 1916) provides for the
removal of President of a municipality.
In the said Section the State Government is
empowered to issue show-cause notice to the guilty
President on the grounds mentioned under Section 48,
before removing him from his office. Most of the
Presidents used to delay the proceedings by not
replying the show-cause notice in time and they
continue to misuse their financial powers. It has,
therefore, been decided to amend the said Act to cease
the financial powers of such President or a Vice-
Present during the pendency of the inquiry and his
financial powers and functions will be exercised and
performed by the District Magistrate until he is
exonerated of the charges.
The Uttar Pradesh Municipalities (Amendment)
Bill, 2004 is introduced accordingly.” (emphasis
supplied)
The numbering of the above provision as sub-section 2-A suffered
from an obvious error on the part of the legislative draftsman. That was
15
because there was already in existence a provision, numbered as sub-section
(2-A) which had been introduced by U P Act 26 of 1964 to entrust the State
Government with the power of removal to be exercised after considering the
explanation that may be offered and upon making an enquiry as considered
necessary and for reasons to be recorded in writing. The existing sub-section
(2-A) which provides for removal was not deleted. The new provision was
erroneously numbered as sub-section (2-A). This mistake was rectified by
the Uttar Pradesh Municipalities (Amendment) Act, 2005
8
. By the Amending
Act, sub-section 2-A, as was inserted by U P Act 6 of 2004, was omitted
and, in its place, a proviso was introduced in sub-section (2). The proviso
which we have analysed earlier sets out the manner in which and the
conditions upon which the financial and administrative powers of the
President can cease.
Part IX-A of the Constitution
Part IX of the Constitution contains provisions in relation to the
panchayats. Part IX-A provides for the municipalities. These provisions were
introduced by the Seventy-third and Seventy-fourth amendments to the
Constitution. Municipalities and panchayats as institutions of local self-
government have a constitutional status. Their role and position are defined
by the Constitution as are their powers, duties and responsibilities. They are
not mere administrative agencies of the State but, as institutions of self-
governance, have been conferred with a degree of autonomy to ensure that
democracy finds expression at the grassroots of Indian society. The
8U P Act 2 of 2005
16
Constitution seeks to attain a decentralisation of democratic governance
through these institutions.
The extent of control which the agencies of the State exercise over
these institutions of local self-government must necessarily conform to
constitutional standards. State legislation of a regulatory nature must be
interpreted in a manner that fosters the attainment of constitutional
objectives. The Court, consistent with the high constitutional purpose
underlying Parts IX and IXA of the Constitution, must give expression to the
autonomy expected to be wielded by the constitutionally recognized levels
of local self-government. Hence, while interpreting state legislation, the
need to conform to constitutional parameters must be borne in mind. An
interpretation of state legislation which will dilute the autonomy of
institutions of local self-government must, to the extent possible, be avoided.
Similarly, an interpretation which would result in reducing the panchayats
and municipalities to a role of administrative subordination must be
eschewed. Consequently, where an issue arises in regard to the removal of
an elected head of a municipality, as in the present case, the procedure
prescribed by the law must be followed. The law itself must be interpreted in
a manner that would render it fair, just and reasonable in its operation and
effect. Moreover, in areas where the law is silent, an effort must be made by
the Court in the process of interpretation to ensure that the procedure for
removal is just, fair and reasonable to be consistent with the mandate of
Article 14.
In Ravi Yashwant Bhoir Vs District Collector, Raigad
9
, the
9(2012) 4 SCC 407
17
appellant who was the President of a Municipal Council was declared to be
disqualified under the provisions of the Maharashtra Municipal Councils,
Nagar Panchayats and Industrial Townships Act, 1965. Among the charges
against him, was a failure to call for a general body meeting, the acceptance
of fresh tenders at high rates in connection with the work of laying down a
water supply pipeline and allowing unauthorized construction. A writ
petition filed by the elected head was dismissed by the High Court. In
appeal, the Supreme Court emphasized the importance ascribed by Parts IX
and IXA of the Constitution to the role and position of the elected head of a
local self-governing institution in the following observations:
“Amendment in the Constitution by adding Parts IX
and IX-A confers upon the local self-government a
complete autonomy on the basic democratic unit
unshackled from official control. Thus, exercise of any
power having effect of destroying the Constitutional
institution besides being outrageous is dangerous to the
democratic set-up of this country. Therefore, an elected
official cannot be permitted to be removed
unceremoniously without following the procedure
prescribed by law, in violation of the provisions of Article
21 of the Constitution, by the State by adopting a casual
approach and resorting to manipulations to achieve
ulterior purpose. The Court being the custodian of law
cannot tolerate any attempt to thwart the institution.”
10
Dealing with the aspect of observing the principles of natural justice, the
Supreme Court held that:
10At para 22 p 425
18
“There can also be no quarrel with the settled legal
proposition that removal of a duly elected member on the
basis of proved misconduct is a quasi-judicial proceeding
in nature. [Vide: Indian National Congress (I) v. Institute
of Social Welfare
11
]. This view stands further fortified by
the Constitution Bench judgments of this Court in
Bachhitar Singh v. State of Punjab
12
and Union of India v.
H. C. Goel
13
. Therefore, the principles of natural justice
are required to be given full play and strict compliance
should be ensured, even in the absence of any
provision providing for the same. Principles of natural
justice require a fair opportunity of defence to such an
elected office bearer.”
14
(emphasis supplied)
The Supreme Court observed that an elected official is accountable to the
electorate and removal has serious repercussions since it takes away the
right of the electorate to be represented by a candidate who is elected.
Undoubtedly, the right to hold the post is statutory and in that sense is not
absolute but removal can take place – it was held – only after strictly
adhering to the provisions laid down by the legislature for removal. The
requirement of observing the principles of natural justice was hence held to
be mandated before an order of removal is passed:
“...the law on the issue stands crystallized to the
effect that an elected member can be removed in
exceptional circumstances giving strict adherence to the
statutory provisions and holding the enquiry, meeting the
requirement of principles of natural justice and giving an
11(2002) 5 SCC 685 : AIR 2002 SC 2158
12AIR 1963 SC 395
13AIR 1964 SC 364
14At para 30 p 427
19
incumbent an opportunity to defend himself, for the
reason that removal of an elected person casts stigma
upon him and takes away his valuable statutory right. Not
only the elected office-bearer but his
constituency/electoral college is also deprived of
representation by the person of his choice.”
15
A Bench of three learned Judges of the Supreme Court in Tarlochan
Dev Sharma Vs State of Punjab
16
dealt with the power of removal under
Section 22 of the Punjab Municipal Act, 1911. The Supreme Court
emphasized that :
“In a democracy governed by rule of law, once
elected to an office in a democratic institution, the
incumbent is entitled to hold the office for the term for
which he has been elected unless his election is set aside
by a prescribed procedure known to law. That a returned
candidate must hold and enjoy the office and discharge the
duties related therewith during the term specified by the
relevant enactment is a valuable statutory right not only of
the returned candidate but also of the constituency or the
electoral college which he represents. Removal from such
an office is a serious matter. It curtails the statutory term
of the holder of the office. A stigma is cast on the holder
of the office in view of certain allegations having been
held proved rendering him unworthy of holding the office
which he held. Therefore, a case of availability of a
ground squarely falling within Section 22 of the Act must
be clearly made out. A President may be removed from
office by the State Government, within the meaning of
Section 22, on the ground of “abuse of his powers” (of
15At para 36 p 428
16(2001) 6 SCC 260
20
President), inter alia.”
17
Interpreting the expression “abuse of powers” as a ground for removal, it
was held that this would not mean the mere use of power which may appear
to be simply unreasonable or inappropriate but implies a willful abuse or an
intentional wrong.
In Sharda Kailash Mittal Vs State of Madhya Pradesh
18
, the
Supreme Court construed the power vested in regard to the removal of the
President of a Nagar Palika under the Madhya Pradesh Municipalities Act,
1961. The Supreme Court emphasized that the power has to be exercised for
strong and weighty reasons and not merely on the basis of minor
irregularities in the discharge of the duties by a holder of an elected office.
In that context, the Supreme Court observed thus:
“There are no sufficient guidelines in the provisions
of Section 41-A as to the manner in which the power has
to be exercised, except that it requires that reasonable
opportunity of hearing has to be afforded to the office-
bearer proceeded against. Keeping in view the nature of
the power and the consequences that flows on its
exercise it has to be held that such power can be
invoked by the State Government only for very strong
and weighty reason. Such a power is not to be
exercised for minor irregularities in discharge of
duties by the holder of the elected post. The provision
has to be construed in strict manner because the holder of
office occupies it by election and he/she is deprived of the
office by an executive order in which the electorate has
17At para 7 p 268-269
18(2010) 2 SCC 319
21
no chance of participation.”
19
(emphasis supplied)
These decisions emphasise the importance of the role and position of
elected heads of government under Part IXA of the Constitution. They
represent the electorate and their removal affects the right of the electorate
to be governed by an elected head accountable to it. Hence the power of
removal which the State exercises under legislative provisions has to be
exercised strictly in accordance with the terms of authorizing legislation.
Removal entails consequences of a serious and adverse nature. Hence an
order of removal has to be preceded by compliance with the principles of
natural justice, whether or not there is an express statutory provision.
Natural justice as an incident of procedural fairness
The next aspect of the matter which must be emphasized is the
importance of the observance of natural justice as an integral element or
facet of procedural fairness. The principles of natural justice in our
jurisprudence are not only a foundational basis of administrative law as it
has evolved but constitute an essential part of fair procedure guaranteed by
Article 14 of the Constitution. Observance of natural justice has
progressively been extended to areas of administrative decision making
where the decision is liable to result in serious consequences for those who
are affected or regulated. The line between what is judicial or quasi-judicial
on one hand and what is administrative on the other, has progressively been
effaced.
19At para 26 p 325-326
22
In C B Gautam Vs Union of India
20
, the Supreme Court held that
even where a statutory provision – in that case Section 269UD of the Income
Tax Act 1961 – does not provide specifically for compliance of the
principles of natural justice, adherence to those principles must be read into
the interstices of the statute.
These principles have been reiterated in a recent judgment of the
Supreme Court in Dharampal Satyapal Limited Vs Deputy
Commissioner of Central Excise, Gauhati
21
where it was held that:
“It, thus, cannot be denied that the principles of
natural justice are grounded in procedural fairness which
ensures taking of correct decisions and procedural
fairness is fundamentally an instrumental good, in the
sense that procedure should be designed to ensure
accurate or appropriate outcomes. In fact, procedural
fairness is valuable in both instrumental and non-
instrumental terms.”
22
Again, the Supreme Court emphasized that the applicability of the principles
of natural justice is not dependent upon an enabling statutory provision for,
where a decision is liable to result in an adverse consequence, natural justice
must be observed despite the absence of a statutory requirement to that
effect. The principle which was formulated by the Supreme Court is thus:
“...the courts have consistently insisted that such
procedural fairness has to be adhered to before a decision
is made and infraction thereof has led to the quashing of
decisions taken. In many statutes, provisions are made
20(1993) 1 SCC 78
21(2015) 8 SCC 519
22At para 27 p 534
23
ensuring that a notice is given to a person against whom
an order is likely to be passed before a decision is made,
but there may be instances where though an authority is
vested with the powers to pass such orders, which affect
the liberty or property of an individual but the statute may
not contain a provision for prior hearing. But what is
important to be noted is that the applicability of principles
of natural justice is not dependent upon any statutory
provision. The principle has to be mandatorily applied
irrespective of the fact as to whether there is any such
statutory provision or not.”
Interpreting Section 48 (2)
Now, it is in this background that it would be necessary to interpret
the provisions of Section 48(2). The substantive part of sub-section (2)
empowers the State Government to issue a notice to show cause to the
President of a municipality as to why he should not be removed from office
where it has reason to believe that the requirements of clause (a) or clause
(b) have been fulfilled. The substantive violations which are adverted to in
clauses (a) and (b) of sub-section (2) cover a broad spectrum. At one end of
the spectrum is clause (a) which postulates that there has been a failure on
the part of the President in performing his duties. On the other hand, clause
(b) covers a broad range of violations including:
(i) incurring one of the stipulated disqualifications;
(ii) acquisition of a share or interest in a contract or employment with
the municipality;
(iii) knowingly acting as a President or as a member in a matter in
24
which he/she has a direct or indirect share or interest, whether
pecuniary or otherwise;
(iv) acting as a legal practitioner against the municipality or the State
Government in respect of certain classes of proceedings or subjects;
(v) abandoning an ordinary place of residence in the area;
(vi) misconduct in the discharge of duties;
(vii) flagrant abuse of position, willful contravention of the Act or
regulations or bye-laws or causing loss or damage to the property or
fund of the municipality during the current or the last preceding term
while acting as a President, Chairman of a Committee, member or in
any other capacity;
(viii) misconduct, whether as a President or as a member;
(ix) loss or damage to the property of the municipality;
(x) misappropriation or misuse of municipal funds;
(xi) acting against the interest of the municipality;
(xii)contravention of the provisions of the Act or the rules;
(xiii)creating obstacles in the orderly conduct of a meeting of the
municipality;
(xiv)willful contravention of an order or direction of the State
Government;
(xv)misbehaviour without any lawful justification with officers or
employees of the municipality;
(xvi)disposal of the property of the municipality at a price less than
its market value; and
25
(xvii)encroachment over the land, building or property of the
municipality or instigation of such acts.
The proviso to sub-section (2), it must be noted, does not stipulate
that the mere issuance of a notice to show cause under the substantive part
of sub-section (2) would result in the President ceasing to exercise the
financial and administrative powers, functions and duties of the office. On
the contrary, the proviso stipulates, firstly, that the State Government must
have reason to believe that the allegations do not appear to be groundless;
secondly, there must be a reason to believe on the part of the State
Government that the President is prima facie guilty on any of the grounds
set out in the sub-section resulting in the issuance of the show cause notice
and proceedings there-under; and thirdly, the show cause notice must
contain the charges which have been levelled against the President of the
municipality. In other words, this threefold requirement has to be fulfilled
before the cessation of financial and administrative powers, functions and
duties takes effect.
Reason to believe
The proviso requires the State Government to have a reason to
believe. Reason to believe postulates an objective satisfaction after an
application of mind to material and relevant circumstances. The expression
“reason to believe” when used in a statute is to be distinguished from an
exercise of a purely subjective satisfaction.
In Barium Chemicals Ltd Vs Company Law Board
23
, the Supreme
23AIR 1967 SC 295
26
Court held that the words “reason to believe” or “in the opinion of” do not
always lead to the construction that the process of entertaining a reason to
believe or the opinion is altogether a subjective process, not lending itself
even to a limited scrutiny by the Court that it was not formed on relevant
facts or within statutory limits. Explaining the words “reason to believe” in
Section 147 of the Income Tax Act 1961, the Supreme Court in ITO Vs
Lakhmani Mewal Das
24
held that the reasons for the formation of belief
must have a rational connection with or a relevant bearing on the formation
of the belief. A rational connection postulates that there must be a direct
nexus or live link between the material coming to the notice of the Income
Tax Officer and the formation of his belief that there has been escapement of
the income of the assessee from assessment on a failure to disclose fully or
truly all material facts. Every material, howsoever vague, indefinite or
distant, would not warrant the formation of the belief. Moreover, the reason
for the formation of the belief must not be a mere pretence and must be held
in good faith.
In Shiv Nath Singh Vs Appellate Assistant Commissioner of
Income Tax, Calcutta
25
, the Supreme Court held that the expression reason
to believe suggests that the belief must be that of an honest and reasonable
person based on reasonable grounds and not merely on suspicion. These
principles were reiterated in a judgment of the Supreme Court in
Bhikhubhai Vithlabhai Patel Vs State of Gujarat
26
.
The formation of a reason to believe within the meaning of the
24AIR 1976 SC 1753
25(1972) 3 SCC 234
26(2008) 4 SCC 144
27
proviso must be on objective considerations which have a rational
connection or link to the material before the State Government. Fairness
requires that this be disclosed to the President of the municipality before the
consequences in the proviso ensue. The President must have an opportunity
to explain.
The State Government is also required by the proviso to be of the
view that the President is prima facie guilty on any of the grounds contained
in the sub-section which have resulted in the issuance of the notice to show
cause. The formulation of a reason to believe that the allegations do not
appear to be groundless and that the President is prima facie guilty on any of
the grounds mentioned in the sub-section would postulate that before these
statutory requirements are found to exist, a fair opportunity of being heard
must be granted to the President of the municipality. A finding of prima
facie guilt must, in our view, be consistent with a prior fulfillment of the
norms of natural justice, consistent with the stage of enquiry. There is
intrinsic evidence in the statutory provision which leads to the inference that
the mere issuance of the notice to show cause does not a fortiori result in the
cessation of the financial and administrative powers, functions and duties
but it is only when the conditions which are spelt out in the proviso exist,
that such a consequence will follow. If a mere issuance of a notice to show
cause was intended to necessarily result in the consequence of the cessation
of financial and administrative powers as envisaged in the proviso, the
legislature would have made a provision to that effect. On the contrary, the
legislature has carefully crafted a statutory provision, in the form of a
28
proviso which ensures that it is only upon the State Government having a
reason to believe that the allegations do not appear to be groundless and that
the President is prima facie guilty on any of the grounds contained in the
sub-section, that the cessation of the financial and administrative powers
would follow from the date of the issuance of the notice to show cause
containing the charges.
The cessation of financial and administrative powers of an elected
head of a municipality is a matter of significance and is replete with serious
consequences. The effect of the financial and administrative powers,
functions and duties being ceased, has a direct impact upon the authority of
the elected head. It erodes authority and impacts upon the ability of the
President to effectively discharge the functions of the office by preventing
the discharge of financial and administrative authority. Bereft of financial
and administrative powers, functions and duties, the office of the President
of a municipality is reduced to a cipher. In fact, the proviso envisages that
upon the powers being ceased, they shall be exercised by the District
Magistrate or an officer nominated, not below the rank of a Deputy
Collector. This consequence is serious enough to warrant the Court to read a
compliance with the principles of natural justice into the provision so as to
ensure a fair procedure and safeguard against an unfair recourse to its power
by the State Government. The principles of natural justice, as we have noted
above, are required to be observed as a matter of first principle when a
decision – administrative, quas-judicial or judicial – adversely affects the
rights of parties. The principle of reading into the statutory provision a
29
requirement of complying with the principles of natural justice is a mandate
of Article 14 because it would be an anathema to a fair procedure for the
State Government to issue dictats that abrogate the financial and
administrative powers of an elected head of a local self-governing institution
without complying with the principles of natural justice. The requirement of
observing the principles of natural justice, as a matter of first principle, must
be weighed in together with the additional factors present in the proviso to
Section 48(2) that lead to the conclusion that a decision to cease financial
and administrative powers must be preceded by adherence to a fair
procedure. The first of the three indicia in the proviso is the existence of a
reason to believe on the part of the State that the allegations do not appear to
be groundless. The second indicia is the requirement of the formation of the
reason to believe that the President of a municipality is prima facie guilty on
any of the grounds mentioned in the sub-section, resulting in the notice to
show cause. Arriving at a determination in regard to the prima facie guilt of
a person, as the statute mandates, must be upon due observance of the
principles of natural justice. The third indicia is that the notice to show
cause has to contain the charges against the person. Hence, even though the
proviso to sub-section (2) of Section 48 does not contain an explicit
requirement of observing the principles of natural justice, nonetheless such a
requirement must necessarily be read into the provision.
The rules of natural justice require that the person against whom
action is proposed, must be made aware of the grounds of the proposed
action and must have an opportunity to respond to the action proposed, by
30
setting forth an explanation. Undoubtedly, the formation of the reason to
believe under the proviso to sub-section (2) is not final having due regard to
the fact that the enquiry is still to be concluded and the cessation of financial
and administrative powers is to enure during the period when the
proceedings in pursuance of the notice to show cause are still to be
concluded. A personal hearing is not a necessary ingredient of complying
with the principles of natural justice at every stage. The minimum
requirement of the principle is that the President of a municipality should be
made aware of the grounds on which the action against him is proposed in
the formulation of the charges which are issued to him, as mandated by the
proviso. The person who is sought to be proceeded against must be informed
of the basis on which the State Government proposes to entertain a reason to
believe that the allegations do not appear to be groundless and that he or she
is prima facie guilty on any of the grounds of sub-section (2) resulting in the
issuance of the notice to show cause and the proceedings in the sub-section.
The period which is allowed to the elected head to explain must be
reasonable: what is a reasonable period being dependent upon the facts and
circumstances of each case. In a case involving an element of urgency where
there is a need for the State to take an expeditious decision, the period
during which an explanation can be submitted, can be suitably tailored to
meet the exigencies of the situation. No absolute rule can be laid down in
the abstract on what constitutes a reasonable period to show cause. But the
minimum requirements of fair procedure must be fulfilled. An opportunity
has to be granted. Otherwise, the provision would be capable of grave
31
misuse to derogate from the authority of an elected head on arbitrary and
whimsical grounds.
The learned Additional Advocate General submitted that (i) the
judgment of the Full Bench in Hafiz Ataullah Ansari has read something
which is not a part of the proviso to Section 48(2) into the statutory
provision; and (ii) the requirement of complying with the principles of
natural justice arises where “there is some space for it” whereas, in the
present case, no space exists between the issuance of a notice to show cause
and the ceasing of financial and administrative powers.
We are not inclined to accept the submission that the reading into the
proviso of a requirement of complying with the principles of natural justice
would amount to the imposition of an alien condition not contemplated by
the legislature. For one thing, it is a well settled principle of our
jurisprudence that even where a statute is silent, compliance with or
adherence to natural justice must be read into the statute as an intrinsic
element of a fair procedure consistent with the mandate of Article 14, where
an administrative or quasi judicial decision has adverse consequences for a
person who is proceeded against. Reading into a statute a requirement of
complying with the principles of natural justice does not amount to rewriting
the statute or engrafting a new legislative provision. Reading natural justice
into the interstices of a statute is an exercise of an interpretation which is
necessary to render the statutory provision consistent with the mandate of
Article 14. Otherwise if a statutory provision were to be held to authorise
the taking of adverse decisions without complying with procedural norms
32
which are fair and reasonable, the provision would itself become vulnerable
to constitutional challenge. Hence, the principle that natural justice should
be read as a matter of interpretation into a statutory provision where a
decision which is taken has adverse consequences is connected with the
mandate of Article 14 of the Constitution. For a Court to read a statutory
provision in a manner which renders it fair, just and reasonable, is not to re-
write the statute but to make it consistent with constitutional norms.
Secondly, we are not impressed with the submission that there is no
space, as the Additional Advocate General calls it, between the issuance of a
notice to show cause and the ceasing of financial and administrative powers
of the President of the municipality. The legislature has clearly not intended
that the mere issuance of a notice to show cause under sub-section (1)
should result in the ceasing of financial and administrative powers as an
inexorable consequence, as night follows day. If the legislature so intended,
it would have provided that upon the issuance of a notice to show cause, the
financial and administrative powers of an elected President of the
municipality cease. The state legislature did not do so. Instead, it imposed a
statutory condition that it was where the State Government has reason to
believe that the allegations do not appear to be groundless and that the
President is prima facie guilty on any of the grounds of sub-section (2)
resulting in the issuance of the notice to show cause and proceedings, that he
shall, from the date of the issuance of the notice containing the charges,
cease to exercise, perform and discharge financial and administrative
powers, functions and duties. It is only when these requirements of the
33
proviso are fulfilled that the ceasing of financial and administrative powers
takes effect by operation of law. In other words, the ceasing of financial and
administrative powers is not an automatic consequence envisaged upon the
mere issuance of a notice to show cause under sub-section (1). For the
consequence to ensue as a matter of law under the proviso to sub-section
(2), the requirements of the proviso must be fulfilled.
The referring order of the Division Bench dated 10 February 2015
doubted the correctness of the view of the Full Bench by observing that
under Section 48(2), the State Government is required to issue a show cause
notice calling upon the President of a municipality to show cause as to why
he should not be removed only when (i) the facts which disclose any or all
of the grounds mentioned in clause (a) or clause (b) (i) to (xvii) are brought
to the knowledge of the State Government and (ii) the State Government has
reason to believe that the allegations are not baseless and the President is
prima facie guilty. In the view of the Division Bench, once such a notice
under Section 48(2) is issued, the financial and administrative powers of the
President would stand ceased by operation of law. With respect, the error on
the part of the Division Bench lies in not distinguishing between the
requirements of the proviso and those of the substantive part of Section 48
(2). The substantive part of Section 48(2) envisages the State Government to
issue a notice to show cause to the President of a municipality why he
should not be removed from office where it has reason to believe that the
grounds mentioned in clause (a) or any of the grounds in clause (b) are
fulfilled. The proviso, however, requires the State Government to apply its
34
mind to certain specified aspects, including among them, whether there is
reason to believe that the President is prima facie guilty on any of the
grounds of the sub-section. The formation of a reason to believe that the
allegations are not groundless; and that the President is prima facie guilty
are pre-conditions to the consequence envisaged under the proviso, of the
financial and administrative powers ceasing to vest in the President of the
municipality. The ceasing of financial and administrative powers is not a
consequence which ensues merely upon a notice to show cause under the
substantive part of sub-section (2). The conclusion of the Division Bench
that the cessation of powers takes place by operation of law merely with the
issuance of a notice to show cause under Section 48(2) is, with respect, not
consistent with the plain text and language of the provision since the
legislature envisages that the consequence would ensue only upon the
conditions contained in the proviso being fulfilled.
Conclusion
We accordingly proceed to answer the reference in the following
terms:
(I) Re Question (a): The decision of the Full Bench in Hafiz
Ataullah Ansari Vs State of U P (supra) lays down the correct
position in law.
(II) Re Questions (b) & (c): The cessation of financial and
administrative powers of the President does not necessarily follow
merely upon the issuance of a notice to show cause under the
substantive part of Section 48(2). The financial and administrative
35
powers of the President shall stand ceased if the State Government has
reason to believe that (i) the allegations do not appear to be
groundless; and (ii) the President is prima facie guilty on any of the
grounds of sub-section (2) resulting in the issuance of the notice to
show cause and proceedings thereunder. The President of the
municipality will, in that event, cease to exercise, perform and
discharge financial and administrative powers, functions and duties
from the date of the issuance of the notice to show cause containing
the charges. For a cessation of financial and administrative powers to
take effect, the requirements of the proviso to Section 48(2) must be
fulfilled. Hence, proceedings for removal of a President of a
municipality under Section 48(2) may take place in a given situation
though the financial and administrative powers have not ceased under
the terms of the proviso.
(III) Re Question (d): There is no requirement under the statute that a
separate order has to be passed under the proviso to Section 48(2)
when the financial and administrative powers of the President of a
municipality cease. Such a consequence would come into being upon
the requirements specified in the proviso to Section 48(2) being
fulfilled.
(IV) Re Question (e): An opportunity of being heard, consistent with
the principles of natural justice, before there is a cessation of the
financial and administrative powers of the President does not stand
excluded by the provisions of Section 48(2). As a matter of textual
36
interpretation, the requirement of complying with the principles of
natural justice is an integral element of the proviso to Section 48(2).
The requirements of natural justice would warrant the grant of an
opportunity to the elected head of a municipality to respond to the
notice issued by the State indicating the basis for the formation of a
reason to believe that the charges do not appear to be groundless and
that the President is prima facie guilty on any of the grounds
mentioned in sub-section (2) of Section 48. The period of notice can
be suitably molded to deal with the exigencies of the situation.
The reference to the Full Bench shall accordingly stand answered. The
writ petition shall now be placed before the regular Bench according to
roster for disposal in light of the questions so answered.
December 18, 2015
AHA
(Dr D Y Chandrachud, CJ)
(Dilip Gupta, J)
(M K Gupta, J)
(Suneet Kumar, J)
(Yashwant Varma, J)
Legal Notes
Add a Note....