I

S.O.R. SUPREME COURT REPORTS 279

SHRI RAM KRISHNA DALMIA

v.

SHRI JUSTICE S. R. TENDOLKAR & OTHERS

(and connected appeal)

(S. R. DAS c. J., VENKATARAM:A AIYAR, B. P. SINHA,

S. K. DAS, and A. K. SARKAR JJ.)

Commission·of Inquiry-Legislation empowering Government to

appoint Commission-Co'ltstitutionality-If violates guarantee of

equality before the law-Notification setting up Commission and con­

ferring powers thereupon-Legality of-If ultra vires the Act­

Whether Commission usurps judicial functions-Commissions of

Enquiry Act, r952 (LX of r952), s. 3-Constitution of India, Arts.

r4_and 246: Seventh Schedule, Entry 94, List I and Entry 45,

List

Ill.

In exercise of the powers conferred upon it by s. 3 of the Com~issions of Enquiry Act, 1952, the Central Government by a

notification dated December

II,

1956, appointed a Commission of

Inquiry to inquire into and report in respect of certain companies

mentioned in the Schedule attached to the notification and in res­

pect of the nature and extent of the control and interest which

certain persons named in

the notification

exercise,d over these

companies. By subsequent notifications the Central Government

made all

the provisions of sub-ss. (2), (3), (4) and (5) of s. 5 of the

Act applicable to

the Commission and

fi¥ed a period of 2 years

from February

II, 1957, as the period within which the

Commis­

sion was to exercise its function and to make its report. The

four persons named filed three applications under Art. 226 of the

. Constitution before the Bombay High Court questioning the vali­

dity of the Act and of the notification and praying for writs for

quashing

the same. The High

Court dismissed the applications

and ordered

that the said notification was legal and valid except

as to

the last part of cl. IO thereof which empowered the

Commis­

_sion to recommend the action which should be taken as and. by

way of securing redress or punishment or to act as a preventive in

future cases. The petitioners as well as

the

Union of India filed

appeals: ·

Held, that the Act was valid and intra vires and that the

notification was also valid excepting the words" "as and by way

of securing redress or punishment " in cl. IO thereof which werlt

beyond the Act. .

The Act was enacted by Parliament under entry 94 of List I

and entry

45 of List III of the Seventh Schedule of the

Constituti~n

whiCh relate to inquiries for the purposes of any of the matters in

List I and in Lists

II and III respectively. The inquiry which

may be set up

bJl a law made under these entrie.s. is pqt limited

1

•

•

March 28.

280 SUPREME COURT REPORTS [1959]

I958 in its scope and ambit, to fntnre legislative purposes only. Such

. . a law m~y also be for administrative purposes and the scope of

Shri Ram KYishna the 1nqu1ry under such a law will cover all matters which may

Dalmia properly be regarded as ancillary to such inquiries.

v. The Act does not delegate to the Government any arbitrary

Shri Justice or uncontrolled power and does not Qffend Art. 14 of the Constitu-

s. R. Tendolkar !ion. The discretion given to the Government to set up a Com-

6-Others mission of Inquiry is guided by the policy laid down in the Act

that the executive action is to be taken only when there exists <f

definite matter of public importance into which an inquiry is

'

necessary. •

Kathi Raning Rawat v. State of Saurashtra, [1952] S. C. R.

435; applied.

The

Commission is merely to investigate, record its findings

and make its recommendations which are not enforceable proprio

vigor.. The inquiry or report cannot be looked upon as judicial

inquiry in the sense of its being an exercise of judicial function

properly so called and consequently Parliament or the Govern­

ment cannot be said to have usurped the functions of the ~udi­

ciary.

The notification was well within the powers conferred on the

Govern1uent by s. 3 of the Act and did not go beyond the provi­

sions of the Act. The conduct of an individual person or com­

pany or a group of individual persons or companies may, in certain

circumstances, become a definite matter of public importance with ..

in the meaning of s. 3( I) and call for an inquiry. Besides,. s. 3

authorises

the Government to appoint a

Commission .of Inquiry

not• only for· the purpose of making an inquiry into a definite

matter of public importance but also for the purpose of perform­

ing such functions as may be specified

in the notification.

It has not been established that the petitioners and their

companies have been arbitrarily singled out for the purpose of

hostile and discriminatory

treatment and subjected to a harassing

and oppressive inquiry. In matters of this kind the Government

has of necessity to act upon

the information available to it. It is

the.best judge of

the reliability of the source of the information

and if it acts in good faith and honestly comes to the conclusion

that the act and conduct of the petitioners and the affairs of their

companies constitute a definite matter of public importance the

Court will be slow to adjudge the action to be bad and illegal.

The bare possibilil.Y that the powers may be misused or abused

cannot

per se make the power bad. The power having been

entrusted to the

Central Government and not to any petty official,

abuse of power cannot be easily assumed .

• In determining whether there is any intelligible differentia on

the basis of which the petitioners and their companies have peen

grouped together it is permissible to look not only at the facts

appearing in

the notification but also the facts brought to the

notice of the

Court upon affidavits. The facts ino the present case

•

•

' •

'

' ..

S.C.R. SUPREME COURT REPORTS 281

afford s1,rffici.ent ~upport to tl).e pre~umptio11 of constitutionality r958

of the n.otification and the petitioners have failed to discharge the -

onus which was on them to prove that other people or companies Shri Ram Krishna

similarly situated have been left out and that the petitioners and Da/mia

their companies have been singled out for discriminatory and v.

hostile treatment. Shti Justice

The recommendations of the CDmmission of Inquiry are of

~reat importance t.o the Gov!'!rnment in ,order to enable it to make

up its mipd ,;i.s to what legislative or administr!ltive rµeasures

should be adopted to eradicate the evil fo,upd or to implement

the beneficial objects it hais in view. There c~n l_:>i' no .. obj,ectiori

to the Commission reco.mmending the imposition of s9me form of

punisl).ment which will, in its opinion, be sufficiently deterrent to

delinquen.ts in future. But the Commission cannot be asked to

ma~e ,recomipendati9ns for taking ,any ~.c.tion "as <J.nd by way of

securing redress or punishmept" in r.espe~t of wropgs alr,eady

done oi c.ommitted as this is the function of a Court Of law.

)':ven t:hough the oripinal notification appointing the Comm,is­

sion '1id not fix the time within which the Commission was to

comp)eie its report the Government could validly do so

by a sub-

sequent notification.

1

.

CIVIL

APPELLATE JumspICTION: Civil Appeals

Nos. 455 to 457

and 656 to 658 of 1957.

Appefl,ls fro:m the judgm,ept ,and order <;lated April

~9, 1957, of the Bombay ;Hig,h Court in M.isc. Applica-

ti01;is ,Nos. 48 to 50 of 1957. ·

G. S. Pathak, S. K. Kapu,.r, P. N. Bhagwati and

Ganpat Rai, for the appellant in C. A. No .. 455 of

1'957 & respondent in C. A. No . .656 of 1957.

Sachin Chaudhry, R. J. Joshi, J. B. Dq,dac.,hanji,

Rarµ,eshwar Nath and S. N. Andley, for the appell~nts

in -C. As. Nos. 456 & 457 of 1957 and respondents in

C. As. Nos. 657 & 658 of 1957. •

0. /{. Daphtary, Sol,icito,r-Ge,nerq,l for l'Yfdia, G. N.

J,oshi, K. H. Bhabha an.d R. H. Dhebar, for respondent

No. 4 in C. As. Nos. 455 to 457 of 1.957 and appellant

in C. As. Nos. 656 to ·658 of 1957. • ·

1958. March 28. .The Judgment _of the Court was

"' .de:livered by

S. R. Tendo/kar

&-O.tliers

D-1s. C. J.-These six several appeals a,re d:irected Das c. J.

against a common judgment and order pronounced on

36

•

•

282 SUPREME COURT REPORTS [1959j

·,958 April 29, 1957, by a Division Bench of the Bombay

Sh . R . h High Court in three several Miscellaneous Applicaitions

" ;;;m;."' na under Art. 226 of the Constitution, namely, No. 48 of

v. 1957 filed by Shri l'l,am Krishna Dalmia (the appellant

Shri Justice in Civil Appeal No. 455 of 1957), No. 49 of 1957 by

S. R. Tendolkar Shri Shriyans Prasad Jain and Shri Sital Prasad Jain

& Others (the appellants in Civil Appeal No. 456 of 1957) and

No. 50 of 1957 by Shri Jai Dayal Dalmia and Shri

Das c. J. Shanti Prasad Jain (the appellants in Civil Appeal

No. 457

of 1957). By those

Misc1illaneous Applications

the petitioners therein prayed for an appropriate

direction or order under .Art. 226 for quashing and

setting aside notification No. S. R. 0. 2993 dated

December 11, 1956, issued by the Union of India in

exercise of powers conferred on it by s. 3 of the Com­

missions of Enquiry Act (LX of 1952) and for other

reliefs. Rules were issued and the Union of lndia

appeared and showed cause. By the aforesaid judg­

ment and order the High Court discharged the rules

and dismissed the applications and ordered that the

said notification was legal and valid except as to the last r

part of cl. (10) thereof from the words "and the action"

to the words " in future cases " and directed the Com­

mission· not to proceed with the inquiry to the extent

that it related to the aforesaid last part of cl. (10) of

the said notification. The Union of India has filed

three several appeals, namely, Nos. 656, 657 and 658

of 1957, in the said three Miscellaneous Applications

complaining

against that part of the said judgment

and order of the Bombay High

Court which adjudged

thii last part of cl. (10) to be invalid.

The Commissions of Inquiry Act, 1952 (hereinafter

referred to

as the Act), received the assent of the

President on August 14, 1952, and was thereafter

brought into .force by a notification issued by the

Central Government under s. 1 (3) of the Act. As its

long title states, the Act is one

" to provide for the

appointment of Commissions of Inquiry and for vesting

such Commissions with certain powers ". Sub-sec­

tion (1) of s. 3, omitting the proviso not materiltl for

our present purpose, provides :

"The appropriate Government may, if it is of

•

•

•

•.

....

'

;

..

S.C.R. SUPREME COURT REPORTS 283

op11110n that it is necessary so to do, and shall, if a i958

resoliJtion in this behalf is passed by the House of the

5

h .

R-K . h

h b h L

. l . A

rt am ris na

People or, as t e case may e, t e eg1s ative ssem- Dalmia

bly of the State, by notification in the Official Gazette, v. •

appoint a Commission of Inquiry for the purpose of Shri Justic•

making an inquiry into any definite matter of public s. R. Tendolkar

importance and performing such functions and within & Others

m.ich time as may be specified in the notification, and

the Commission so appointed shall make the Inquiry

and perform the functoions accordingly."

Under sub-s. (2) of that section the Commission may

consist of one or more members and where the Com­

mission consists of more than one member one

of them may be appointed as the Chairman there­

of. Section 4 vests in the Commission the powers

of a civil court while trying a suit under the Code of

Civir Procedure in respect of .the several matters

specified therein, namely, summoning and enforcing

attendance of any person and examining him on oath,

requiring discovery

and production of any document,

receiving evidence

op. affidavits, requisitioning any

public record or copy thereof from any court or officer,

issuing commissions for examination

of witnesses or

documents

and any other matter which

ma;y be prescrib­

ed. Section 5 empowers

the appropriate Government, by

a notification in the Official Gazette, to confer on the Commission additional powers as provided in all or

any of the sub-ss. (2), (3), (4) and (5) of that section.

Section 6 provides

that

no" statement made by a

person

in the course of giving evidence before the

commission shall subject him to, or be used against

him in, any civil or criminal proceeding except

a· pro­

secution for giving false evidence by such statement

provided· that the statement is made in reply

to a question which he is required by the Com-

mission to answer or is relevant to• the subject

matter of the inquiry. The appropriate Government

• may under s. 7 issue a•notification declaring that the

Commission shall cease to exist from such

date as may

be

s[ll:lcified therein. Bys. 8 the Commission is empower­

ed, subject to

any rules that may be made, to regulate

·

its own procedure including the time and place of its

•

•

Das

C. ].

•

284 SUPREME COURT REPORTS [1959]

z95B sittings and may act notwithstanding the temporary

Shri Ram Krishna absence of any member or the existence of any vacancy

Dalmia among its members. Section 9 provides for indemnity

•

• v. to the appropriate Government, the. members of the

Shri Justice Commission or other persons acting under their

s. R. T'ndolkar directions in respect of anything which is done or

& Others

Das C. ].

intended to be done in good faith in pursuance of the

Act. The rest of the sections are not material for th<!

purpose of these appeals.

In exercise of the powers co1tferred on it by s. 3 of

the Act the Central Government published in the

Gazette of India dated December 11, 1956, a notifi­

cation

in the following terms :

MINISTRY

OF :FINANCE

(Department of Economic Affairs)

. ORDER

New Delhi, the 11th December, 1956

S. R. 0. 2993-Whereas it has been made to

to the Central Government that :

•

appear

(1) a large number of companies and some firms

were promoted

and/or controlled by Sarvashri Rama­krjshna Dalmia, J aidayal Dalmia, Shanti Prasad Jain,

Sriyans Prasad Jain, Shital Prasad Jain or some one

or more of them and by others being either relatives or

employees of the said person or persons, closely con-

nected

with the said persons ;

·

(2) large amounts were subscribed by the in vesting

public

in the shares of

some of these companies ;

(3) there have been gross irregularities (which may

in -several respects and materials amount to illegalities)

in the management of such companies including

manipulation of the accounts and unjustified transfers

and use of funds and assets ;

(4) the mo.PJ.eys subscribed by the investing public

were

in a considerable measure used not in the interests

of the companies concerned b.ut contrary to their

interest and for the ultimate personal benefit of those

in control and/or management; and ,

(5) the investing public have as a result suffered

considerable losses .

•

•

,_

.....

·"'

S.C.R.

SUPREME COURT REPORTS

285

And Whereas the Central Government i;'l of the r

953

opinion that there should ~ea full. in9uiry into these Sim Ram Krishna

matters which are of defimte public importance both JJalmi?t

by reason of the gr~ve c~nsequen?es which appear t~ v.

have ensued to the mvestmg pubhc and also to deter-Slwi Ju;tice

mine such measures as may be deemed necessary in s. R. Tendolkar

th f

&M~

order to prevent a recurrence ereo ;

• Now, therefore, in exercise of the powers conferred Das c. J.

by section 3 of the Commissions of Inquiry Act (No. 60

of 1952), the Central Government hereby appoints a

Commission

of Inquiry consisting of the following

persons,

namely:

Shri Justice

S. R. Tendolkar, Judge of the High

Court at Bombay, Chairman.

Shri N. R. Modi of Messrs A. F. Ferguson&. Co.,

Chartered Accountants, Member.

Sliri S. C. Chaudhuri, Commissioner of Income-tax,

Member. ·

1. The Commission shall inquire into and report on

and in respect of:

(1) The administratioil of the affairs of the com­

panies specified in

the schedule hereto;

(2) The administration of the affairs of such other

companies and firms as the Commission may during

the course of its enquiry find to be companies or firms

connected with

the companies referred to in the

schedule and whose. affairs ought to be investigated

and inquired into in connection with or arising out of

the inquiry into the affairs of the companies specified

in the schedule hereto ;

(3) The nature and extent of the control,

direct

and indirect, exercised over such companies and firms

or

any of them by the aforesaid Sarvashri Ram

Krishna Dalmia, Jaidayal Dalmia, Shanti

Prasad Jain,

Sriyans Prasad Jain, their relatives, '3mployees and

persons connected with them ; •

(4) The total amount of the subscription obtained

from the investing public and the amount subscribed

by the aforesaid persons and the extent to which the

funds and assets thus obtained or acquired were

misused, misapplied

or misappropriated;

(5) The

ex.tent and nature of the investments by

•

•

•

286 SUPREME COURT REPORTS [1959]

'95

8

and/or l~ans to and/or the use of the funds or assets

S

" . R K . h by and transfer of funds between the companies

1H·i am ris na • •

~almia aforesaid ;

v. (6) The· consequences or results of such invest>-

511,; Ju,ti" ments, loans transfers and/or use of funds and assets;

s. R. Tendolkar (7) The reasons or motives of such investments,

&

01

""' loans transfers and use and whether there was any

Da' c. J. justification for the same and whether the same were

made bona fide in the interests of the companies con-

cerned ; •

(8) The extent of the losses suffered by the invest­

ing public, how far the losses wel'e avoidable and

what steps were taken by those in control and/or

management to avoid the losses;

(9) The nature and extent, of the personal gains

made by any person or persons or any group or groups

of persons whether herein named or not by reason (ff or

through his or their connection with or control over

any such company or companies;

(10) Any irregularities, frauds or breaches of trust

or action in disregard of honest commercial practices

or contravention of any law (except contraventions in

respect of which crimina) proceedings are pending in

a

Court of Law) in respect of the companies and firms

whose affairs

are investigated by the Commission

which

may come to the knowledge of the Commission

and the action which in the opinion of the

Commis­

sion should be taken (as and by way of securing

redress

or punishment or) to act as

a preventive in

future cases. · .

(ll) The measures which in the opinion of the

Commission are necessary in order to ensure in the

future the due and proper administration of the funds

and assets of companies and firms in the interests of

the in vesting p,µblic. ·

' SCHEDULE

l. Dalmia Jain Airways Ltd. .

2. Dalmia Jain Aviation Ltd:, (now known as Asia

Udyog Ltd.)

3. Lahore Electric Supply Company Ltd., (how

known as South Asia Industries Ltd.)

4. Sir Shapurji Broacha Mills Ltd .

•

• •

S.C.R. SUPREME COURT REPORTS 287

5. Madhowji Dharamsi Manufacturing Company

Ltd,

6. Allen Berry and Co. Ltd.

7. Bharat Union Agencies Ltd.

8. Dalmia Cement and Paper Marketing Company

Ltd., (now known as Delhi Glass Works Ltd.)

9. Vastra Vyavasaya Ltd.

• Ordered that the Order be published in the Gazette

of

India for public information. (No. F.

107 (18-

INS/56)

).

•

H. M. Patel

Secretary.

It should be noted that the above notification did not

specify the time within which the Commission was to

complete

the inquiry and make its report. OQ January 9, 1957, the Central Government issued

another notification providing that all the provisions

of sub-ss. (2), (3), (4), and (5) of s. 5 should apply to

the Commission. As the notification of December 11,

1956, did

not specify the time within which the

Commission was to make its report, the

Central

Government on February 11, 1957, issued a third

notification specifying two years from that date as

the time within which the Commission of Inqui'ry

should exercise

the functions conferred on it and make

its report.

On February 12, 1957, three several

Miscellaneous Applications were filed under

art. 226 of

the Constitution questioning the validity of the Act

and the notification dated December 11, 1956, on

diverse grounds

and praying for a writ or order for

quashing

the same.

,

It will be convenient to advert to a few minor objec­

tions urged before us

on behalf of the petitioners in

support of their appeals before we come to deal with

their

·principal and major contentioQs. The first

· objection is that the notification has gone beyond the

Act. It is pointed out that the Act, by s. 3, empowers

the appropriate Government in certain eventualities

to a.epoint a Commission of Inquiry for the purpose

of making an inquiry into any definite matter ot

public importance and for IiO other purpose. The

contention is that the conduct of an individual person

•

•

Shri Ram Krishna

Dalmia

v.

S hri ] uslice

S. R. Tendolkar

& Others

Das C. ].

•

288 SUPREME COUET REPOETS [1959]

or company cannot possibly be a matter of public

SI

. R

1

, .

1

importance and far less a definite matter of that kind .

. ri am )._ris ina W bl .

Dalmia e are una e to accept this argument as correct.

..

v. 'Videspread floods, famine and pestilence may quite

Shi Justfr• easily be a definite matter of public importance

s. R. Tendolkar urgently calling for an inquiry so as to enable the

& oihers Government to take appropriate steps to prevent their

Das C. ].

recurrence in future. The conduct of villagers il'l

cutting the bunds for taking water to their fields

during the dry season may c~se floods during the

rainy season and we can see no reason why such

unsocial conduct of villagers

of certain villages thus

ca using floods should not be regarded as a definite

matter of public importance. The failure of a big bank

resulting in the loss of the life savings of a multitude

of men of moderate means is certainly a definite matter

of public importance but the conduct of the

pefsons

in charge and management of such a bank which

brought about its collapse is equally a definite matter

of public importance. Widespread dacoities in parti­

cular parts of the country is, no doubt, a definite

matter of public importance but we see no reason why

the conduct, activities and modus operandi of particu­

lar dacoits and thugs notorious for their cruel depreda­

tions should

not be regarded as definite matters of

public importance urgently requiring a sifting inquiry.

It is needless to multiply instances. In each case the

question is : is there a

definite matter of public impor­

tance which calls for an inquiry? We see no warrant

for the proposition that a defiuite matter of public

importance must necessarily mean ouly some matter in­

volving

the public benefit or advantage in the abstract,

e.g., public health, sanitation or the like or some public

evil or prejudice,

e. g., floods, famine or pestilence or

the like. Quite conceivably the conduct of an indi­

vidual

person• or company or a group of individual

persons

or companies may assume such a dangerous

proportion and may so

prejudicially affect or threaten

to affect the public well-being as to make such con­

duct a definite matter of public importance urgently

calling for a full inquiry. Besides, s. 3 itself authorises

the appropriate Governmen,t to appoW a Commission

•

•

•

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. ...._

...

S.C.R; SUPREME COURT REPORTS 289

of Inquiry not only for the purpose of making an r958

inquiry into a definite matter of public importance but h . - .

also for the purpose of performing such functions as

5

" 1;;7 1!-rishna

may be specified in the notification. Therefore, the av~"'

notification is well within the powers conferred on the Skri Ju;tice

appropriate Government by s. 3 of the Act and it can-s. R. Tendolkar

not be questioned on the ground of its going beyond & Olhm

the provisions of the Act.

Learned counsel for

the petitioners immediately

J:las c. f.

replies that in the e'7-ent of its being held that the

notification is within the terms of the Act, the Act

itself is

ultra vires the Constitution. The validity of

the Act is called in question in two ways. In the

first

place it is said that it was beyond the legislative com-

petency

of Parliament to enact a law conferring such

a wide

sweep of powers. It is pointed out that Parlia-

ment enacted . the Act in exercise of the legislative

powers conferred on.

it by

Art> 246 of the Constitution

read with entry 94 in List I and entry 45 in List III of

the Seventh Schedule to the Constitution. The matters

enumerated in entry 94 in List I, omitting the words

not necessary for our purpose, are " inquiries ......... for

the purpose of any of the matters in this ·List '', and

those enumerated in entry 45 in List III, again omitt-

ing the unnecessary words, are " inquiries ............ for.

the purposes of any of the matters specified in Lis_t II

qr List III. " Confining himself to the entries in so

far as they relate to " inquiries ", learned counsel for

the petitioners urges that Parliament may make a law

with r.espect to inquiries but cannot under these entries

make a law. conferring any power to perform any

function other than the power to hold an inquiry. He

qoncedes that, according to the well recognised rule of

construction of the provisions of a Constitution, the

legislative heads should be construed very liberally.

and that it mµst be assufued th::i,t tht3 Constitution

iµtended to give ~o the appropriate legislature not only

the power to legislate-with respect to the_ particular,

legislative topic

but

also with respect to all matters

ancillary thereto. Indeed the v~ry use of the 'Y<?rds

"":'ith·r,espect to"· in Art.,246 supports this principle

. ' ~7 .

• •

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290 SUPREME COURT REPORTS [1959}

I958 of liberal interpretation. He, however, points out that

Sh

. R--. . the law, which the appropriate legislature is em­

" am Rmhna d k d h · b · h

· Dal..lia powere to ma e un er t ese entries must e wit

•

v. respect to inquiries for the purposes of any of the

Shri Justice matters in the relevant lists and it is urged that the

s. R. Tendolkar words "for the purpose of" make it abundantly clear

e;. Othm that the law with respect to inquiries to be made under

these two entries

must be for the purpose of future Das c. J. legislation with respect to any of the legislative heads

in

the .relevant lists. In other words, the argument is

that under these two entries the appropriate legis­

lature

may make a law authorising the constitution of

a Board or Commission of Inquiry to inquire into and

ascertain facts so as to enable such legislature to

undertake legislation with respect to any of the legis­

lative topics

in the relevant lists to secure

s~me pl]blic

benefit or advantage or to prevent some evil or harm

befalling the public and thereby to protect the public

from

the same. But if an inquiry becomes necessary

for, say, administrative purposes, a law with respect

to such an inquiry cannot be made under these two

entries. And

far less can a law be made with respect

to an inquiry into any wrongs alleged to have been

committed by an individual person or company or a

group of them for the purpose of punishing the sus­

pected delinquent. This argument

has found favour

with

the High Court, but we are, with great respect,

unable

to accept this view. To adopt this view will

mean adding words

to the two entries so as to read

"inquiries ......... for the purpose of future legislation

with respect to any of the matters in ......... " the List

or Lists mentioned therein. The matter, however, does

not rest here. A careful perusal

of the language used

in

entry 45 in List III does, in our view, clinch the /i

matter. Entry 45 in List II~, which is the Concurrent

List, speaks, mter alia, of " inquiries ............ for the

purpose of any of the matters in List II or List III.

Under Art. 246 read with this •entry, Parliament as

" well as the Legislature of a State may make a law

with respect

to

" inquiries for the purpose of any of the

matters in List IL" Parliament, under Art. 246, has

no power to make a law with respect to any of the

•

•

•

...

,.

S.C.R. SUPREME COURT REPORTS 291

matters enumerated in J.,ist II. · Therefore, when

x958

Parliament makes a law under Art. 246 read with Shri Ram Krishn"

entry 45 in List III with respect to an inquiry for the Dalmia

purposes of any of the matters in List II, such law v .•

can never be one for inquiry for the purpose of future Shri Justice

legislation by Parlia.ment with respect to any of s. R. Tendolkar

those matters in List II. Clearly Parliament can make

Q;. Othdfs

a. law for inquiry for the purpose of any of the Das c. J.

matters in List II and none.the less so though Parlia-

ment cannot legislatti with respect to such matters

and though none of the State Legislatures wants to

Legislate on such matters. In our opinion, therefore,

the law to be made by the appropriate legislature with ·

respect to the two legislative entries referred to above

may cover inquiries into any aspect of the matters

enumerated in any. of the lists mentioned therein and

is n~t confined to those matters as mere heads of legis-

lative topic. Quite conceivably the law with respect

to inquiries for the purpose of any of the matters in

the lists may also be for administrative purposes and

the scope of the inquiry under such a law will cover

all matters which

may properly be regarded as ancil-

lary to such inquiries. The words

" for the purposes

of" indicate that the scope of the inquiry is not

necessarily limited to the particular or specific matt'ers

enumerated

in any of the entries in the list concerned

but may extend to inquiries into collateral matters

which may be necessary for the purpose, legislative or

otherwise, of those

particular matters. We are unable,

therefore, to hold -that the inquiry which may be set

up by a law made under these two entries is, in its

scope or ambit, limited to future legislative purpases

only.

Learned counsel

then

takes us through the different

heads

of inquiry enumerated

in the notification and

urges that the inquiry is neither for .any legislative

nor for

any administrative purpose, but is a clear

usurpation

of the functions of the judiciary. The

argument is

that

l?arliam9nt in authorising the

appQintment of a Commission and the Government in

appointing this Commission have arrogated t_o them­

selves judicial.powers which do not, in tlie very nature

•

•

292 SUPREME COURT REPORTS [1959]

r95B of thing~, beiong to their respective domains w;hic'h

Sh . R K .

1

must be purely legislative and executive respect1vely.

" n",;;'m;;'"""It is contended that Parliament cannot convert itself

v. into a court except for the rare cases of dealing with

Shri Justice breaches of its own privileges for which it may punish

s. R. Tendolkar the delinquent by committal for contempt or of proceed-

& Othm ings by way of impeachment. It cannot, it is urged,

undertake to inquire or investigate into alleged indivi·

Das C. ].

•

dual wrongs or private disputes nor can it bring the

supposed culprit to book or gather materials for the,

purpose of initiating proceedings, civil or criminal,

against him, because such inquiry or investigation is

·clearly not in aid of legislation. It is argued that if a

criminal prosecution is to be launched,

the preliminary

investigation

must be held under the

Code of Criminal

Procedure

and it should not be open to any legislature

to start investigation on its own and

thereby-to

deprive the citizen of the normal protection afford­

ed to him by the provi8ions of the Code of Crimi­

nal Procedure. This line of reasoning also found

favour with the High Court which, after con­

sidering the provisions of the Act and the eleven

heads

of inquiry enumerated in the notification,

came

to the conclusion that the last portion of

cl.

0

(10) beginning with the words "and the action"

and ending with the words " in future cases " were

ultra vires the Act and that the Government was not

competent to require the Commission to hold any ·

inquiry or make any report with regard to the matters

covered by that portion of cl. (10), for such inquiry or

report amounts to a 1,1surpation of the judicial powers

of ~he Union or the State as the case may be .

While we find ourselves

in partial agreement with

the actual conclusion of the High

Court on this point,

we are,

with great respect, unable to accept the line of

reasoning ad

VMJ.ced by learned counsel for the peti.

tioners, which

has been accepted by the High

Court

· for more reasons than one. In tpe first place neither

Parliament nor the Government has itself undertaken

any inquiry at all. Parliament has made a law with

respect .to inquiry and has left it to the appropriate

Government to set up a Commission of Inquiry under

•

•

•.

i

, "

I

.........

S.C.R. SUPREME COURT REPORTS 293

eertain circumstances referred to in s. 3 of the Act. I958

The Central Government, in its . turn, has, in exercise -. .

of the. powers conferred on it by the Act, set up this Shri Ram f!rishna

Commission. It is, therefore, not correct to say that Da~·~

Parliament or the Government itself has undertaken shri Justice

to hold any inquiry. In the second place the con-s. R. Tendolkar

clusion that the last portion of cl. (10) is bad <1;-Others

because it signifies that Parliament or the Government

had usurped the functions of the judiciary appears to Das c. J.

us, with respect, to be inconsistent with the conclusion

arrived at in a later part of the judgment that as the

Commission can only make recommendations which

are .not enforceable proprio vigore there can be no

question of usurpation

of judicial functions. As has

been stated by the High

Court itself in the latter part

of its judgment, the only power that the Commission

has .is to inquire and make a report and embody there-

in its recommendations. The Commission has no

power

of adjudication in the sense of passing an order

which

can be enforced proprio vigore. A clear distinc-

tion must, on the authorities, be drawn between a

decision which,

by itself, has no force and no penal

effect

and a decision which becomes enforceable

immediately

or which may become enforceable by

some action being taken. Therefore, as the

Commis-

sion we are concerned with is merely to investigate

and record its findings and recommendations without

having any power to enforce them, the inquiry or

report cannot be looked upon as a judicial inquiry in

the sense of its being an exercise of judicial function

properly

so called and consequently the question of

usurpation by Parliament or the Government of

.the

powers of the judicial organs of the Union of India

cannot arise on the facts of this case and the elaborate

discussion

of the American authorities founded on the

categorical separation of powers

expre840ly provided by

and under the American Constitution appears to us,

with respect, wholl:y inappropriate and unnecessary

and we do not feel called upon, on the present occa-

sion., to express any opinion on the question whether

even in the absence of a specific provision for separa-

tion of power~ in our Constitution, such as there is

•

•

•

294 SUPREME COURT REPORTS [1959]

1

95

8

under the American Constitution, some such di·dsion

h

.

R-K . h of powers-legislative, executive and judicial-is,

5

" am '" na h 1 · l' · · C ' · I h ·

Dt1lmi• nevert e ess imp ic1t m our onstitut10n. n t e view

•

• '"· we have taken it is also not necessary for us to

Sh» Juslice consider whether, had the Act conferred on the ·appro-

s. R. Tendolkar priate Government power to set up a Commission of

&-oihm Inquiry with judicial powers, such law could not,

subject, of course, to the other provisions of the Con.

Das C. ]. b d

stitution, e supporte as a law made under some

entry in List I or List III authol'ising the setting up

of courts read with these two entries, for a legislation

may well be founded on several entries.

Learned Counsel appearing for the petitioners, who

are appellants in Civil Appeals Nos. 456 and 457 of

1957, goes as far as to say that while the Commission

may find facts on which the Government may take

action, legislative or executive, although he does-not

concede the latter kind of action to be contemplated, .

the Commission cannot be asked to suggest any

measure, legislative or executive, to be taken by the

appropriate Government. We are unable to accept

the proposition so widely enunciated. -An inquiry

necessarily involves investigation into facts and

necessitates the collection of material facts from the

ev{dence adduced before or brought to the notice of

the person or body conducting the inquiry and the

recording of its findings on those facts in its report

cannot but be regarded as ancillary to the inquiry

itself, for the inquiry becomes useless unless the

findings of the inquiring body are made available

to the Government which set up the inquiry. It

is, •in our judgment, equally ancillary that the per­

son or body conducting

the inquiry should

ex­

press its own view on the facts found by it for the

consideration of the appropriate Government in order

to enable it tlil take such measure as it may think fit

to do. The whole purpose of setting up of a Com­

mission of Inquiry consisting • of experts will be

frustrated and the elaborate process of inquiry will be

deprived

of its utility if the opinion and the ad

vice of

the expert body as to the measures the situation dis­

closed calls for

cannot be placed before

t~e Government

•

•

,. .

'

J

'

.,_

S.C.R~ SUPREME COURT REPORTS 295

for consideration notwithstanding th.at doing so x95B

· cannot be to the prejudice of anybody because it has Shri Rom Krishna

no force of its own. In our view the recommendations Dolmi~

of a Commission of Inquiry are of great imp9rtance to •·

the Government iR order to enable it to make up its Shri Jusliee

mind as to what legislative _or administrative measures

5

· R. TJndo:har

.S. Others

should be adopted to eradicate the evil found or to

implement the beneficial objects it has in view. From Dos c. J.

this point of view, tpere can be no objection even to

the Commission of Inquiry recommending the imposi-

tion of some form

of punishment which will, in its

opinion, be sufficiently deterrent to delinquents in

future. But seeing that the Commission of Inquiry has

no judicial powers

and its report will purely be

recom­

mendatory and not effective proprio vigore and the

stat~ment made by any person before the Commission

of Inquiry is, under s. 6 of the Act, wholly inadmis-

sible in evidence

in any future proceedings, civil or

criminal,. there

can be no point in the Commission of

Inquiry making recommendations for taking any

action

" as and by way of securing redress or punish-

ment" which, in agreement with the High Court, we

think, refers, in the context, to wrongs already done or

committed, for redress or punishment for such wrongs,

if any, has to be impose.cl by a court of law properly

constituted exercising its own discretion on

the facts

and

-eircumstances, of the case and without being in

any way influenced by the view of any person or body,

howsoever august or high powered

it may be. Having

regard to all these considerations it appears to us

that·

only that portion of the last part of cl. (10) which calls

upon the Commission of Inquiry to niake recommenda-

tions about

the action to be taken

" as and by way of

securing redress or punishment ", cannot be said to be

at all necessary for or ancillary to the purposes of the

Commission. In our view the words in the latter part

of the section, namely, "as and by way of securing

redress

or

punishment", clearly go outside the scope

of the Act and such provision is not covered by the

two legislative entries and should, therefore, be deleted.

So deleted the latter portion of cl. (10) would read-

" ii.nd the action which in the opinion of the Commission

•

•

•

296 SUPREME COURT REPORTS (1959]

z958 should be taken .................................... to act as·a

Sh

· R-K . h preventive in future cases ".

ri am ris na . .

l!almia Delet10n of the words ment10ned above from cl. (10)

v. raises the question of severability. We find ourselves

Shri Justi" in substantial agreement with the reasons given by

s. R. Tendolk•r the High Court on this point and we hold that the

& Others efficacy of the notification is in no way affected by the

deletion -of the offending words mentioned above and

Das C. ].

there is no reason to think that the Government would

not have issued the notification ·without those words.

Those words do

not appear to us to be inextricably

wound

up with the texture of the entire notification.

The principal ground urged in support of the con­

tention as to the invalidity of the Act and/or the

notification is founded on Art. 14 of the Constitution.

In Budhan

Chaudhry v. The State of Bihar (

1

)

a pon­

stitution Bench of seven Judges of this Court at

pages 1048-49 explained the true meaning and scope

of Art. 14 as follows:

"The provisions of Article 14 of the Constitution

have come up for discussion before this court in a

number of cases, namely, Chiranjit Lal Chaudhuri v.

The Union of India (

2

), The State of Bombay v. F. N.

Ba'tsara ('), The State of West Bengal v. Anwar Ali Sar­

kar('), Kathi Raning Rawat.

v. The State of Sau­

rashtra ('), Lachmandas Kewalram Ahuja

v. The State

of Bombay ("), Qasim Raz vi v. The State of Hyderabad (')

and Habeeb Mohamad v. The State of Hyderabad (').

It is, therefore, not necessary to enter upon any

lengthy discussion as to the meaning, scope and effect

• of the article in question. It is now well established

that while article 14 forbids class legislation, it does

not forbid reasonable classification for the purposes

of legislation. In order, however, to pass the test of

permissible cla.ssification two conditions must be ful­

filled, namely, (i)

that the classification

·must be

founded

on an intelligible differentia which

distin·

guishes persons or things that ltre grouped together

•

(1) [1955] 1 S.C.R. IOH.

(3) [1951] S.C.R. 682.

(5) [1952] S.C.R. 435·

(7J [1953J s.c.R. 581 •

(2) [1950] S.C.R. 869. •

(4) [1952] s.c. R. 284.

(6) [1952] S.C.R. 710.

(S) [19,;3] s.c.R. 661.

•

•-

S.C.R. SUPREME COURT REPORTS 297

from others left out of the group and, (ii) that that r95S . .

differentia must have a rational relation to the object Shri Rani Krishna

sought to be achieved by the statute in question. The Dfllmill

classification may be founded on different bases, v. •

namely, geographical, or according to objects or Shri Justice

occupations or the like. \Vhat is necessary is that

5

· R. Tendolkar

& Others

there must be a nexus between the basis of classifica-

'eion and the object of the Act under consideration. It Das c. J.

is also well established by the decisions of this Court

that article 14 condemns discrimination not only by a

substantive law

but also by a law of

procedure."

The principle enunciated above has been consistently

adopted

and applied in subsequent cases. The

deci­

sions of this Court further establish-

. (a) that a law may be constitutional even though

it relates to a single individual if, on account of some

spectal circumstances or reasons applicable

to him and

not applicable to others, that single individual may be

treated as a class by himself;

(b)

that there is always a presumption in favour

of the constitutionality of an enactment and the

burden is upon him who attacks it to show that there

has been a clear transgression of the constitutional

principles ;

. •

(c) that it must be presumed that the legislature

1

understands and correctly a ppr. eciates the need of itsJ

own people, that its laws are directed to problems

made manifest by experience ·and that its discrimina­

tions are based on. adequate grounds;

(d) that the legislature is free to recognise degrees

of harm and may confine its restrictions to those cases

where

the need is deemed to

be the clearest ;

(e) that in order to sustain the presumption of

constitutionality the court may take into consideration

matters of common knowledge, matters of common

report,

the history of the times and

may" assume every

state of facts which can be conceived existing at the

time of legislation ; and

(f) that while good faith and knowledge of the

existing conditions on the part of a legislature are to

be presumed, if there is nothing on the face· of the

•

•

•

298 SUPREME COURT REPORTS [1959]

z958 law or the surrounding circumstances brought to the

. , . notice of the court on which the classification may

Shn 1;;'7 Anshna reasonably be regarded as based, the presumption of

"v'."'" constitutionality cannot be carried to the extent of

SMi Justice always holding that there must be some undisclosed

s. R. Tendotkar and unknown reasons for subjecting certain indi-

& Othm viduals or corporations to hostile or discriminating

Das C. ].

legislation. •

The above principles will have to be constantly borne

in mind by the court when it is called upon to adjudge

the constitutionality of any particular law attack­

ed as discriminatory and violative of the equal pro­

tection of the laws.

A close perusal

of the decisions of this

Court in

which the above principles have been enunciated and

applied by this Court will also show that a stiotute

which may come up for consideration on a question

of its validity under Art. 14 of the Constitution,

may be placed in one or other of the following five

classes:-

(i) A. statute may itself indicate the persons or

things to whom its provisions are intended to apply

and the basis of the classification of such persons or

things may appear on the face of the statute or may

be gathered from the sorrounding circumstances known

to or brought to the notice of the court. In determin­

ing the validity or otherwise of such a statute the court

has to examine whether such classification is or can be

reasonably regarded as based upo:ii some differentia

which distinguishes such persons

or things grouped • together from those left out of the group and whether

such differentia has a reasonable relation to the object

sought to be achieved by the statute, no matter

whether the provisions of the statute are intended

to apply onl¥ to a particular person or thing or

only to a certain class of persons or things. Where the

court finds that the classificatjon satisfies the tests,

the court will uphold the validity of the law, as it did

in Ohiranjitlal Ohowdhri v. The Union of India (1), The

State of Bombay

v. F. N.

Balsam('), Kedar Nath

(1) [1950) S.C.R 869. (2) [r95;J S.C.R. 682,

• •

-

•

'

,,,,...

S.C.R. SUPREME COURT REPORTS 299

Bajoria v. The State of West Bengal (1), V. M. Syed I958

J.1fohammad & Company v. The State of Andhra (

2

) -

d B dha Oh dh Th S

,f B 'h (3) Shri Ram Krishna

an u n ou ry v. . e ta:te OJ i. a:r . . Dalmin

(ii) A statute may direct its prov1s10ns agarnst v.

one individual person or thing or to several individual Shri Justice

persons or things but no reasonable basis of classifica-s. R. Tendolilar

tion may appear on the face of it or be deducible from &-Others

1'he surrounding circumstances, or matters of common Das c. J.

knowledge. In such a case the court will strike down

the law as an instanc~ of naked discrimination, as it

did in Ameerunnissa Begum v. Mahboob Begum(') and

Ramprasad Narain Sahi v. The State of Bihar (5).

(iii) A statute may not make any classification of

the persons or things for the purpose of applying its

provisions but may leave it to the discretion of the

Government to select and classify persons or things to

whoru its provisions are to apply. In determining

the question of the validity or otherwise of such a

statute the court will not strike down the law out of

hand only because no classification appears on its face

or because a discretion is given to the Government to

make the selection or classification but will go on to

examine and ascertain if the statute has laid down

any principle or policy for the guidance of t.J:ie

exercise of discretion by the Government in the matter

of the selection or classification. After such scrutiny

the court will strike down the statute if it does not

lay down . any principle or policy for guiding the

exercise of discretion by the Government.in the matter

of selection or classification, on the ground that the

statute provides for the delegation of arbitrary and

uncontrolled power to . the Government so as 'to

enable it to discriminate between persons or. things

similarly sitµate and that, therefore, the discrimina-

tion is inherent 1n the statute itself. In such a .case

the court will strike down both the law as well as

the executive action taken under such law, as it did in

State of West Bengal 47. Anwar Ali Sarkar (

6

), Dwarka

Prasad Laxmi Narain v. The State of Uttar Pradesh(7)

. (~) [1954] S.C.R. 30. (2) [1954] S.C.R. rr17.

(3) [1955] 1 S.C.R 1045. (4) [1953] S.C.R. 404.

(5) [1953] S.C.I;{. 1129. (6) [1952] S.C.H.. 28+

(7) [1954) S.C.R. 803.

•

•

•

300 SUPREME COURT REPORTS [1959]

z95B and Dhirendra Krishna 111andal v. The Superintendent

Sh

. R K . , a:nd Remembrancer o~ Legal A ~'airs (

1

).

ri atn ris1111a , 'J JJ

lJalmia (1v) A statute mav not make a classification of the

v. persons or things f~r the purpose of applying its

Shri Justfrc provisions and may leave it to the discretion of the

s. R. 1'endollw t1overnment to select and classify the persons or things

& Others h · · · 1 b h

to w om its prov1s10ns are to app y ut may at t e

Das c. J. same time lay down a policy or principle for th!l

guidance of the exercise of discretion by the Govern­

ment in the matter.of such selection or classification,

the court will uphold the law as constitutional, as it

did in Katki Baning Rawat v. The· State of Sau­

rashtra (

2

).

(v) A statute may not make a classification of the pei·sons or things to whom their provisions are intend­

ed to apply and leave it to the discretion of the

Government to select or classify the persons or tilings

for applying those provisions according to the policy

or the principle laid down by the · statute itself for

guidance

of the exercise of discretion by the Govern­

ment in the matter of such selection or classificatioi1.

If the Government in making the selection or

classifi­

cation does not proceed on or follow such policy or

principle, it has been held by \;his Court, e. g., in Kathi

Baning Rawat v. The State of Saurashtra (')that in

such a case the executive action but not the statute

should be condemned as unconstitutional.

In the light of the foregoing discussions the question

at once arises: In what category does the Act or the

notification impugned in these appeals fall ?

• ,lt will be apparent from its long title that the

purpose of the Act is to provide for the appointment

of Commissions of Inquiry and for vesting such Com­

missions with certain powers. Section 3 empowers·

the appropriate Government, in certain circumstances

therein mentioned', to appoint a Commission of Inquiry

for the purpose of making an inquiry into any definite

matter of public importance :!.nd performing such

functions

within such time as may be specified in the

notification. It seems clear-. and it has not 'been

controverted-that on a proper construction of this

(1) [1955] I

S.C.R 22~. (2) [1952]"S.C R. 435.

•

•

~

' '

.......

..

'

y

,

r 0

s:cJ~,. SUPREME COURT REPORTS 301

section, the fonctions the performance of which is r958

contemplated must be such as are ancillary to and in -

"d f h · · •t lf d t b d f Sltri Rani Krishna

ai 0 t e mqmry i se an canno e. rea as .a u.nc- Dalmi"

tion independent of or unconnected with such mqmry. v.

That being the position, as we conceive it to be, the Shri Justice

question arises as to the scope and ambit of the power s. R. Tendolkar

which is conferred by it on the appropriate Govern-& Othm

fnent. The answer is furnished by the statute itself,

for

s. 3 indicates that the appropriate Government Das c. f.

can appoint a

Comfnission of Inquiry only for the

purpose of making an inquiry into any definite matter

Of public importance and into no other matter. Iii

other words the subject matter of the inquiry can only

be a definite

matter of public importance. The appro-priate Government, it follows, is not authorised by this

section to

appoint a Commission for the purpose of

holding an inquiry into any other matter. Learned Solicitor-Genel'al, in the premises, submits that the

section itself on the face of it, makes a classification so

that this statute falls within the first category

meritioned above and contends that this classification

of· things is based on an intelligible differentia which

has a reasonable relation to the object sought to be

achieved by it, for a definite

matter of public

impo1't-

ance may well call for an inquiry by a Commission.

In the alternative the learned Solicitor-General urges

that in any case the section itself quite clearly indi-

cates

that the policy of Parliament is to provide for

the appointment of Commissions of Inquiry

to· inquire

into

any definite matter of public importance and

that as there is no knowing when, where or how any

such

matter may crop up Parliament considers' it .

necessary or expedient to leave it to the appropriate

Government to take action as and when the appro-

priate moment will arrive. In the tempo · of the

prevailing conditions in modern society" events occur

which were

never foreseen and it is impossible for

Parliament or any

legmlature to anticipate all events

or to provide for all eventualities and, ther~fore, it

musir leave the duty of taking the necessary action to

the appropriate Government. This delegation of

authority, however, is not unguided or uncontrolled,

•

•

•

I

302 SUPREME COURT REPORTS [1959)

z958 for the discretion given to the appropriate Govern-

-

ment to set up a Commission of Inquiry must be

Shri Ram [{rislma .d d b h 1. 1 .d d 1

IJ

1

,.. gm e y t e po icy a1 own, name y, that the

•

"v. •a executive action of setting up a Commission of Inquiry

Shri Jitsti" rnust conform to the condition of the section, that is

s. R. T'ndolkar to say, that there must exist a definite matter of public

& Otl.e,, importance into which an inquiry is, in the opinion of

Das C. ].

the appropriate Government, necessary or is require<i

by a resolution in that behalf passed by the House of

the People or the Legislative Aesembly of the State.

If the preambles or the provisions of the statutes

classed under. the first category mentioned above

could be read as making a reasonable classification

satisfying

the requirements of Art. 14 and if the

preamble to the statute considered in the case ·of

Kathi Raning Rawat (

1

)

could be construed as laying

down sufficiently clearly a policy or principle

for• the

guidance of the executive, what objection can there be

to construing

s. 3 of the Act now under our considera­

tion as also making a reasonable classification or at

any rate as declaring with sufficient clarity the

policy

of Parliament and laying down a principle for the

guidance of the exercise of the powers conforrcd on

the.

appropriate Government so as to bring this statute

at least in the fourth category, if not also in the first

category ?

On the authorities, as they stand, it cannot

be said that an arbitrary and uncontrolled power has

been delegated to the appropriate Government and

that, therefore, the law itself is bad.

·Learned counsel for the petitioners next contends

that if the Act is good in the sense thatl t has declared

its 'policy and laid down some principle for the

guidance of the Government in the exercise of the

power conferred on it, the appropriate Government

has failed to exercise its discretion properly on the

basis of a rea~onable classification. Article 14 pro­

tects all persons from discrimination by the legislative

as well as by the executive organ.of the State. "8tate"

is defined in Art. 12 as including the Government and

"law" is defined in Art. 13 as including any noti:Pica­

tion or order. It has to be conceded, therefore, that

(•) [1952] S.C.R. 435·

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S.C.R. SUPREME COURT REPORTS 303

it is open to the petitioners also to question the consti-r

95

s

tutionality of the notification. The attack against Shri Ram Krishna

the notification is that the Government has not pro-Dalmii

perly implemented the policy or followed the principle v.

laid down in the Act and has consequently transgress-Shri Justice

ed the bounds of the authority delegated to it. It is s. R. Tendolkar

& Others

pointed out that in March, 1946, one Shri Tricumdas

1hvarkadas, a solicitor of Bombay, had been appoint- Das c. J.

ed an officer on Special Duty to indicate the lines on

which

the Indian

Ctimpanies Act was to be revised.

He made a report which was, however, incomplete in

certain particulars. Thereupon the Government

appointed Shri Thiruvenkatachari, the Advocate-

General

of Madras, to make further inquiry. The last

mentioned gentleman submitted his report and on the

basis of that report, it is said, a memorandum contain-

ing

tentative proposals was prepared and circulated to

elicit the opinions of various organisations.

On

October 28, 1950, a Committee called the Indian Com-

pany Law Committee-popularly known as the Bhaba

Committee-was appointed. That Committee went

round and collected materials and made its compre-

hensive report on

the basis of which the new

Indi;1n

Companies Act has recently been remodelled. -As

nothing new has since then happened why, it is asked,

should

any further inquiry be made ? The conclusion

is pressed upon us

that there can, in the circumstances,

be no definite

matter of public importance which can

possibly call for

an inquiry. We find no force in this

argument.

In the first place the Bhaba

Committee at

p. 29 of its Report recommended that further inquiries •

may, in future, have to be made regarding some

matters relating to Companies and, therefore, the

necessity for fresh inquiry cannot be ruled out. In

the next place the appropriate Government is em-

powered

to appoint a Commission of Inquiry if, in its

opinion, it is necessary so to do.

'.l.'he preambles to

the notification recite that certain matters enumerated

under five heads had been made to appear to the

Centfal Government, in consequence of which the

Central Government had come to the conclusion that·

there should be-a full inquiry into those matters which,

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304 SUPREME COURT REPORTS [1959]

'95

8

in its opinion, were definite matters of public importc

shri Ram J(rislma ance both by reason of the grave consequences which

•

falmia appeared to have ensued to the investing public and

Y· for determining such measures as might be deemed

Shri Justice necessary in order to prevent a recurrence thereof.

S. R. Tendolka1'

& Oth:::rs

Das C. j.

Parliament in its wisdom has left the matter of the

setting up of a Commission of Inquiry to the discre­

tion of the appropriate Government and if the apprcr­

priate Government has formed the opinion that a

definite

matter of public

importance has arisen and

calls for an inquiry the court will not lightly brush

a~ the opinion. .

~~~.arned counsel for the petitioners argues that

granting that the question as to the necessity for con­

stituting a Commission of Inquiry has been left to the

subjective determination of the appropriate Govern--

ment the actual setting up of a Commission is cdndi­

tioned by the existence of some definite matter of

public importance. If there be no such definite matter

of public importance in existence then no question of

necessity for · appointing a Commission can arise.

Reference is

then made to the first preamble to the

notification and it is pointed out that all the matters

a!feged to have been made to appear to the Central

Government relate to some supposed act or conduct of

the petitioners. The contention is repeated that the act and conduct of individual persons can never be

regarded

as definite matters of public importance. We a re unable to accept this argument as sound, for

as ~ve have already stated, the act or conduct of indi­

viduals may assume such dangerous proportions as

may well affoct the public well-being and thus become

a definite

matter of public importance.

\Ve do not,

therefore, agree that the notification should be struck

down for the absence of a definite matter of public

importance eaning for

an inquiry.

The point which is next urged in support of these

appeals and which has given ns oonsiderable anxiety is

that the petitioners and their companies have been

arbitrarily singled out for the purpose of hostile' and

discriminatory treatment and subjected to

a harassing

and oppressive inquiry. The provisions of Art. l*,

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S.C.R. SUPREME COURT REPORTS 305

it is contended, protect every person against dis- I95

8

crimination by the State,! namely, against the law as

51

. R-K . ,

II h

· · I d h' t' ·d m am ris,ma

we . as t e executive act10n an t is protec wn exten s Datm;a

to State action at all its stages. The petitioners' griev- v.

ance is that the G·overnment had started discrin1ina-Shri Justice.

tion even at the· earliest stage when it conceived the s. R. Tendnlkar

idea of issuing the notification. Reference is made to G Others

the Memorandum filed by the Bombay Shareholders'

Association before

the Bhaba Committee showing

that the same or

simll.ar allegations had been made not

only against the petitioners and their companies but

against other businessmen a,n.d their companies and

that although the petitioners and their companies and

those other persons and their companies were thus

similarly situate, in that allegations had been made

against both, the Government arbitrarily applied the

Act"to the petitioners and their companies and issued

the notification concernin~them but left out the others

from its operation. It il, true that the notification

primarily or even solely affects the petitioners and

their companies but it cannot ·be overlooked that

Parliament having left the selective application of the

Act to the discretion of the appropriate Government,

the latter must of necessity take its decision on the

materials available to it and the opinion it forms

thereon.

The appropriate Government cannot in such

matters be expected to sit down and hold a judicial

inquiry into the truth of the materials brought before

it,

and examine the informants on oath in the presence

of

the parties who are or may

b~ likely to. be affected

Das C. ].

by its decision. In matters of this kind the appro- •

priate Government has of necessity to act upon the

information available to it.' It is the best judge of

the reliability of its source Of information and if it acts

in good faith on the materials brought to its notice

and honestly comes to the conclusion tli.at the act and

conduct of the petitioners and the affairs of their

companies cor1stitute·a definite matter of public im-

portance calling for an inquiry with a view to devise

mea,,ures for preventing the recurrence of such evil,

this Court, not being in possessi01i of all the facts will

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306 SUPREME COURT REPORTS [1959]

1

9ss we apprehend, be slow to adjudge the executive action

Sh

. R-K .

1 to be bad and illegal.

\Ve are not unmindful of the

ri am "'mar t th t "d d" . h b

llalmia 'ac · a a very WI e IScret1011ary power as een

•

,.. conferred on the Government and, indeed, the contem-

'.51,,i Justice plation that such wide powers in the hands of/ the

S. R. Tendolkar executive may in some cases be misused or abused

& Othm a11cl turned into an engine of oppression has caused

Das C. ].

considerable anxiety in our mind. Nevertheless, th!!

bare 'possibility that the powers may be misused or

abused cannot per se induce tlfe court to deny the

existence of the powers. It cannot be overlooked that

Parliament has confided this discretion, not to any

petty official but to the appropriate Government itself

to take action in conformity with the policy and prin­

eiple laid clown in

the Act. As this

Court has said in

Matajog Dobey v. H. C. Bhari ('), "a discretionary

power is

not necessarily a discriminatory power

•and

that abuse of power is not/to be easily assumed where

the discretion is vested in the Government and not in a

minor official." w·e feel sure, however, that if this law

is administered

by the Government

"with an evil eye

and an unequal hand" or for an oblique or unworthy

purpose the arms of this Court will be long enough to

rea.ch it and to strike down such abuse with a heavy

hand. What, then, we inquire, are the salient facts

here? The Central Government appointed investi­

gators to scrutinise

the affairs of three of the peti­

tioners' concerns. Those investigators

had made their

reports to the

Central Government. · The Central

Government had also, the Bha ba Committee Report

and all the Memoranda filed before that Committee. It

may also have had othei: information available to it

and on those materials it formed its opinion that the

act and conduct of the petitioners and the affairs

of their companies constituted a definite matter I of

public importai1ce which required a full inquiry. Up to

this stage there is no question of legal proof of the

allegations against the petitioners as in a court of law.

The only question is : do t,hose allegations if honestly

believed, constitute a definite

matter of public

import­

ance? We are unable to say that they do not.

(1) (1955] z S.C.R. 925, 932.

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S.C.R. SUPREME COURT REPORTS 307

Reference is again made to the several matters r95s

enumerated in the five clauses set out in the first Sh . R-K .

1

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preamble to the notification and it is urged that those " Da~;miaris ma ·

matters do not at all disclose any intelligible differ- v. •

entia on the basis of which the petitioners and their Shri Justice

companies can be grouped together as a class. On s. R. Tendolkar

the part of the Union of India reference is made to the & Others

affidavits affirmed by Shri H. M. Patel, the Principal c

Das . ].

Secretary to the Finance Ministry of the Government of

India purporting to silt out in detail as the baclrgronnd

thereof, the circumstances which led to the issue of

the impugned notification and the matters recited

therein

and the several reports referred to in the said

affidavit. Learned counsel for

the petitioners take

the objection that reference cannot be made to any

extraneous matter and that the basis of classification

nrn~ appear on the face of the notification itself and

reliance is placed on certain observations in the dis­

senting judgments in Chiranjitlal Chowdhury's case (1)

and in item (2) of the summary given by Fazl Ali J.

in his judgment in F. N. Balsara's case("). In Chiranjit­

lal Chowdhury' s case (1) the majority of the Court read

the preamble to the Ordinance which was replaced by

the Act which was under consideration there as pp.rt

of the Act and considered the recitals, reinforced as

they were by the presumption of validity of the Act,

as

prima facie sufficient to constitute an intelligible

basis for regarding

the company concerned as a

class

by itself and held that the petitioner there

had not discharged the onus that was on him. The

dissenting Judges, after pointing out that the petition

and the affidavit did not give any indication as· to

the differentia on the basis of which the company had

been singled out, went on to say that the statute also

did

not on the face of it indicate any basis of classifica-

tion. This was included in cl.

(2) of

the summary set

out in the judgment in F. N. Balsara's case("). Those

observations cannot, • therefore, be read as meaning

that the classification must always appear on the face

of the law itself and that reference cannot be made to

(1) [r550] S.C.R. 869. (2) [r951J S.C.R. 682.

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308 SUPREME COURT REPORTS [1959]

z95B any extraneous materials. In fact in Chiranjitlal

,

1

. R-I< . h Chowdhury's case (

1

)

parliamentary proceedings, in so far

··'"' am "' na h d · t d th d' . d

· Dalmia · as t ey eprn e · e surroun mg Circumstances an

v. furnished the background, were referred to. In Kathi

Shri Justico Raning Rawat' s case (') the hearing was adjourned in

s. R. Tendolkar order to enable the respondent to put in an affidavit

r~ Others setting forth the material circumstances. In Kedarnath

J

Ba;oria's case (') the situation brought about by the-

Das C. . '.J

war conditions was taken notice of. The same may

be said of the cases of A. Thangci Kunju Musaliar v.

V. Venkitachalam Patti (') and Pan:nalal Binjraj v.

Union of India('): In our judgment, therefore, there

can be no objection to the matters brought to the

notice of the court by the affidavit of Shri H. M. Patel

being taken into consideration along with the matters

specified in the notification in order to ascertain

whether there was any valid basis for treating the peti­

tioners

and their companies as a class by themselves.

Learned counsel for the petitioners next urges that

even if the matters referred to in

Shri H. M. Patel's

affidavits and those appearing on the face of the

notification are taken into consideration one can­

not deduce therefrom any differentia which may

be . taken to distinguish the petitioners and their

companies from· other persons and their companies.

The qualities and characteristics imputed to the peti­

tioners

and their companies are not at all peculiar or

exclusive

to them but are to be found equally in other

persons and companies and yet they and their com­

panies

have been singled out for hostile and discrimi­

natory treatment leaving out other persons and

companies which are similarly situate. There is no

force

in this argument. Parliament has confided the

task of the selective application of the law to the

appropriate Government and it is, therefore for the

appropriate

Gt>vernment to exercise its discretion in

the matter. It is to be expected-and, until the

contrary is proved, it is to be presumed-that the

Government, which is responsible to Parliament, will

act honestly, properly and in conformity wit.ho the

(1) [1950] S.C.R. 869. (2) [1952] S.C.R 435.

(3) [1954] S.C.R. 30. (4) [1955] 2 s.c,R. 1196.

(5) [1957) S.C.R. 23J.

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B.C.R. SUPREME COURT REPORTS 309

policy and principle laid down by Parliament. It '95

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mav well be that the Central Government thought

1

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that even if one or, more of the particular qua rtres Dalmia.

and characteristics attributed to the petitioners and v.

their companies may be found in another person or Shri Justice

company, the combination of· those qualities and s. R. Tendolkar

characteristics which it thought were present in the & Others

'"'titioners and their companies was of a unique nature c

1 .r-- Das . .

and was not present in any other person or company.

In its appreciation o:J the material facts ptepa~atory

to the exercise of the discretion left to it by Parlia-

ment the Central Government may have thought that

the evil was more pronounced in the petitioners and

their concerns than any other person or concern and

that the need for an inquiry was more urgent and clear

in the case of the petitioners and their companies than

in tlrn case of any other person or company. What is

the gist and substance of the allegations against the

petitioners and their companies? They are that a

small group of persons had from before 1946 acquired

control over a

number of companies including a bank-

ing

company and an insurance company; that some

of these companies were private companies and the

others were public companies in which the public

had

invested considerable moneys by buying shares; that

the financial years of some of these companies were

different from those

of the others ; that the funds of

the limited companies were utilised in purchasing

shares in other companies having large reserve funds

with a view

to get control over them and to utilise

those funds for acquiring shares

in other companies or

otherwise utilise those funds for

the personal benefit

· of these individuals; that the shares were acquired on

blank transfer deeds and were not registered in the

names of the companies with whose funds they were

purchased so as to permit the same• shares to be

shown

in the balance sheets of the different companies

having different

fina.ncial years; that after 1951

several

of these companies were taken into voluntary liquig,ation or their assets were transferred to another

company under some pretended scheme of arrange­

ment or re-org~nisation; that after getting control of

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310 SUPitEl\iE COURT REPORTS [1959]

r95B a company they appointed some of themselves a.s

Shri

11

:;·Kdshna n;ianaging director or selling agent on high remunera-

lJulmia t10n and after a while cancelled such appointment on

•

· v. paying fabulous amounts as and by way of compensa-

Shn Justice tion; that funds of one company were transferred to

s "'· r,ndolkar another company to cover up the real financial posi­

& Others tion. It is needless to add other allegations to explain

Lias c. J. the matter. The question before us is not w hethe,r

the allegations made on the face of the notification

and in the affidavits filed on behalf of the Union of

India are true but whether the qualities and character­

istics, if honestly believed to be found in the petition­

ers, are so peculiar or unique as to constitute a good

and valid basis on which the petitioners and their

companies can be regarded as a class by themselves.

We are not of opinion that they do not. It is not fm;

us to say on this a pplica ti on and we do not ino fact

say or even suggest that the allegations about the

petitioners and their concerns are at all well founded.

It is sufficient for our present purpose to say that the

facts disclosed on the face of the notification itself and

the facts which ha1•e been brought to our notice by the

affidavits afford sufficient s•1pport to the presumption ·

of. constitutionality of the notification. There being

thus a presumption of validity in favour of the Act

and the notification, it is for the petitioners to allege

and prove beyond doubt that. other persons or com­

panies similarly situate have been left out and the

petitioners and their companies have been singled out

for discriminatory and hostile treatment. The petition-

ers have, in our opinion, failed to discharge that

on'lls. Indeed nowhere in the petitions is there even an

rwerment that there are other persons or companies

similarly

situate as the petitioners and their companies.

It

has to be remembered that the allegations set forth

in the memora°!J.dum submitted by the Bombay Share­

holders' Association to the Bhaba Committee have not

been proved by legal evidence. And further that

report itself contains matters which may be taken as

calculated to lend support to the view that wh~thf'r

regard is had to the combination of a variety of evils or

to their degree, the petitioners may quite conceivably

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S.C.R. SUPREME COURT REPORTS 311

be grouped as a class by themselves. In our judgment r958

the plea of the infraction of the equal protection "I . R -

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. . b t . d ., m am ris'1?ia

cause o our onst1tut10n cannot e sus a1ne · Dalmia

The next contention Is that the notification is bad, • v.

because the action of the Government in issuing it Shri Justice

was mala fide and amounted to an abuse of power. s. R. Tendalkar

Learned counsel appearing for the petitioner, who is & Others

the appellant in Civil Appeal No. 455 of 1957, m::ikes

it clear that no personal motive or illwill against the Das c. J.

petitioners is imputed to any one, but he points out

that the Bhaba Committee had been set up and the

Companies Act has been remodelled and, therefore,

the present Commission was not set up for any legiti-

mate purpose. The main idea, according to learned

counsel, was to obtain information which the.Govern-

ment could not get by following the ordinary pi·ocedure

undei' the Code of Criminal Procedure and this ulterior

motive clearly

makes the governmental action mala

fide. This point has been further

emphasise~ by

learned counsel appearing for the petitioners, who are

appellants in Civil Appeals Nos. 456 and 457 of 1957.

He has drawn our attention to the affidavits filed bv

his clients and contends that it was well-known to the

Government that none of them was concerned in pr.o-

moting or managing any of the companies and their

position being thus well-known to the Govern-

ment, their "inclusion in the notification was both

outside . the power conferred by the Government

and also constituted a mala fide exercise of the

power conferred on it. No substantial ground in

support of this point has been brought before us

and we are not satisfied that the circumstances

referred to

in the notification and the affidavits

filed

on behalf of the

Union of India, may not,

if true, be the basis of a further inq_uiry into the

matter. It will be for the Commission to inquire into

~he allegations and come to its own findings and make

its report containing its recommendations. It is not

de~ir~ble that we should say anything more on this

pomt. All that we need say is that the charge of

mala fides has not been brought home to the Govern'

ment.

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312 SUPREME COURT REPORTS [1959]

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A point was taken that the original notification was

SI

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( . , defective in that it did not fix the time within which

iri ani ris11nq h C , , ,

Dalmia t e ommrns10n was to complete its report and that a

•

v. subsequent notification fixing ·a time could not cure

Slwi Ju,tice that defect. We do not think there is any substance

s. 11. Tendoll<ar in this too. The third notification quoted 11bove

&

0

'""' amended the original notification by fixing a time.

There w11s nothing to prevent the Government fron1

Da" C. ].

issuing a fresh notification appointing a Commission

and fixing a time. If that cc1Uld be done, there was

no reason

why the same result could not be achieved

. by

the combined effect of two notifications. In any

case the amending notification t11ken together with the

original notification may be read as a fresh notifica­

tion

within the meaning of s. 3 of the Act, operative

at least

from the date of the later notification.

It is feebly argned that the notification is bad' as it

amounts to a delegation of essential legislative func­

tion., Assuming that there is delegation of legislative

function,

the Act having laid down its policy, such

delegation

of power, if any, is not vitiated at all, for

the legislation by the delegatee will have to conform

to

the policy so laid down by the Act. Lastly a

p«int is raised that the notification is bad because it

violates Art. 2:3 of the Constitution. It is frnnkly

stated by the learned counsel that this point is rather

premature at this stage and that he desires to resen-e

his client's right to raise it in future.

No

other point has been urged before us and for

reasons

stated above the appeals Nos. 455, 456 and

457 of 1957

11re dismissed with costs. Appeals Nos .

656, 657 and 658 of 1957 succeed only in part, namely,

to the extent that only the words "by way of redress

or punishment " occurring in the btter portion of

cl. (10) will be deleted so that the latter portion of cl. (10)

will read as: "and the action which in the opinion of

the Commission should be taken .................. to act 11s

a preyentive in future cases" a<> indicated above. vVe

make no order as to the costs of these three appeals.

C. A. Nos. 455, 456 and 457 of 1957 dismissed.

O. A. Nos. 656, 657 and 658 of 195? partly allowed.

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