Karnataka High Court
Sri. Arokya Das S/O Chinnasuri And Smt. ... vs The State Of Karnataka By Its Secretary, ... on 18 September, 2006
Equivalent citations: ILR2006KAR4112, 2006(6)KARLJ629, 2006 (6) AIR KAR R 374, (2006) 6 KANT LJ 629
Author: B.S. Patil
Bench: B.S. Patil
ORDER B.S. Patil, J.
Page 1022
1. The Order dated 21.07.2006 passed by the State Government dissolving the 3rd respondent City Municipal Council, K.G.F., Kolar, in exercise of the powers conferred Under Section 316 of the Karnataka Municipalities Act, 1964 (for short the Act') is challenged in both these writ petitions.
2. As the facts and circumstances of both these petitions are common, they care clubbed together, heard and disposed of by this common order. However, for the sake of convenience, the facts in W.P. No. 10159/2006 are referred to.
3. The petitioners' were elected as Councillors to the 3rd respondent Municipal Council, in the elections held during March 2001. The 2nd petitioner was elected as the President of the Municipal Council. The first meeting of the Council was held on 29.12.2001 and its term was to end in December 2006.
4. On a complaint filed by the 4 th respondent who is a sitting MLA of the locality, the Government got conducted an investigation through the Deputy Commissioner of the district, who submitted a report dated 14.02.2006 addressed to the Director of Municipal Administration, Bangalore. Acting on the basis of the said report, the 1st respondent issued a show cause notice dated 20.05.2006 to the 3rd respondent -Municipal Council framing as many as 9 charges alleging several irregularities against the Municipal Council and calling upon it to show cause why action to dissolve the Municipal Council Under Section 316 of the Karnataka Municipalities Act, 1964, be not taken. The show cause notice was replied on 03.06.2006 denying all the charges levelled. The 1st respondent passed an order dated 21.07.2006 dissolving the Municipal Council by Page 1023 invoking the provisions of Section 316 of the Act. It is this action that is called in question in this writ petition.
5. Learned Counsel Sri. A.K. Subbaiah appearing for the petitioners along with Sri. Papegowda very strongly urges the following contentions:
i) That, no reasonable opportunity of being heard, as contemplated under Article 243-U of the Constitution of India has been provided before passing the impugned order. Reasonable opportunity of being heard as contemplated under Article 243-U of the Constitution, includes personal hearing which is not afforded in the instant case and therefore the action is illegal. In this regard, reliance is placed on the judgment of this Court in the case of Arokya Das @ Das Chinnasavari and Ors. v. State of Karnataka and Ors. (for short Arokya Das Case) which incidentally involves the very same Municipal Council of Robertsonpet which was dissolved earlier under different circumstances.
ii) That, every charge levelled against the Council was properly explained by way of a detailed reply but the same has not been considered and therefore there is total non-application of mind to the reply submitted to the charges. In this connection he takes the Court to the reply given on 03.06.2006 vide Annexure-C.
iii) That the action to dissolve the Council stems from the report/complaint of the 4 th respondent - MLA which is actuated by political and ulterior considerations.
iv) He next contends that the powers conferred Under Section 316 of the Act cannot be invoked for the nature of the charges levelled against the Municipal Council. In this regard he submits that the duties and functions of the Municipal Council are enumerated in Chapter V particularly Sections 87, 88 and 91 and none of those duties or functions are violated and therefore the extreme measure of dissolving the elected body was not permissible.
v) That, in the absence of consideration of the explanation offered in the reply to the show cause notice by either rejecting or accepting the same regarding each one of the charges, it cannot be said that the Government has applied its mind to the reply given and has acted in accordance with law by observing the Rules of natural justice. In this regard, he has placed reliance on the two judgments of this Court in the cases of Ibrahim Katnalsab Maskawale and Ors. v. Joint Registrar of Co-operative Societies, Balgam KLJ 1988 (2) 213 & K.T. Puttegowa v. The Deputy Registrar of Co-operative Societies and Ors. KLJ 1989 (2) 17.
vi) He has lastly laid considerable stress on the scope, ambit and purport of Section 316 to contend that the default attributed to the Council entailing its dissolution must be persistent and not a case of stray or solitary instance. In this regard, he has placed reliance on two judgments of this Court in the cases of Nagaraja v. Stats of Karnataka 1979 (1) KLJ SN 80 & Town Municipal Council, Coondapur v. State of Karnataka 1977 (2) KLJ 114.
Page 1024
6. Learned Advocate General representing the State Government and the 2nd respondent - Deputy Commissioner submits that the action to dissolve the Municipal Council is taken strictly in accordance with law and after duly complying with the principles of natural justice. Taking the Court through the nature of the charges levelled against the Municipal Council, he submits that the illegalities resorted to by the Council were of serious and grave nature warranting the action in question. Dealing with Charge No. l pertaining to violation of Sub-clause (2) of Section 72 of the Karnataka Municipalities Act regarding omission to auction the shops belonging to the Municipal Council, he has contended that this allegation is admitted in the reply submitted by the Municipal Council. In this regard, he has brought to the notice of the Court an order passed in W.P.No. 10123/1999 on 30.3.1999 wherein a direction is issued to all the Municipalities in the State to strictly conform to the provisions contained in Section 72 of the Act and Rule 39 of the Rules while disposing of the stalls or shops.
7. Referring to another charge of causing loss in a sum of Rs. 1,35,000/ - in the matter of tender work given to the contractors, the reply submitted by the Council tries to put the blame on the Junior Engineer. Further, as regards non-production of some of the records at the time of inspection, the Council has come forward with an excuse that the concerned officers were transferred and therefore the records were not made available. Thus, the learned Advocate General submits that many of the charges, atleast 4 of them have been admitted by the Council in its reply submitted and therefore there was no need to afford any opportunity of personal hearing once the charges are admitted. He further submits that if any one of the charge is proved, the State is empowered to resort to the action contemplated Under Section 316 of the Act.
8. Learned Advocate General has next contended that the petitioners have not asked for personal hearing. That the reasonable opportunity of being heard, contemplated under Article 243-U does not include an opportunity of the personal hearing. Where no prejudice is caused by the action under challenge, there is no need for compliance of the principles of natural justice. In this regard, he has placed reliance on the judgment reported in the case of Aligarh Muslim University and Ors. v. Mansoor Ali Khan . Strongly contending that reasonable opportunity of being heard does not mean personal hearing, learned Advocate General has placed reliance on the following judgments of the Apex Court:
i) Carborundum Universal Ltd. v. Central Board of Direct Taxes, New Delhi 1989 Suppl (2) SCC 462,
ii) The State of Assam and Anr. v. The Gauhati Municipal Board, Gauhati , Page 1025
iii) Baldev Singh and Ors. v. State of Himachal Pradesh and Ors. ,
iv) Union of India v. Jyoti Prakash Mitter
v) F.N. Roy v. Collector of Customs, Calcutta and Ors. ,
9. He next contends that the order passed by the Government dissolving the Municipality need not contain detailed reasons as is expected of the judicial orders passed by the Courts. He has placed reliance on the judgment rendered by the Apex Court in the case of M.J. Sivani and Ors. v. State of Karnataka and Ors. and S.N. Mukherjee v. Union of India . It is finally contended by the learned Advocate General that the Court shall not interfere with the administrative decisions unless the same is shown to be illogical or one suffering from procedural impropriety or that it shocks the conscience of the Court. He has placed reliance on the judgment of the Apex Court in the case of Damoh Panna Sagar Rural Regional Bank and Anr. v. Munna Lal Jain in this regard.
10. Learned Counsel appearing for the 4th respondent Sri. Lakshminarayana submits that there are prima facie materials to show that the Municipality has violated the rules and the provisions of the Act. For the purpose of finding out the illegalities committed, it is not necessary to hold an enquiry like a disciplinary enquiry to find the guilt of the delinquent or of an accused. That, other Councillors have not approached this Court nor have they been impleaded which meant that the majority have acquiesced in the decision taken. Placing considerable emphasis on the empty formality of insisting for personal hearing he has placed reliance on the judgment of the Apex Court in the case of State of Maharashtra and Ors. v. Jalgaon Municipal Council and Ors. relating to the so called dubious doctrine. He submits that as many as 160 sites have been auctioned for less than Rs. 25,000/- only to over come the requirement of taking prior permission of the Government. As regards the auction of other five sites for Rs. 50,000/- and more, it was not the Deputy Commissioner who was competent but the State Government whose prior permission was necessary as per Section 72(2) of the Karnataka Municipal Corporations Act. He submits that permission obtained on 9.3.2004 Page 1026 from the Deputy Commissioner is not sufficient compliance with the provisions of the Act. These violations, according to the learned Counsel being indisputable and admitted and the action to dissolve the Municipality having been taken in public interest, the principles of natural justice requiring personal hearing need not be mechanically invoked to come to the aid of the petitioners in this case is his submission. Contending that the previous sanction of the Government before bringing the property to auction is mandatory, he has placed reliance in the case of Krishan Murari Lal Sehgal v. State of Punjab . He has emphasized the feet that a distinction has to be made in the case of infraction of private rights and the rights as claimed by the Council, particularly in the background of serious allegations made. He has placed reliance on the following decisions:
7. S.L. Kapoor v. Jagmohan and Ors.
8. M.C. Mehta v. Union of India and Ors.
9. Canara Bank v. V.K. Awasthy .
11. Having heard the learned Counsel for the parties and upon careful perusal of the materials placed before the Court, the point that arises for consideration is:
Whether the action of the State Government in dissolving the third respondent City Municipal Council is legally sustainable?
12. As per the show cause issued on 20 th May, 2006 the allegations of illegalities and irregularities are broadly classified in two categories. First one, pertaining to violation of Rules regarding the financial and economic matters resulting in misuse of the economic resources of the Municipal Council. The other, pertaining to violation of Rules and irregularities in relation to other technical requirements. In the first category as many as seven specific instances of irregularities are pointed out whereas in the second category as many as nine instances of irregularities are detailed in the show cause notice. The basis for issuing the show cause notice, as can be seen from the show cause notice itself is the letter and the report of the Deputy Commissioner Kolar, dated 14.2.2006 and the consequent investigation by the Directorate of Municipal Administration and the report submitted by the Directorate. The illegalities alleged, relate to violation of Section 72(2) of the Karnataka Municipality Rules 1966 regarding continuation of the lease of some of the shops without conducting auction, failure to take action against one K. Chandrashekar, Marketing Inspector, who had alleged to have temporarily misappropriated a sum of Rs. 65,000/-; Page 1027 auction of sites during the year 2002 in contravention of the Act and Rules without taking prior permission of the Government; omission to effectively advertise and notify the intended auction thereby resulting in realisation of less amount in the auctions conducted; lapse in not recording the details of the immovable property owned and possessed by the Municipality properly and the failure of the officials to provide details in this regard; auction sale of sites measuring 30' x 40' which would have fetched a sum of Rs. 19,20,000/- at the rate of Rs. 10/- per sq.ft. in the market by realising only an amount of Rs. 9,72,928/- which meant loss of Rs. 9,47,072/- to the Council, etc.
13. As regards the irregularities and illegalities falling in the second category pertaining to technical aspects and violation of rules, the allegations made pertain to non-furnishing of eleven records in relation to tenders called for, not obtaining technical approval for the estimated expenditure and not following the prescribed procedure in calling for tenders. Illegalities were allegedly committed during the year 2002-2003 in respect of 72 works by granting piece work contract and in not making available some of the files pertaining to the piece work.
14. The show cause notice was replied by the President of the Municipal Council after discussing the matter in the Municipal Council and after a resolution was passed in this regard on 03.06.2006. As regards the continuation of lease of the 1314 shops, it is contended that admittedly the said shops had been given on lease/rental basis with effect from the year 1964 when the Sanitary Board was in existence. Although the requirement was to auction the shops every 5 years, as the lessees approached the Civil Court from time to time and obstructed the auction, the same could not be conducted. It is further stated that the previous Commissioner of the Municipal Council, Sri. M. Ramesh had effected changes by allotting the shops in favour of others which was disproved by the present Municipal Council on 08.09.1995 resolving to continue the previous lessees. It is further stated that continuation of the lease has taken place even during the time of previous Municipal Councillors who were in power. With regard to allegations made against Sri. Chandrashekar, it is contended that the matter did not come to the notice of the Council, at any rate, if the said official had misused the funds that cannot be a ground to hold the Council liable. As regards the auction procedure followed in conducting the auction, it is stated that all the prescribed procedure is followed and publication is given in the newspaper apart from notifying the public with beat of tom-tom and other modes of public notice and that out of 162 sites auctioned not even one site is auctioned for a sum more than Rs. 25,000/- and therefore there was no necessity to take prior approval of the Government. As regards the five sites which were of the value more than 50,000/- prior approval of the Deputy Commissioner had been taken as per letter dated 09.03.2004 and therefore the allegation made in this regard was baseless. As regards the allegations pertaining to non-mentioning the details of immovable property owned by the Municipality in the concerned register, the Council has pointed out that it had nothing to do with the alleged irregularities attributed to the Page 1028 council. The officials were required to comply with these requirements. With regard to the alleged loss caused in a sum of Rs. 9,47,072/- by auctioning 160 sites measuring 30' X 40', the allegations are denied. In so far as allegations pertaining to non-furnishing of 11 records relating to the works carried out, it has been stated that the said records had been misplaced at the time of inspection and investigation. As regards the contract given on piece work basis and non-furnishing of 15 records the Municipal Council has come forward with an explanation that the concerned officials had been transferred and were not available at the time of inspection which resulted in non-furnishing of the documents in question.
15. From the allegations made in the show cause notice and the reply submitted by the Municipal Council, it can be seen that most of the allegations have been denied stoutly and no where the Municipal Council has come out in its reply admitting the allegations. The contention urged by the learned Advocate General that several allegations have been admitted by the Council specifically cannot be accepted. If one carefully peruses the reply submitted by the Municipal Council every charge is explained and denied. A statement to be taken as an admission has to be specific and unambiguous, particularly when the Court has to act upon the same to fix up liability, which necessarily follows serious civil consequences.
16. The contention of the Advocate General that the fact of not auctioning the sites owned by the Municipal Council is admitted has to be examined in the context of the assertion made by the Municipal Council that since 1964 these shops were given on lease and the lease period was extended or renewed after lapse of every five years by increasing the rent and the present Municipal Council had continued the said procedure. The justification offered and the background in which the auction of the shops were not conducted particularly in the wake of pendency of litigation, as stated in the reply, would make it abundantly clear that the charge is not admitted. Therefore, it becomes incumbent on the authority examining the matter to consider the explanation given and find out if the explanation deserved to be accepted, or it would fall in the category of lapses mentioned in See. 316 warranting severe action of dissolution of an elected body.
17. As regards failure to obtain prior sanction of the Government for auctioning the sites, the reply furnished by the Municipal Council is that in so far as sites whose value is less than Rs. 25,000/-, there being no statutory requirement to obtain prior permission they auctioned those sites and have realised the market value. In so far as five sites which were auctioned for the value ranging from Rs. 50,000/- to Rs. 53,000/-, the defence is that they were auctioned after taking prior permission of the Deputy Commissioner. The details pertaining to the letter of the Deputy Commissioner are also referred in the reply. The impugned order does not record any finding as to whether such permission was obtained from the Deputy Commissioner. The factum of the Municipal Council obtaining prior permission of the Deputy Commissioner and the effect of obtaining such permission is not considered in the impugned order. No doubt, prima facie it appears that huge sites Page 1029 measuring 50' X 100' which have been sold at the value of around Rs. 50,000/- per site do not inspire confidence to hold that appropriate market value was realised. Allegations are also made in the show cause notice that the auctions are conducted without giving proper publicity and without advertising them in the newspapers. In view of such grave allegations made, it was incumbent for the respondent-authorities to gather necessary materials after holding proper enquiry to find out if there was proper publication and due notice to the public regarding the proposed auction and whether the allegation made stating that the notice of the proposed auction was published in only one single newspaper that too, in only one single copy was true. If that be so it would certainly mean that the whole thing was done in order to achieve certain dubious objects. But this allegation has remained only an allegation and no materials are gathered to find out the truth. This was not difficult to unearth by following due process and by collecting credible materials. Though this allegation is denied by way of reply submitted, the impugned order does not disclose any specific finding with regard to this allegation. Thus, there are no efforts made to unearth these allegations. Secondly, the reply given and the stand taken by the Council is not considered to sustain the adverse findings recorded by the Respondent Authorities.
18. Once it is held that the allegations made were not admitted the next question that would arise is whether a personal hearing was essential in the light of the provisions contained under Article 243-U of the Court and in view of the decision rendered by this Court in the case reported in Arokya Das Case in I.L.R. 2000 KAR 2794. This Court has authoritatively pronounced after referring to the constitutional provisions and after examining the serious nature of the consequences that follow when an elected body is dissolved that the requirement under Article 243-U of the Constitution mandates personal hearing. Therefore, in the facts and circumstances of this case once it is held that the allegations made are not admitted, as a natural corollary it follows that the Municipal Council ought to have been given an opportunity of personal hearing to substantiate the stand taken by it in the reply before the extreme measure of dissolution is resorted to. This is all the more necessary because in a democratic set up when an elected body is dissolved on the ground that it has indulged in illegal activities and has abused its powers resorting to financial irregularities, the findings recorded would have stigmatic effect on the entire body. The judgments sought to be relied upon by the learned Advocate General and by Sri. Lakshminarayana to contend that it would be only an empty formality to afford personal hearing and that the principles of natural justice cannot be resorted to as mere rituals to be performed are not applicable to the facts of this case. The contention of the learned Advocate General that Article 243-U which provides for reasonable opportunity of being heard cannot be interpreted to require personal hearing cannot also be accepted in the wake of the decision rendered by this Court in Arokya Das Case reported in I.L.R. 2000 KAR 2794 which has been affirmed in appeal by the Division Bench.
Page 1030
19. A perusal of the impugned order in the background of the reply submitted by the Municipal Council would lead to an inescapable conclusion that the explanation offered to each of the charges by the Municipal Council is not considered by the Government before passing the impugned order. There is non-application of mind to the reply submitted and the order is not a speaking order, in that, all relevant aspects have not been considered.
20. Though the impugned order makes it clear that the allegations found proved resulting in dissolution of the Municipal Council would not render the Councilors ineligible to contest for the next election, the findings have serious stigmatic effect and will certainly affect them. Therefore, on the ground that lenient view is taken so for as their right to contest for the next election is concerned the impugned order cannot be sustained.
21. It has to be mentioned here that due to the default in unearthing the truth by following proper procedure, serious charges including even financial irregularities reflecting corrupt and dishonest dealings are going unpunished which is highly distressing. This cannot be allowed to happen. Rule of law, transparency in public dealings and accountability of the public bodies demand that these allegations have to be seriously and thoroughly looked into. The object of such an endeavour cannot just be limited to over throwing a body but shall result in follow-up action of fixing liability on the concerned individuals/ officials followed by initiation of such legal steps as are permissible in law to make good the loss and to punish the guilty. It is only then that the anxiety of the State to take recourse to the provisions of Section 316 of the Act to dissolve a Municipal Council on charges of financial irregularities and dishonest dealings can result in a meaningful action and serve as a lesson to similarly placed bodies. Such an exercise is imperative in instant case, particularly because of the serious nature of the allegations made.
22. In the result and for the foregoing reasons, I pass the following:
ORDER
(i) Writ petitions are allowed.
(ii) The impugned order is quashed.
(iii) The 3rd respondent - City Municipal Council, Robertsonpet is ordered to be restored.
(iv) The State Government shall undertake systematic exercise to unearth the truth leading to the allegations made against the Municipal Council and take appropriate action expeditiously, at any rate within a period of three months from the date of receipt of a copy of the order. Even if the term of the Municipality expires before the final orders are passed, the 1st Respondent shall proceed to pass appropriate orders in the matter. If the allegations are found proved, the 1st respondent shall initiate actions against the guilty in accordance with law and shall make all endeavours to recover the loss caused to the Municipality and also to punish the guilty.
In the circumstances of the case, the parties to bear their respective costs.