Full Judgment Text
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PETITIONER:
LALIT NARAYAN MISHRA INSTITUTE OF ECONOMIC DEVELOPMENT ANDSO
Vs.
RESPONDENT:
STATE OF BIHAR & ORS. ETC.
DATE OF JUDGMENT23/03/1988
BENCH:
DUTT, M.M. (J)
BENCH:
DUTT, M.M. (J)
MISRA RANGNATH
CITATION:
1988 AIR 1136 1988 SCR (3) 311
1988 SCC (2) 433 JT 1988 (1) 635
1988 SCALE (1)582
CITATOR INFO :
R 1992 SC1277 (22,34,88,95)
ACT:
Bihar ordinances Nos. 15 of 1986 and 30 of 1986
replaced by Bihar Private Educational Institutions (Taking
over) Act, 1987-Challenging constitutional validity of-And
validity of order of termination of service under Bihar
Ordinance No. 15 of 1986.
HEADNOTE:
%
In these writ petitions and civil appeals, Lalit
Narayan Mishra Institute of Economic Development and Social
Change, Patna, a registered society, and its Registrar, Dr.
Jagadanand Jha, challenged the constitutional validity of
Bihar ordinances Nos. 15 of 1986 and 30 of 1986, replaced by
the Bihar Private Educational Institutions (Taking over)
Act, 1987 (’The Act’). Dr. Jagadanand Jha further challenged
the validity of the order of termination of his services as
the Registrar of the Institute, dated April 21, 1986 in the
writ petition (Civil) No. 439 of 1987. As disposal of the
writ petition (Civil) No. 431 of 1987 wherein the
constitutional validity of the Act was challenged and the
writ petition (Civil) No. 439 of 1987 above-said would
virtually mean the disposal of the other writ petitions and
appeals, the Court dealt with those two writ petitions.
On April 19, 1986, the State Government of Bihar
promulgated ordinance No. 15 of 1986, whereby the Lalit
Narayan Mishra Institute of Economic Development and Social
Change, Patna (’Institute’) was taken over. On the day the
ordinance was promulgated, possession of the Institute was
taken over and the services of Dr. Jagadanand Jha, the
Registrar of the Institute were terminated by the impugned
order dated April 21, 1986. The petitioners filed Writ
Petitions before the High Court, challenging the validity of
the said ordinance and the order of termination of the
services of Dr. Jagadanand Jha. The High Court dismissed the
writ petitions, Both, the Society and Dr. Jagadanand Jha,
preferred two appeals by special leave being Civil Appeal
No. 4142 of 1986 and Civil Appeal No. 4141 of 1986
respectively. The Society and Dr. Jagadanand Jha also
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challenged the ordinance No. 30 of 1986 by Writ Petition
(Civil) No. 55 of 1987 and the constitutional validity of
the Act replacing the said two ordinances.
312
Allowing the writ petitions (Civil) Nos. 87 of 1987 and
439 of 1987 and Civil Appeal No. 4141 of 1986, in so far as
they related to the order of termination of the services of
Dr. Jagadanand Jha, and dismissing the writ petitions
(Civil) Nos. 55 of 1987 and 431 of 1987 and Civil Appeal No.
4142 of 1986, the Court,
^
HELD: The provisions of the Act are the same as those
of the two ordinances Nos. 15 and 30 of 1986. The first
attack on the validity of the Act and the ordinances was
founded on the plea of violation of Article 14 of the
Constitution. It was contended that the Act and the
ordinances were discriminatory in nature and violative of
Article 14 of the Constitution of India and should be struck
down. The contention was wholly misconceived. The ordinances
were not promulgated and the Act was not passed for the
purpose of nationalisation of the Institute only. It was
apparent from the provisions of the ordinances and the Act
that the private educational institutions as defined therein
were to be taken for the purpose as mentioned in the
Preambles to the ordinances and the Act in a phased manner.
All the institutions which answered the description given in
section 2(a) of the Act were to be nationalised. It was not
correct to say that the Institute had been signled out for
nationalisation. [319E; 321D; 323D-F]
There can be no doubt that when nationalisation had to
be done in a phased manner, all the institutions cannot be
taken over at a time. The nationalisation in a phased manner
contemplates that by and by the object of nationalisation
will be taken over. In implementing the nationalisation of
the private institutions in phased manner, the Legislature
had started with the Institute, and the question of singling
out the Institute or treating it as a class by itself did
not arise. It was the legislative decision that the
Institute should be taken over in the first phase of
nationalisation. The Legislature had not left it to the
discretion of the executive government for the purpose of
selecting the private educational institution for the first
phase. It was very difficult to assail a legislative
decision. Of course, a legislative decision can be assailed
if it is violative of any provision or part III of the
Constitution. So far as Article 14 was concerned, the Court
did not think that it had any manner of application inasmuch
as the question of discrimination did not arise as soon ss
it was conceded that it was a case of in a phased manner and
that for the first phase the Institute had been chosen by
the Legislature itself. The Institute had been chosen by the
legislative process. It was true that the ordinance Were
promulgated under Article 213 of the Constitution, bot it
could not be characterised as an executive act. In any even,
ultimately, the Legislature itself had
313
passed the Act with the inclusion of the Institute in the
Schedule thereto as the only institution to be nationalised
in the first phase. Even assuming that the question of
discrimination might arise also for the purpose of selection
for the first phase, there were justifiable reasons for
selecting the Institute for the first phase of
nationalisation; the State had changed the name of the
Institute, provided the site for the Institute, got the
building constructed through its own agencies and funds and
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supervised the prescription of syllabi. The fact could not
be excluded that since 1975 it is the State of Bihar
nurturing the Institute, spending money and exercising
necessary control over it, and these facts fully justified
the propriety of legislative wisdom in selecting the
Institute for nationalisation in the first phase. [323G-H;
324B-C; 325C-E]
There could be no doubt that on the date the ordinances
were promulgated and the Act was passed, the same could not
be challenged on the ground of non-implementation of the
legislative intent in nationalising similar institutes by
amending the Schedule. If a legislative enactment cannot be
challenged as discriminatory on the date it is passed, it is
difficult to challenge the same as violative of Article 14
of the Constitution on the ground of inaction of the
executive in implementing the purposes of the Act, regard
being had to the fact that it was the Legislature which had
made the selection for the first phase of nationalisation.
If no such selection had been made by the Legislature and
the entire thing had been left to the discretion of the
Government, it might have been possible to complain of
discriminatory treatment. It is common knowledge that when
any litigation ensues and remains pending, the Government
generally does not take any step till the final disposal of
the litigation. It was apparent that in view of the pendency
of litigations, the State Government had granted approval of
only temporary affiliation to the three institutions
mentioned in the additional affidavit of the petitioner-
society and that too on certain conditions. If the State
Government had no intention of taking over other
institutions in accordance with the provisions of the Act,
it would have sanctioned permanent affiliation to the three
institutions. The Court could not accept the contention of
the petitioner-society that the professed object of
nationalisation in phases was a mere pretence and a
colourable device to single out the Institute or that the
facts of exclusion of eleven similarly situated Institutes
and the subsequent recognition of the three other Institutes
imparted vice of discrimination to the impugned Act. The
question of discrimination or discriminatory treatment of
the Institute did not arise and the contention of the
petitioner-society in this regard was rejected. [325G-H;
326A-B; F; 327E-F]
314
The next attack of the petitioner-society to the
impugned Act was A founded on violation of the provision of
Article 19(1)(c) of the Constitution. The question was
whether the fundamental right of the petitioner society, as
conferred by Article 19(1)(c), had been infringed or not,
and, further, whether the fundamental right to form
association, as contained in Article 19(1)(c) of the
Constitution, also included within it the concomitants or
the activities or the objects or purposes of an association.
[327F; 328E ]
Article 19(1)(c) confers a right on the citizens to
form association. In exercise of such a right, the
petitioner-society had constituted itself into an
association. That right of the Society remained unimpaired
and uninterfered with by the impugned Act and ordinances.
There was no doubt that the Institute had been taken over by
the provisions of the ordinances and the Act. It was true
that with the taking over of the Institute, the Society had
lost its right of management and control of the Institute,
but that is the consequence of all acquisitions. When a
property is acquired, the owner loses all control, interest,
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and ownership of the property. Similarly, the Society, which
was the owner of the Institute, had lost all control and
ownership of the Institute. It might be equally true that
the Institute was the only activity of the Society, but what
was concerned was the right of the Society to form
association. So long as there was no interference with the
Society, its constitution or composition, it was difficult
to say that because of the taking over or acquisition of the
Institute, which was the only property of activity of the
Society, the fundamental right of the Society to form
association had been infringed. The decision of this Court
in Damyanti Naranga v. Union of India, [1971] 3 SCR 240, had
not manner of application to the present case. The
observations made in the decision of this Court in All India
Bank Employees’ Association v. National Industrial Tribunal,
[1962] 3 SCR 269, supported the view the Court had taken
that the fundamental right guaranteed under Article 19(1)(c)
does not extend to or embrace within it the objects or
purposes or activities of an association. It does not carry
with it a further guarantee that the objects or purposes or
activities of an association so formed shall not be
interfered with by law except on grounds as mentioned in
Article 19(4). In the circumstances, the contention of the
petitioner-society that because of acquisition of the
Institute, the Society had lost its right of management over
the Institute, and the Institute being the main or the only
activity of the Society, the impugned legislations
interfered with the right of the society to form and
continue the association and, as such, were unconstitutional
and void under Article 19(1)(c) of the Constitution. was
unsound and rejected. [329C-D; 330B-C, E; 331E-G; 332A-B]
315
Another ground on which the validity of the Act and the
ordinances was assailed was the absence of legislative
competence of the State Legislature, Counsel for the
petitioner-society submitted that having regard to the pith
and substance of the Act, the Act fell within Entry 66 of
List I and the Entry 25 of List III and Entry 66 of List I
must be harmoniously construed, but to the extent of
overlapping, the power conferred by Entry 66 must prevail
over the power of the State under Entry 25. [332C, F]
By the impugned Act, the Legislature has not laid down
any law relating to the subjects mentioned in the Entry 66,
List I, or in Entry 25, List III. The Act only provides for
the taking over of private educational institutions in
phases and has taken over the Institute to start with for
the first phase. An Entry in any of the Lists of Seventh
Schedule will apply when a law is enacted by the Legislature
on any of the subjects mentioned in the Entry. In this case,
the impugned Act does not lay down any law touching the
subject referred to in Entry 66, List I, or Entry 25, List
III. Therefore, neither of these two Entries applied. The
Entry that applies to the impugned legislation is Entry 42
of List III, pertaining to acquisition and requisition of
property. The taking over of the private educational
institutions and the Institute in the first phase is nothing
but acquisition of property. The Institute was the property
of the petitioner-society and by the impugned Act the
property stood transferred to and vested absolutely in the
State Government free from all encumbrances. The only Entry
relevant is Entry 42 of List III. As soon as Entry 66 of
List I was excluded, it was irrelevant which of the Entries-
25 or 42 of List III-was applicable, in either case, the
State Legislature was competent to make the enactment. There
was no substance in the contention of the petitioner-society
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that the Act was invalid because the State Legislature had
lacked competence in passing the same. [333B-F]
As it is held that the impugned Act is really a
legislation relating to acquisition of property within the
meaning of Entry 42 of list III, the question might arise
whether after the repeal of Article 31(2) by the
Constitution (Fourty-Forth Amendment) Act, 1978, any
compensation was compulsorily payable for the acquisition of
property. The point was not ultimately pressed, and the
Court was not called upon to decide the point or express any
opinion on the same. [334B-D]
The Court then dealt with the case of Dr. Jagadanand
Jha, Registrar of the Institute, whose services were
terminated by an order dt. April 21, 1986, as a result of
the ordinance No. 15 of 1986 promulgated on April 19, 1986.
[334D-E]
316
The petitioner Dr. Jagadanand Jha was not a member of
the teaching staff; he was the Registrar of the Institute,
which comes within the expression "other categories of
staff" under sub-section (4) of Section 6 of the said
ordinance. It is true that under sub-paragraph (4), it has
been provided that sub-paragraphs (2) and (3) shall apply
mutatis mutandis, but such application will be limited to
the term of appointment and other conditions of service of a
member of non-teaching staff of the institution. In other
words, the State Government may appoint a committee for the
purpose of considering the term of appointment and other
conditions of service of the members of the non-teaching
staff, and has to decide accordingly. It was thus apparent
that the State Government proceeded on the basis that under
sub-paragraph (4) of paragraph 6 of the ordinance, it was to
consider the question of termination of the services of the
members of the non-teaching staff as in the case of the
members of the non-teaching staff, as provided in sub
paragraph (3) of paragraph 6 of the ordinance. Even then,
the Court was not impressed with the manner and haste in
which the order of termination had been passed. Although it
was alleged that a Committee had been formed and the State
Government had terminated the services of the petitioner on
the report of the Committee, the Court could not understand
the necessity for such haste; in the circumstances, it would
not be unreasonable to infer that the Committee or the State
Government had not properly applied its mind before the
order of termination of the services of Dr. Jha was made.
[336E-H; 337A-B]
There can be no dispute that when there is a
legislative direction for termination of the services of
employees, the compliance with the principles of natural
justice may not be read into such direction and, if such
terminations are effected without giving the employees
concerned an opportunity of being heard, no exception can be
taken on the same. But in this case, sub-paragraph (4) of
paragraph 6 of the ordinance does not contain any direction
for the termination of the services of the members of non-
teaching staff. Even in spite of that, if the State
Government wanted to terminate the services of the
petitioner Dr. Jha, it could not be done without giving him
an opportunity of being heard, for such an act on the part
of the State Government would be an administrative act. It
is clear from the provision of sub-paragraph (4) of
paragraph 6 that the services of the members of the non-
teaching staff have been intended to be continued. The
services of the petitioner Dr. Jha, who had been working in
the post of Registrar of the Institute for a long time,
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could not be terminated without giving him an opportunity of
being heard. Counsel for the respondents also did not oppose
this view. Therefore as the petitioner had not been given an
opportunity of being
317
heard, the impugned order of termination of the services of
the petitioner could not be sustained. [337C-G; 338A]
Both the Society and Dr. Jha were not able to
substantiate the allegation of mala fides against the then
Chief Minister of Bihar. Even assuming although holding to
the contrary, that the Chief Minister had acted mala fide,
the same could not vitiate the legislative process in the
exercise of which the impugned Act and the ordinances had
been respectively passed and promulgated. The respondents
also had failed to prove the alleged mismanagement of the
Institute by the Society or Dr. Jha; the allegation of
mismanagement was not pressed . [338B-C]
The impugned order dated April 21, 1986 of termination
of the services of the petitioner Dr. Jha was quashed. Writ
Petitions (Civil) Nos. 87 of 1987 and 439 of 1987 and Civil
Appeal No. 4141 of 1986 in so far as they related to the
said order of termination of the services of Dr. Jagadanand
Jha, were allowed. The State Government would be at liberty
to consider the question of termination of the service of
Dr. Jha after giving him a reasonable opportunity to make
representation. The Writ Petitions (Civil) Nos. 55 of 1987
and 431 of 1987 and Civil Appeal No 4142 of 1986 were
dismissed. [338D-E]
State of Rajasthan v. Mukandchand, [1964] 6 SCR 903;
Maganlal Chaganlal (P) Ltd. v. Municipal Corporation of
Greater Bombay, [1975] 1 SCR 1; in re The Special Courts
Bill, 1978, [1979] 2 SCR 476; Shri Ram Krishna Dalmia v.
Shri Justice S.R. Tendolkar & Ors., [5969] SCR 279; B.S.
Reddy v. Chancellor, Osmania University, [1967] 2 SCR 214;
Sakal Papers (P) Ltd. v. Union of India, [1962] 3 SCR 842;
Dwarkadas Shrinivas of Bombay v. Sholapur Spinning & Weaving
Co. Ltd., [1954] SCR 674; Damyanti Naranga v. Union of
India, [1971] 3 SCR 840; All India Bank employees’
Association v. National Industrial Tribunal, [1962] 3 SCR
269; State of Bihar v. Maharajadhiraja Sir Kameshwar Singh
of Darbhenga, [1952] SCR 889 (1009) and K.I Shephard v.
Union of India & Ors., [1987] 4 SCC 431, referred to.
JUDGMENT:
CIVIL ORIGINAL/APPELLATE JURISDICTION: Writ Petition
(Civil) No. 55 of 1987 etc.
(Under Article 32 of the Constitution of India)
Soli J. Sorabjee, S.N Kacker, S. Nariman, R.K Jain,
Singh, Ranjit Kumar. Dhananjay Chandrachud, Rakesh Khanna,
R.P. Singh, L N Sinha for the appearing parties
318
The Judgment of the Court was delivered by
DUTT, J. In these writ petitions and civil appeals,
Lalit Narayan Mishra Institute of Economic Development and
Social Change, Patna, a Society registered under the
Societies Registration Act, 1860, and its Registrar, Dr.
Jagadanand Jha, have challenged the constitutional validity
of two ordinances being Bihar ordinances Nos. 15 of 1986 and
30 of 1986 replaced by the Bihar Private Educational
Institutions (Taking over) Act, 1987, hereinafter referred
to as ’the Act’. Dr. Jagadanand Jha has further challenged
the validity of the order of termination of his service as
the Registrar of the Institute dated April 21, 1986 in Writ
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Petition (Civil) No. 439 of 1987. As disposal of Writ
Petition (Civil) No. 431 of 1987 wherein the constitutional
validity of the Act has been challenged and Writ Petition
(Civil) No. 439 of 1987 in which the legality of the order
of termination of service of the said Dr. Jagadanand Jha has
been challenged will virtually mean disposal of the other
writ petitions and appeals, we propose to deal with these
two writ petitions.
The Institute, Lalit Narayan Mishra Institute of
Economic Development and Social Change, Patna, hereafter
referred to as ’Institute’, was initially named Bihar
Institute of Economic Development and was started in 1973
under the Chairmanship of Dr. Jagannath Mishra, the then
Minister of Irrigation and later on the Chief Minister of
Bihar. It was named as Lalit Narayan Mishra Institute of
Economic Development and Social Change to commemorate the
memory of late Shri Lalit Narayan Mishra, once upon a time,
Union Railway Minister. It may be noticed at this stage that
the name of the Institute and the name of the Society are
the same.
The Institute was basically started as a research
institute. In 1974, the Magadh University recognised the
Institute for the purpose of research. Subsequently, Ranchi,
Patna and Bihar Universities also granted recognition to the
Institute as a research institute. In March, 1977, the
Magadh University declared the Institute as an autonomous
Institute under section 73 of the Bihar State Universities
Act, 1975.
on April 19, 1986, the State Government of Bihar
promulgated ordinance No. 15 of 1986 whereby the Institute
was taken over. It is alleged that the ordinance was
promulgated and the Institute was taken over at the instance
of the then Chief Minister of Bihar Sri Bindeshwari Dubey.
The petitioner-Society has also alleged mala fides on the
part of the Chief Minister of Bihar in taking over the
Institute
319
by promulgating the ordinance. On the day the ordinance was
promulgated, possession of the Institute was taken, and the
services of Dr. Jagadanand Jha, who was the Registrar of the
Institute, were terminated by the impugned order dated April
21, 1986. Besides contending that the ordinance and the
order of termination of the petitioner Dr. Jagadanand Jha
are illegal and invalid, the petitioner-society and the said
Jagadanand Jha allege that all these have happened because
of the personal enmity of the Chief Minister against Dr.
Jagannath Mishra the Chairman of the Society and the
Institute.
The petitioners filed writ petitions before the Patna
High Court challenging the validity of the said ordinance
No. 15 of 1986 and the order of termination of services of
Dr. Jagadanand Jha. The Patna High Court, however, by its
judgment dated August 26, 1986 dismissed both the writ
petitions. Both the Society and Dr. Jagadanand Jha have
preferred two appeals by special leave being Civil Appeal
No. 4142 of 1986 and Civil Appeal No. 4141 of 1986
respectively against the said judgment of the Patna High
Court. The Society and Dr Jagadanand Jha have also
challenged the ordinance No 30 of 1986 by Writ Petition
(Civil) No 55 of 1987 and, as stated already, they have also
challenged the constitutional validity of the Act replacing
these ordinances.
At this stage, it is necessary to refer to the
provisions of the Act which are the same as that of the two
successive ordinances Nos 15 and 30 of 1986. Some
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submissions have been made at the Bar on the Preamble to the
Act which reads as follows:
"To PROVIDE FOR TAKING OVER BY THE STATE
GOVERNMENT OF PRIVATE EDUCATIONAL
INSTITUTIONS OF THE STATE OF BIHAR .
WHEREAS, the State of Bihar has bright
prospects of rapid growth of Industrial and
Economic Development, the relevancy and importance
of specialised knowledge of Business Management
has assumed great importance;
AND, WHEREAS, for that purpose it is
necessary to ensure a high level of educational
and training facilities and the co-ordination of
the training with important industrial and
business units;
AND, WHEREAS, it has been resolved to
nationa-
320
lise this branch of education in phases."
Clause (a) of section 2 of the Act defines "Private
Educational Institutions" as follows:
"S. 2(a). "Private Educational Institution" means
a private educational college, institute or
school, affiliated to any University of the State
of Bihar or recognised by the State Government and
imparting education, and/or training in Business
Management or Business Administration or matter
connected with Economic and Social Development
and/or conducting degree or diploma course in one
or the other branch of education mentioned above;"
Chapter II of the Act relates to taking over of Private
College/ Institute. Section 3 of chapter II runs as follows:
"S. 3(1) With effect from the date of this Act,
the institution as specified in the Schedule of
this Act shall stand transferred to and shall vest
absolutely in the State Government free from all
encumbrances.
(2) The State Government may from time to
time by a notified order amend the Schedule by the
inclusion of any institution and the same shall
stand vested and transferred to in the State
Government with effect from the date mentioned in
the notification.
(3) All the assets and properties of the
institution, Governing Body/Managing
Committee/Association, whether movable or
immovable including lands, buildings, workshop,
stores, instruments, machinery, vehicles, cash
balance, reserve fund, investment, furniture and
others shall on the date of taking over, stand
transferred to and vested in the State Government
free from all encumbrances."
Section 4(1) of the Act provides that the Commissioner
shall be deemed to have taken charge of the Institution
which stands vested in the State Government under the
provisions of the Act. Section 6 relates to the
determination of terms of services of the teaching staff and
the other employees of the Institution. The Schedule to the
Act specifies the name of the Institute, namely. "L.N.
Mishra Institute of
321
Economic Development and Social Change, Patna" in terms of
section 3(1) of the Act. Under the Preamble to the Act, it
is necessary to rationalise private education relating to
business management in view of a very good possibility of a
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rapid industrial and economic development of the State of
Bihar. The nationalisation has been resolved to be made in
phases. It has been already noticed that under section 3(1)
of the Act, the Institution mentioned in the Schedule will
be transferred to the State Government and will be actually
vested in it free from all encumbrances. The Schedule
mentions only one Institute and in view of section 3(1) it
has vested in the State Government. It is said that the
first phase relates to the taking over of the Institute and
that has been done. Section 3(2) also provides for amendment
of the Schedule by including any institution. In other
words, the other institutions which answer the description
of private educational institutions as defined in clause (a)
of section 2 of the Act will also be nationalised, not at a
time, but in phases, the first phase having started with the
take over of the Institute. This, in short, is the scheme of
the Act.
The first attack to the validity of the Act and the
said two ordinances is founded on the plea of violation of
Article 14 of the Constitution. It is submitted by Mr.
Sorabjee, learned Counsel appearing on behalf of the
petitioner-Society, that while it is true that Article 14
forbids class legislation, it does not, however, forbid
reasonable classification. We are reminded of the principle
of law as laid down in State of Rajasthan v. Mukandchand,
[1964] 6 SCR 903; Maganlal Chaganlal (P) Ltd. v. Municipal
Corporation of Greater Bombay, [1975] 1 SCR 1 and in re The
Special Courts Bill, 1978, [1979] 2 SCR 476. In all these
cases, it has been laid down that in order to satisfy the
test of permissible classification under Article 14, two
conditions must be fulfilled, namely, (1) that the
classification must be founded on an intelligible
differentia which distinguishes persons or things that are
grouped together from others left out of the group and (2)
that the differentia must have a rational relationship to
the object sought to be achieved by the statute in question.
It is urged by the learned Counsel that the impugned Act on
the face of it does not disclose any basis or principle for
singling out the Institute and for treating it as a class by
itself. It is submitted that neither in the preamble nor in
the provisions of the Act is there the slightest indication
for treating the Institute as a class by itself.
Much reliance has been placed by the learned Counsel
for the petitioner on the decision of this Court in Shri Ram
Krishna Dalmia v. Shri Justice S.R. Tendolkar & Ors., [1959]
SCR 279. In that case, the
322
Central Government in exercise of its power under section 3
of the Commissions of Enquiry Act, 1952, issued a
notification dated December 11, 1956 appointing a Commission
of Enquiry to enquire into and report in respect of certain
companies mentioned in the Schedule attached to the
notification and in respect of the nature and extent of the
control and interest which certain persons named in the
notification exercised over these companies. Das, C.J.
speaking for the Court observed that it was not established
that the petitioners and their companies had been
arbitrarily singled out for the purpose of hostile and
discriminatory treatment and subjected to a harassing and
oppressive enquiry. It was further observed that nowhere in
the petitions was there even an averment that there were
other persons or companies similarly situated as the
petitioners and their companies. Certain principles of law
have been laid down in that decision. These principles still
hold the field and are helpful in considering the
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constitutionality of a statute. One of these principles is
that a law may be constitutional even though it relates to a
single individual if, on account of some special
circumstances or reasons applicable to him and not
applicable to others, that single individual may be treated
as a class by himself.
The other decision that has been relied upon by the
petitioner is B.S. Reddy v. Chancellor, Osmania University,
[1967] 2 SCR 214. What happened in that case was that
section 5 of the Osmania University (Second Amendment) Act,
1966 introduced into the Osmania University Act, 1959 a new
section 13A whereby it was provided that the person then
holding the office of the Vice-Chancellor of the University
could only hold that office until a new Vice-Chancellor was
appointed, and that such new amendment must be made within
90 days of the commencement of the said amendment Act
whereupon the old Vice-Chancellor would cease to hold
office. It was held by this Court that there was no
justification for the impugned legislation, that is, the
provision of section 13A, resulting in a classification of
the Vice-Chancellors into two categories, namely, the
appellant as the existing Vice-Chancellor and the future
Vice-Chancellors to be appointed under the Osmania
University Act. It was held that both these categories
constituted one single group or class, and that even
assuming that the classification of these two types of
persons as coming under two different groups could be made,
nevertheless, it was essential that such a classification
must be founded on an intelligible differentia which would
distinguish the appellant from the Vice Chancellors
appointed under the Osmania University Act. The Court held
that there was no intelligible differentia on the basis of
which the classification could be justified.
323
On the basis of the above principles of law as laid
down by this Court, it is submitted by the learned Counsel
for the petitioner that while it is true that a single
individual may be treated as a class by himself on account
of some special circumstances or reasons applicable to him
as laid down by this Court in Dalmia’s case (supra), such
classification must be founded on an intelligible
differentia which distinguishes the person classified from
others falling outside the classification. It is urged that
even though nationalisation of institutes is permissible in
a phased manner, and a single institution like the Institute
with which we are concerned may be singled out as a class by
itself, it must be founded on an intelligible differentia
that distinguishes it from other institutions and such
differentia for classification must have a rational nexus to
the object sought to be achieved by the Act. It is the case
of the petitioner-Society that there are eleven other
similar institutes, which have been specifically named in
the petition and there is nothing in the Act to indicate why
the Institute has been singled out. Moreover, there is also
nothing to indicate either in the Preamble or in the
provisions of the Act that the singling out of the Institute
from the other institutions and treating it as a class by
itself, has a reasonable relation to the object sought to be
achieved by the Act. It is, accordingly, submitted that the
Act and the ordinances are discriminatory in nature and
violative of Article 14 of the Constitution and should be
struck down on that ground.
The contention made on behalf of the petitioner-Society
is wholly misconceived. The ordinances were not promulgated
and the Act was not passed for the purpose of
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nationalisation of the Institute only. It is apparent from
the provisions of the ordinances and the Act that the
private educational institutions as defined therein are to
be taken over for the purpose as mentioned in the Preambles
to the ordinances and the Act in a phased manner. All the
institutions which answer the description as given in
section 2(a) of the Act are to be nationalised. It is,
therefore, not correct to say that the Institute has been
singled out for the purpose of nationalisation.
There can be no doubt that when nationalisation has to
be done in a phased manner, all the institutions cannot be
taken over at a time. The nationalisation in a phased manner
contemplates that by and by the object of nationalisation
will be taken over. Therefore, in implementing the
nationalisation of private institutions in a phased manner,
the Legislature has started with the Institute. Therefore,
the question of singling out the Institute or treating it as
a class by itself does not arise, for as the provisions of
the Act and the ordinances go, all the
324
private educational institutions, as defined in section 2(a)
of the Act, A will be nationalised in a phased manner.
It is the legislative decision that the Institute
should be taken over in the first phase of the
nationalisation. The Legislature has not left it to the
discretion of the executive Government for the purpose of
selecting the private educational institution for the first
phase. It is very difficult to assail a legislative
decision. Of course, there can be no doubt that a
legislative decision can be assailed if it is violative of
any provision of Part III of the Constitution. So far as
Article 14 is concerned, we do not think that it has any
manner of application inasmuch as the question of
discrimination does not arise as soon as it is conceded that
it is case of nationalisation in a phased manner and for the
first phase the Institute has been chosen by the Legislature
itself.
The decision of this Court in the cases of Dalmia
(supra) and Osmania University (supra) have no manner of
application because in those two cases the question of
discrimination did really arise. But, in the instant case,
there cannot be any discrimination when nationalisation has
to be made in phased manner.
It is, however, submitted that there was no
justification to pick and choose the Institute even for the
first phase. As has been stated already, the Institute has
been chosen by legislative process. It is true that the
ordinances were promulgated under Article 213 of the
Constitution of India, but it cannot be characterised as an
executive act. In any event, ultimately the Legislature
itself has passed the Act with the inclusion of the
Institute in the Schedule thereto as the only Institution to
be nationalised in the first phase. Even assuming that the
question of discrimination may arise also for the purpose of
selection for the first phase, we are of the view that there
are justifiable reasons, which will be stated presently, for
selecting the Institute for the first phase of
nationalisation.
Mr. Kacker, learned Counsel appearing on behalf of the
Chief Minister of Bihar, has placed before us two
resolutions of the Education Department of the Government of
Bihar dated June 10, 1975 and November 21, 1975. By the
first mentioned resolution, it was decided to rename the
Bihar Institute of Economic Development as Lalit Narayan
Mishra Institute of Economic Development and Social Change
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to commemorate the memory of late Shri Lalit Narayan Mishra,
who was the Railway Minister, and to enlarge the working
scope of the Institute and to develop it into a significant
and useful memorial.
325
It was also resolved that the entire expenditure of the
Institute would be borne by the State government (Education
Department) and for this purpose annual grants would be
sanctioned. A steering committee under the chairmanship of
the Education Minister was constituted. It is not disputed
that since June, 1975 every expenditure for maintaining and
running the Institute has been incurred by the State of
Bihar. It is submitted by Mr. Kacker that the facts
disclosed in the writ petition have brought out prominently
the interest the State had taken in not only financing, but
also controlling the entire development and running of the
Institute. The total amount of money spent by the State
Government in nurturing the Institute works out to about
Rs.1.60 crores. Facts also disclose that not only the State
had changed the name of the Institute, but also provided the
site for the Institute, got the building constructed through
its own agencies and funds and even supervised the
prescription of syllabi. There is much force in the
contention of Mr. Kacker that in a sense the State
Government was running the entire Institute without
nationalisation and when it decided to nationalise such
institutions for the purposes mentioned in the Preambles of
the Act and ordinances, this Institute was chosen to be the
very first with all sense of justification and propriety. In
considering the propriety of legislative wisdom in selecting
the Institute in the first phase of nationalisation, we
cannot exclude the fact that since 1975 it is the State of
Bihar which has been nurturing the Institute spending a
considerable sum of money and exercising necessary control
over it, as contended on behalf of the petitioner-Society.
The facts stated above, in our opinion, fully justify the
propriety of legislative wisdom in selecting the Institute
as the subject-matter of nationalisation in the first phase.
It is, however, complained on behalf of the Institute
that since April 19, 1986 when the first ordinance was
promulgated, no other institution has been added to the
Schedule, though nearly two years have passed in the
meantime. It is submitted that this fact demonstrates that
the professed object of nationalisation in phases is a mere
pretence and a colourable device to single out the Institute
for discriminatory treatment. The taking over of the
Institute is an act of legislation and not an act of the
Government. The question to be considered is whether at the
time when the ordinances were promulgated or the Act was
passed, the same suffered the vice of discrimination or not.
There can be no doubt that on the date the ordinances were
promulgated and the Act was passed, the same could not be
challenged on the ground of non-implementation of the
legislative intent in nationalising similar institutes by
amending the Schedule. If a
326
legislative enactment cannot be challenged as discriminatory
on the date it is passed, it is difficult to challenge the
same as violative of Article 14 of the Constitution on the
ground of inaction of the executive in implementing the
purposes of the Act, regard being had to the fact that it
was the Legislature which had made the selection for the
first phase of nationalisation. If no such selection had
been made by the Legislature and the entire thing had been
left to the discretion of the Government, it might have been
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possible to contend of discriminatory treatment. The
respondents have, however, given an explanation for not
including the other similar institutions in the programme of
nationalisation, to be precise, in the Schedule to the Act.
In paragraph 24 of the counter-affidavit of the
respondents Nos. 1, 3 and 4 affirmed by Shri Ram Shankar
Prasad, Deputy Secretary, Department of Education,
Government of Bihar, it has been stated, inter alia as
follows:
"Since the validity of the Act is under cloud,
being the subject matter of challenge before this
Hon’ble Court, the State Government has not yet
taken over other Institutes. However, it is
submitted that the proposal to take over two other
institutes in the second phase is at the final
stage and is awaiting the final decision with
regard to the validity of the Act. When the cloud
is cleared, further step for taking over other
institutes imparting education in similar branch
will be taken."
It is common knowledge that when any litigation ensues
and remains pending, the Government generally does not take
any step till the final disposal of the litigation. It is
also the case of the respondents that because of the
pendency of the litigation challenging the validity of the
ordinances and the Act, the Government did not take any
steps for nationalisation of similar institutes for the
second phase.
A grievance has been made on behalf of the petitioner-
Society that even after the promulgation of the ordinances,
three other Institutes, the details of which have been set
out in the additional affidavit, have been recognised. An
explanation for the recognition of the three Institutes has
been given in paragraph 25 of the counter-affidavit of the
respondents Nos. 1, 3 and 4. The explanation is that the
affiliation is granted under the Bihar State University Act
by the University with the approval of the State Government.
Three Institutes mentioned in paragraph 4 of the additional
affidavit of the petitioner-Society were
327
recommended by the concerned university for affiliation. The
State Government has concurred in the grant of temporary
affiliation subject to certain conditions and only for two
sessions. In other words, the explanation is that permanent
affiliation has not been granted by the State Government. It
is also the case of the said respondents that these
institutions are not imparting training in the various
courses which are being taught in the Institute. The
Institute has sponsored and taken out various research
programmes and training in computer which are not available
in the three institutions named in paragraph 4 of the
additional affidavit. It is thus apparent that in view of
the pendency of litigations, the State Government has
granted approval to only temporary affiliation to the three
institutions and that too on certain conditions. If the
State Government had no intention of taking over other
institutions in accordance with the provisions of the Act,
in that case, the Government would have sanctioned permanent
affiliation to the three institutions. It is made clear in
the affidavit of the respondents Nos. 1, 3 and 4 that the
State Government, after the disposal of the litigations,
that is to say, after the disposal of these writ petitions
and the civil appeals, would go on with the nationalisation
of other institutions by the amendment of the Schedule to
the Act. Therefore, although there has been delay in
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implementing the provisions of the Act, such delay is
unintentional and because of the pendency of litigations. In
the circumstances, we are unable to accept the contention
made on behalf of the petitioner-Society that the professed
object of nationalisation in phases is a mere pretence and a
colorable device to single out the Institute or that the
facts of exclusion of eleven similarly situated Institutes
and the subsequent recognition of the three other Institutes
impart vice of discrimination to the impugned Act. As has
been stated already, the question of discrimination or
discriminatory treatment of the Institute does not arise and
the contention of the petitioner-Society in this regard is
rejected.
The next attack of the petitioner-Society to the
impugned Act is founded on violation of the provision of
Article 19(1)(c) of the Constitution. It is urged on behalf
of the petitioner-Society that in taking over the Institute,
there has been an infraction of the fundamental right of the
Society to form association. It is contended that by the
impugned Act the management of the Society has been totally
displaced and its composition changed. All assets and
properties are vested in the State Government and the
Commissioner is deemed to have taken charge of the
Institute. It is submitted that all incidents of ownership
and management have been taken over by the State and what is
being left to the company is paper ownership and management
and, as
328
such, in substance and effect the right of association of
the Society is clearly affected. It is submitted that the
Act is not saved under Article 19(4) of the Constitution
because the fundamental right of the Society to form
association has been interfered with not in the interests of
the sovereignty and integrity of India or public order or
morality.
At this stage, it may be pertinent to refer to the fact
that by the impugned ordinances and the Act, what has been
taken over is the Institute. Although the name of the
Society and of the Institute is the same, these are two
different entities. It is not disputed that by the impugned
legislations the Institute and not the Society has been
taken over. No restriction whatsoever has been imposed on
the functioning of the Society. Indeed, the provisions of
the ordinances and the Act do not refer to the Society but
to the Institute. The entire argument of the petitioner-
Society is founded on the infraction of the fundamental
right of the Society to form association.
The question, therefore, is whether the fundamental
right of the petitioner-Society, as conferred by Article
19(1)(c), has been infringed or not. It has been stated
already that the Society has not been taken over by the
impugned Act or ordinances. The Institute has been
established by the Society in implementation of one of its
objects. In other words, the Institute constitutes one of
the activities of the Society. The question naturally arises
whether the fundamental right to form association, as
contained in Article 19(1)(c) of the Constitution, also
includes within it the concomitants or the activities or the
objects or purposes of an association.
Our attention has been drawn to the principles laid
down in two decisions of this Court relating to the
interpretation of the provisions of the Constitution,
namely, Sakal Papers (P) Ltd. v. Union of India, [1962] 3
SCR 842 and Dwarkadas Shrinivas of Bombay v. Sholapur
Spinning & Weaving Co. Ltd., [1954] SCR 674. In these two
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decisions, it has been laid down that while considering the
nature and content of the fundamental rights, the Court must
not be too astute to interpret the language of the
Constitution in so literal a sense as to whittle them down,
but must interpret the same in a manner which would enable
the citizens to enjoy the rights guaranteed by it in the
fullest measure subject, of course, to permissible
restrictions. Further, in construing the Constitution it is
the substance and the practical result of the act of the
State that should be considered rather than its purely legal
aspects, and that the correct approach in such cases should
be to enquire as to what in substance is the loss or injury
caused to the citizens and not
329
merely what manner and method has been adopted by the State
in placing the restriction.
The above principles, as laid down in those two
decisions, are well settled and no exception can be taken to
them. It is true that the provisions of the Constitution,
particularly the provisions relating to the fundamental
rights, should not be construed in a pedantic manner, but
should be construed in a manner that would enable the
citizens to enjoy the rights in the fullest measure. But,
that does not surely mean and it was not the intention of
this Court to lay down that in construing the provisions
relating to fundamental rights, it should be stretched to
the extent of covering even certain extraneous matters which
would be far from the ambit and scope of the fundamental
rights. Article 19(1)(c) confers a right on the citizens to
form association. In exercise of such a right the
petitioner-Society has constituted itself into an
association. That right of the Society remains unimpaired
and uninterfered with by the impugned Act and ordinances. It
is, however, complained that the only activity of the
Society was its right of management of the Institute which
was founded in implementation of its objects. Having been
taken over, the Society only exists in paper. Such
interference with the activity of the Society is really,
interference with the right of the Society to form
association. It is submitted that Article 19(1)(c) not only
guarantees the fundamental right to form association, but
also its continuation. It is further submitted that in law
interfering with or divesting the management of the Society
of the Institute is clear interference with its right to
continue the Association.
In support of the above contentions, reliance has been
placed on behalf of the petitioner-Society on Sholapur
Spinnig & Weaving Company’s case (supra). In that case, the
question that came up for consideration was whether by the
impugned ordinance there was deprivation of the rights of
the Company in violation of Article 31(2) of the
Constitution. It was the contention of the Government that
it had taken over the superintendence of the affairs of the
Company and that the impugned legislation was merely
regulative in character. In rejecting the said contention,
this Court observed that the promulgating the ordinance the
Government had not merely taken over the superintendence of
the affairs of the Company, but in effect and substance had
taken over the undertaking itself and, in the circumstances,
practically all incidents of ownership had been taken over
by the State and nothing was left with the Company but the
mere husk of title. In the premises, the impugned statute
had over-stepped the limits of legitimate Social Control
Legislation and infringed the fundamental right of
330
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the Company guaranteed to it under Article 31(2) of the
Constitution and is, therefore, unconstitutional. This Court
found as a fact that the undertaking itself was taken over
in the guise of regulatory legislation in violation of
Article 31(2) of the Constitution. The facts of that case
are completely different from those of the present case.
There can be no doubt that the Institute has been taken over
by the provisions of the ordinances and that Act. It is true
that with the taking over of the Institute, the Society lost
its right of management and control of the Institute, but
that is the consequence of all acquisitions. When a property
is acquired, the owner loses all control, interest and
ownership of the property. Similarly the Society, which was
the owner of the Institute, has lost all control and
ownership of the Institute. It may be equally true that the
Institute was the only activity of the Society, but we are
concerned with the right of the Society to form association.
So long as there is no interference with the Society, its
constitution or composition, it is difficult to say that
because of the taking over or acquisition of the Institute,
which was the only property or activity of the Society, the
fundamental right of the Society to form association has
been infringed.
Mr. Sorabjee, learned Counsel for the petitioner-
Society, has placed strong reliance upon the decision of
this Court in Damyanti Naranga v. Union of India, [1971] 3
SCR 840. In that case, by a legislative enactment, namely,
the Hindi Sahitya Sammelan Act, 1962, the institution known
as the Hindi Sahitya Sammelan was declared an institution of
national importance. By the said Act a statutory Sammelan
was constituted as a body corporate by the name of the Hindi
Sahitya Sammelan. Under section 4(1) of the Act, the
Sammelan was to consist of the first members of the Hindi
Sahitya Sammelan, which was a registered Society founded for
the development and propagation of Hindi and all persons who
might become members thereafter in accordance with the rules
made in that behalf by the first governing body to be
constituted by the Central Government by notification. The
Act provided for vesting in the Sammelan of all property,
movable or immovable, of or belonging to the Society. The
constitutionality of the Act was challenged accordingly on
the ground that it interfered with the right of the
petitioners to form association under Article 19(1)(c) of
the Constitution. It has been held that the Act does not
merely regulate the administration or the affairs of the
Society; what it does is to alter the composition of the
Society itself. The result of this change in composition is
that the members, who voluntarily formed the Society, are
now compelled to act in that Association with other members
who have been imposed as members by the Act and in whose
admis-
331
sion to membership they had no say. Further, it has been
observed that the right to form association necessarily
implies that the persons forming the Society have also the
right to continue to be associated with only those whom they
voluntarily admit in the Association. Any law by which
members are introduced in the voluntary association without
any option being given to the members to keep them out or
any law which takes away the membership of those who have
voluntarily joined, will be a law violating the right to
form association. It has also been held that the right
guaranteed by Article 19(1)(c) is not confined to the
initial stage of forming an association, but it also
includes within it the right to continue the association.
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The decision in Damyanti’s case (supra) has no manner
of application to the facts of the present case. In that
case, the composition of the Society was interfered with by
introducing new members, which was construed by this Court
as interference with the fundamental right of the Society to
form association and to continue the same. In the instant
case, the composition of the Society has not been touched at
all. All that has been done is to nationalise the Institute
of the Society by the acquisition of the assets and
properties relating to the Institute. The Society may
constitute its governing body in accordance with its rules
without any interference by the Government.
In this connection, we may refer to a decision of this
Court in All India Bank Employees’ Association v. National
Industrial Tribunal, [1962] 3 SCR 269. Ayyangar, J, speaking
for the Court, observes that the right guaranteed by Article
19(1)(c) of the Constitution does not carry with it a
concomitant right that unions formed for protecting the
interests of labour shall achieve their object such that any
interference to such achievement by any law would be
unconstitutional unless it could be justified under Article
19(4) as being in the interests of Public order or morality.
The right under Article 19(1)(c) extends only to the
formation of an association or union and in so far as the
activities of the association or union are concerned or as
regards the step which the union might take to achieve its
object, they are subject to such laws as may be framed and
such laws cannot be tested under Article 19(4). This
observation supports the view we have taken that the
fundamental right guaranteed under Article 19(1)(c) does not
extend to or embrace within it the objects or purposes or
the activities of an association. In other words, it does
not carry with it a further guarantee that the objects or
purposes or activities of an association so formed shall not
be interfered with by law except on grounds as mentioned in
Article 19(4), namely, sovereignty and integrity of India or
Public order or
332
morality. In the circumstances, the contention made on
behalf of the petitioner-Society that because of the
acquisition of the Institute, the Society lost its right of
management over the Institute and the Institute being the
main or the only activity of the Society, the impugned
legislations interfere with the right of the Society to form
and continue the association and, as such, unconstitutional
and void under Article 19(1)(c) of the Constitution, is
unsound and rejected.
Another ground on which the validity of the Act and
ordinances has been assailed is absence of legislative
competence of the State Legislature. It is submitted by the
learned Counsel appearing on behalf of the petitioner-
Society that the professed aims and objects of the Act are
to ensure the high level of educational and training
facilities and to nationalise this branch of education and,
accordingly, having regard to the pith and substance of the
Act, it falls within Entry 66 of List I. Entry 66 is as
follows:
"66. The co-ordination and determination of
standards in institutions or higher education or
research and scientific and technical
institutions. "
We may also refer to Entry 25 of List III which runs
as follows:
"25. Education, including technical education,
medical education and universities subject to the
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provisions of Entries 63, 64, 65 and 66 of List I;
vocational and technical training of labour. "
Counsel submits that Entry 25 of List III and Entry 66
of List I must be harmoniously construed, but to the extent
of overlapping the power conferred by Entry 66 must prevail
over the power of the State under Entry 25. On the other
hand, it is submitted by Mr. Kacker that the impugned
legislation does not even purport to deal with co-ordination
and determination of standards in taking over institution of
higher education. Counsel submits taking over of such
institutions would affirmatively be covered under Entry 25
itself and, negatively, what is carved out is only
co-ordination and determination of standards. It is
submitted that Entry 25 of List III is enough to sustain the
Act.
By the impugned Act, the Legislature has not laid down
any law relating to the subjects mentioned in Entry 66, List
I, or in Entry 25, List III. The Act only provides for the
taking over of private educa-
333
tional institutions in phases and has taken over the
Institute to start with for the first phase. It may be that
the purpose of such taking over or nationalisation of
private educational institutions is to ensure a high level
of educational and training facilities and the co-ordination
of the training with important industrial and business
units. An Entry in any of the Lists of Seventh Schedule will
apply when a law is enacted by the Legislature on any of the
subjects mentioned in the Entry. In the instant case, as has
been noticed already, the impugned Act does not lay down any
law touching the subject referred to in Entry 66, List 1, or
Entry 25, List III. In our opinion, therefore, neither of
these two Entries applies. Even assuming that one of these
two Entries applies. then it is Entry 25, List III, and not
Entry 66, List I; as contended on behalf of the respondents.
The impugned legislation if held to be one on education or
technical education, is surely not relating to any matters
referred to in Entry 66, List I. We are, however, of the
view that Entry 25 also has no application.
The Entry that applies to the impugned legislation is
Entry 42 of List III pertaining to acquisition and
requisition of property. The taking over of the private
educational institutions and of the Institute in the first
phase is nothing but acquisition of property. The Institute
was the property of the petitioner-Society and by the
impugned Act the property stands transferred to and vested
absolutely in the State Government free from all
encumbrances. Thus, the Institute has been acquired by the
impugned legislation and, therefore, the only Entry which is
relevant is Entry 42 of List III. As soon as Entry 66 of
List l is excluded, it is quite irrelevant which of the
Entries-25 or 42 of List III-is applicable. Therefore,
whether it is Entry 25 or Entry 42, in either case, the
State Legislature is competent to make enactment There is,
therefore, no substance in the contention made on behalf of
the petitioner-Society that the Act is invalid because the
State Legislature lacked competence in passing the Act.
Now the question is whether after the repeal of Article
31(2) by the Constitution (Forty-Fourth Amendment) Act,
1978, any compensation is compulsorily payable for
acquisition of property. The question may arise, as it is
held that the impugned Act is really a legislation relating
to acquisition of property within the meaning of Entry 42 of
List III. Indeed, while urging that the Act falls within the
ambit of Entry 66 of List I and, as such, beyond the
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competence of the State Legislature, Mr. Sorabjee submits
that it does not come within the purview of Entry 42 of List
III, as no compensation for the acquisition of the Institute
has been provided for. He has drawn our attention to
334
the observation of Chandrasekhara Aiyar, J. in the State of
Bihar v. Maharajadhiraja Sir Kameshwar Singh of Darbhanga,
[1952] SCR 889 (1008) that payment of compensation is an
essential element of the valid exercise of the power to
take. Besides drawing our attention to the said observation,
the learned Counsel has not pursued the point; on the
contrary, it is submitted by him that as on the date of the
decision in Kameshwara Singh’s case (supra), that is, before
its amendment by the Constitution (Seventh Amendment) Act,
1956, Entry 42 related to "principles on which compensation
for property acquired or acquisition for any other public
purpose is to be determined and the form and the manner in
which such compensation is to be given", so the said
observation was made. This means that the learned Counsel is
of the view that after the repeal of Article 31(2) of the
Constitution, no compensation is compulsorily payable for
the acquisition of property. In other words, the point is
not ultimately pressed. In the circumstances, we are not
called upon to decide the point or express any opinion on
the same.
Now we may deal with the case of Dr. Jagadanand Jha,
Registrar of the Institute. The first ordinance, namely,
ordinance No. 15 of 1986, was promulgated by the Governor on
April 19, 1986 and the service of Dr. Jha were terminated by
an order dated April 21, 1986 which is extracted below:
"The Governor of Bihar in exercise of power under
section 6 and sub-sections (2), (3) &(4) of Bihar
Private Educational Institutions (Take over)
Ordinance, 1986 and Bihar Ordinance No. 15 of 1986
and Education Department Notification No. 99/C has
considered the report of the Committee and has
come to the conclusion appointment and promotion
of officers and workers was not done as per rules
of the University, nor in accordance with
Government directions and notifications and their
stay in the Institute was not in the interest of
the said Institute. Therefore, the services of
following persons are dispensed with immediate
effect:
1. Dr. Jagannath Mishra-Chairman-cum-
Director General.
2. Sri Jagadanand Jha-Registrar."
Paragraph 6 of the ordinance, which is verbatim the
same as
335
section 6 of the Act, reads as follows: A
"6. Determination of terms of services of the
teaching staff and other employees of the
institution.-(1) As from the date of the notified
order, all the staff employed in the institution
shall cease to be the employee of the institution;
Provided that they shall continue to serve
the institution on an ad-hoc basis till a decision
under sub-section (3) and (4) is taken by the
State Government.
(2) The State Government will set up one or
more Committees of experts and knowledgeable
persons which will examine the bio-data of each
member of the teaching staff and ascertain whether
appointment, promotion or confirmation was made in
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accordance with the University Regulation or
Government direction/circular and take into
consideration all other relevant materials, such
as qualification, experience, research degree etc.
and submit its report to the State Government.
(3) The State Government on receipt of the
report of the Committee or Committees, as the case
may be, will decide in respect of each member of
teaching staff on the merits of each case, whether
to absorb him in Government service or whether to
terminate his service or to allow him to continue
on an ad-hoc basis for a fixed term or on contract
and shall, where necessary, redetermine the rank
pay, allowance and other conditions of service.
(4) The State Government shall similarly
determine the term of appointment and other
conditions of service of other categories of staff
of the Institution on the basis of facts to be
ascertained either by a committee or by an officer
entrusted with the task and the provisions of
subsections (2) and (3) shall apply mutatis
mutandis to such case.
Under paragraph 6(1), all the staff employed in the
institution shall cease to be the employees of the Institute
from the date of the notified order. Under the proviso,
however, such employees will continue on an ad-hoc basis
till a decision under sub-paragraphs (3) and (4) is taken by
the Government. Under sub-paragraph (2) of para-
336
graph 6, the State Government is to set up one or more
committees of experts and knowledgeable persons for the
purpose of ascertaining whether or nor appointment,
promotion or confirmation of each member of the teaching
staff was made in accordance with the University Regulation
or Government direction/circular and to submit its report to
the State Government. Sub-paragraph (3) of paragraph 6
enjoins the State Government to decide in respect of each
member of teaching staff on the merits of each case whether
to absorb him in Government service or to terminate his
service or to allow him to continue on an ad-hoc basis for a
fixed term or on contract etc. Subparagraphs (2) and (3)
relate to the members of teaching staff of the concerned
institution. Sub-paragraph (4) of paragraph 6 of the
ordinance deals with the cases of other categories of staff
of the institution. It provides that the State Government
shall similarly determine the term of appointment and other
conditions of service of other categories of staff of the
institution. It is clear that there is some distinction
between sub-paragraph (3) and sub-paragraph (4). While under
subparagraph (3), the State Government is to decide, among
other things, whether the service of a member of teaching
staff will be terminated or not, under sub-paragraph (4),
the State Government has not been enjoined to decide whether
the service of any member of a nonteaching staff will be
terminated or not, all that has been directed to be decided
by the State Government under sub-paragraph (4) relates to
the term of appointment and other conditions of service.
Admittedly, the petitioner Dr. Jagadanand Jha was not a
member of the teaching staff, but, as noticed already, he
was the Registrar of the Institute, which comes within the
expression "other categories of staff" under sub-paragraph
(4). It is true that under sub-paragraph (4) it has been
provided that sub-paragraphs (2) and (3) shall apply mutatis
mutandis but, such application will be limited to the term
of appointment and other conditions of service of a member
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of non-teaching staff of the institution. In other words,
the State Government may appoint a committee for the purpose
of considering the term of appointment and other conditions
of service of the members of the non-teaching staff and the
State Government has to decide accordingly.
It is thus apparent that the State Government proceeded
on the basis that under sub-paragraph (4) of paragraph 6 of
the ordinance, the State Government was to consider the
question of termination of the services of members of non-
teaching staff as in the cases of members of teaching staff,
as provided in sub-paragraph (3) of paragraph 6
337
of the Ordinance. Even then, we are not impressed with the
manner and haste in which the order of termination has been
passed. the ordinance was promulgated on April 19, 1986 and
the order of termination was made on April 21, 1986.
Although it is alleged that a Committee was formed and the
State Government terminated the services of the petitioner
on the report of the Committee, we fail to understand the
necessity for such haste and, in the circumstances, it will
not be unreasonable to infer that the Committee or the State
Government had not properly applied its mind before the
order of termination of the services of Dr. Jha was made.
There can be no dispute that when there is a
legislative direction for termination of the services of
employees, the compliance with the principles of natural
justice may not be read into such direction and, if such
terminations are effected without giving the employees
concerned an opportunity of being heard, no exception can be
taken to the same. But, in the instant case, sub-paragraph
(4) of paragraph 6 of the ordinance does not contain any
direction for the termination of services of the members of
non-teaching staff. Even in spite of that, if the State
Government wants to terminate the services of the petitioner
Dr. Jha, it cannot be done without giving him a reasonable
opportunity of being heard, for such act on the part of the
State Government would be an administrative act. In this
connection, we may refer to our decision in K.I. Shephard v
Union of India & Ors., [1987] 4 SCC 431 wherein it has been
held that the scheme-making process under section 45 of the
Banking Regulation Act, 1949 being administrative in nature,
the rules of natural justice are attracted, as the scheme
provides for the termination of services of the employees.
It is clear from the provision of sub-paragraph (4) of
paragraph 6 that the services of the members of non-teaching
staff have been intended to be continued. The petitioner Dr.
Jha has been working in the post of Registrar of the
Institute for a pretty long time. We are, therefore, of the
view that his services cannot be terminated without giving
him an opportunity of being heard. The learned Counsel,
appearing on behalf of the respondents, also do not
seriously oppose the view that in such circumstances, the
petitioner Dr. Jha should have been given an opportunity of
being heard.
It is alleged in the impugned order of termination that
the appointment and promotion of the petitioner were not
done as per the rules of the University nor in accordance
with the Government directions and notifications and his
stay in the Institute was not in the interest of the
Institute. If the Petitioner was given an opportunity to
338
make a representation, he could substantiate that the above
findings were erroneous. In any event, as the petitioner was
not given an opportunity of being heard, the impugned order
of termination of the services of the petitioner cannot be
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sustained.
Before parting with the cases, we may record that both
the Society and Dr. Jha have not been able to substantiate
the allegation of mala fide against the then Chief Minister
of Bihar. Even assuming, although holding to the contrary,
that the Chief Minister had acted mala fides, the same
cannot vitiate the legislative process in the exercise of
which the impugned Act and ordinances were respectively
passed and promulgated. The respondents also have failed to
prove the alleged mismanagement of the Institute by the
Society or by Dr. Jha. Indeed, they have not pressed the
allegation of mismanagement.
For the reasons aforesaid, the impugned order of
termination dated April 21, 1986 of the petitioner Dr.
Jagadanand Jha is quashed. Writ Petitions (Civil) Nos. 87 of
1987 and 439 of 1987 and Civil Appeal No. 4141 of 1986 in so
far as they relate to the said order of termination of
services of the petitioner Dr. Jagadanand Jha are allowed.
The State Government will be at liberty to consider the
question of termination of service of the petitioner after
giving him a reasonable opportunity to make representation.
The Writ Petitions (Civil) Nos. 55 of 1987 and 431 of
1987 and Civil Appeal No. 4142 of 1986 are dismissed
There will be no order for costs in any of these
matters.
S.L.
339