Madhya Pradesh High Court
Arjun Singh vs State Of Madhya Pradesh And Ors. on 4 March, 1992
Equivalent citations: 1992(0)MPLJ693
Author: D.M. Dharmadhikari
Bench: D.M. Dharmadhikari
ORDER D.M. Dharamadhikari, J.
1. The petitioner is a prominent leader of the Congress party in India. He was twice Chief Minister of the State of Madhya Pradesh. For some period, he was Governor of the State of Punjab. He is presently a cabinet minister in the Central Cabinet.
2. The petitioner by this petition under Article 226 of the Constitution of India seeks quashing of the notification published in the Madhya Pradesh Rajpatra dated 29-3-1990, whereby the scope of enquiry pending before Hon'ble Shri Justice S. T. Ramalingam, Judge of the Madras High Court has been enlarged by adding three more terms of reference for enquiry by him.
3. A few important events will have to be kept in mind while deciding the present controversy. Shri Kailash Joshi, who was the leader of the opposition in Madhya Pradesh Legislative Assembly on 18-10-1987 filed a writ petition in the High Court of Madhya Pradesh, being Misc. Petition No. 3909 of 1987, seeking appropriate directions from the Court in the matter of a lottery conducted by Churhat Welfare Society at Churhat in district Sidhi and highlighted therein several illegalities, irregularities and misuse of powers by high officials and public-men in the Government. The petition filed by Shri Kailash Joshi was allowed by the High Court by its decision reported in Kailash Joshi v. State of M. P. and Ors., 1989 JLJ 127. The main judgment was delivered by Hon'ble C. P. Sen, J. (as he then was) of this Court. The other honourable Judge Shri Y.B. Suryawanshi (as he then was), gave a separate opinion, but substantially concurred with the opinion of C. P. Sen. Suryawanshi, J. in his opinion categorically agreed with the directions issued by C. P. Sen, J. while allowing the petition as contained in paragraph 42 of the opinion of C. P. Sen, J. Since the question of validity of the impugned notification enlarging the scope of enquiry before Hon'ble Shri Justice S. T. Ramalingam depends, to a large extent, on the true understanding of the directions of the High Court, it would be necessary to quote verbatim the final directions of the Court contained in paragraph 42 of the order in the case of Shri Kailash Joshi (supra) as under:-
"42. We, therefore, allow the petition and quash the order of the Collector dated 104-1987 condoning defaults, the exemption granted under Section 28 of the Lottery Act to Churhat Society for payment of tax by the Chief Minister on 15-5-1987 and by the Cabinet on 10-5-1988 as being without application of mind and declare that Churhat Society was granted a licence to hold one draw for a private lottery under Section 6 but Churhat Society unlawfaully held 11 more draws. Churhat and the organising agent to furnish complete accounts of its 12 draws including the profits earned and unclaimed prizes retained by the agent and the taxes payable, the full particulars of the prize winners of prizes of Rs. 10,000/- and above and their mode of payments. An enquiry be made by an independent high power agency into the affairs of Churhat Society and how the shares of its profits derived from the draws have been utilized and to take such action as may be required under the law against Churhat Society and its organising agents."
4. As we have understood, the controversy in the Churhat Lottery case initiated by Shri Kailash Joshi, leader of the opposition, was that a private lottery involving crores of rupees was organised in the constituency of Shri Arjun Singh, the then Chief Minister of Madhya Pradesh, through a society consisting of his own son, near relatives and friends, by granting them licence for running the lottery under Section 6 and tax exemptions under Section 28 of the M. P. Lottery (Niyantran Tatha Kar) Adhiniyam, 1973. The case of Shri Kailash Joshi before the High Court was that undue favours were shown and legal provisions were violated with impunity only with a view to confer undue benefits on the Churhat society and the managing members of that society. There was, according to Shri Kailash Joshi great misuse of official position by the concerned authorities and the Ministers in-charge.
5. It would also be necessary to mention a few relevant facts at this stage. The petitioner Shri Arjun Singh was elected as the Chief Minister of the State in June 1980, being a member of the Vidhan Sabha from Churhat constituency. He completed his full term and thereafter was again elected as Chief Minister and continued in that capacity up to 12-3-1985 when he was appointed Governor of Punjab. After a brief period as Governor of Punjab, he became a Cabinet Minister in the Central Cabinet and returned to the State of Madhya Pradesh as Chief Minister on 14-2-1988. Shri Motilal Vora was Chief Minister of Madhya Pradesh between 13-3-1985 to 13-2-1988. As has already been mentioned above, Shri Arjun Singh became Chief Minister from 14-2-1988 and as a result of the decision of the Division Bench in the case of Churhat Lottery in January 1989, he stepped down from the office of the Chief Minister by tendering his resignation. The then Ministry of the Congress party in the Madhya Pradesh State Assembly headed by Shri Motilal Vora as Chief Minister, in order to implement those directions of the High Court, by three notifications published on 24-2-1981 in M. P. Rajpatra appointed Hon'ble Shri Justice S. T. Ramalingam, Judge of Madras High Court to enquire into various affairs of Churhat Children Welfare Society and the lottery organised by it. The three notifications on the subject, cumulatively marked as Annexure-A/5 with the petition are included at pages 50 to 53 of the paper book. It is to be noticed here that the original terms of reference made to Hon'ble Shri S. T. Ramalingam for enquiry by the then Congress Government in the State with Shri Motilal Vora as Chief Minister, contained the following terms of reference as notified. The same are reproduced below verbitim :
"Bhopal, the 24th February 1989 No. F.l-3-89-l(i) E.C..... Whereas the High Court in its order dated the 20th January 1989 in M. P. No. 3909/87, Kailash Joshi v. State of Madhya Pradesh and others has directed that an inquiry be made by an independent high power agency into the affairs of the Churhat Children's Welfare Society and how the shares of its profits derived from all or any other draws have been utilized and to take such action as may be required under the law against the said Society and its organizing agents and that the State Government is of the view that the said order of the High Court should be implemented and carried on and whereas the State Government is also satisfied that this is a definite matter of public importance which calls for an inquiry to be made, the State Government hereby appoints an independent high power agency presided over by Shri Justice S. T. Ramalingam, Judge of the Madras High Court.
2. The Headquarters of the Agency shall be at Jabalpur, Madhya Pradesh.
3. The term of reference for inquiry by the aforesaid Agency shall be as under : -
(1) How the affairs of the Churhat Children's Welfare Society are conducted and how the share of its profit derived and money collected through lottery has been utilised ?
(2) What is the amount collected drawwise by the agent and the society and what is the tax liability as per the Madhya Pradesh Lottery (Niyantran Tatha Kar) Adhiniyam, 1973 ?
(3) Whether any irregularities, illegalities and offences were committed in organizing the lottery, holding of draws of lottery, distribution of prizes, and in that event the person responsible for the same ?
(4) Any other matter incidental or connected with the above subject matter of enquiry.
4. The Agency may complete its enquiry and submit its report to the State Government within a period of six months from the date of issue of this Notification.
By order and in the name of Governor of Madhya Pradesh.
R. C. SHRIVASTAVA, Secy."
6. One more important fact to be noticed is that a separate notification was issued on 24-2-1989 in terms of Section 11 of the Commissions of Inquiry Act, 1952, which reads as under :-
"Bhopal, the 24th February 1989 No. F. 1-3-98-I(i) E.C...... Whereas by Government of Madhya Pradesh Resolution dated the 24th Feb., 1989 and Notification No. F l-3-89-I(i) E.C. dated the 24th February 1989 an independent high power agency presided over by Shri S. T. Ramalingam, Judge of the Madras High Court has been appointed to hold an inquiry into affairs of Churhat Children's Society which is a definite matter of public importance.
Whereas Government of Madhya Pradesh is of opinion that all the provisions of the Commissions of Inquiry Act, 1952 should be made applicable to the aforesaid agency; therefore, in exercise of the powers conferred by Section 11 of Commissions of Inquiry Act, 1952 the State Government hereby directs that all the provisions of the said Act shall apply to the above High Power Agency.
By order and in the name of the Governor of Madhya Pradesh R. C. SHRIVASTAVA. Secy."
The third notification of the same date i.e. 24-2-1989 (page 52 of the paper book) was also issued in terms of sub-sections (2) to (5) of Section 5 of the Commissions of Inquiry Act, 1952, to enable the Commission to exercise all necessary and ancillary powers for efficient conduct of the enquiry.
7. After the above enquiry was set up under one Member Justice S. T. Ramalingam of Madras High Court, an application was filed by Shri Kailash Joshi on 25-7-1989 before him to enlarge the scope of the enquiry by including within it the alleged misdeeds and conduct of both the Chief Ministers Shri Arjun Singh and Shri Motilal Vora in granting undue privileges and tax exemptions to the Churhat Society. Justice Ramalingam by order dated 27-7-1989 rejected that application of Shri Kailash Joshi for enlarging the scope of enquiry, holding that the scope of enquiry having already been laid down by the terms of reference of the original notification (Annexure A/5), the same could not be enlarged. Against the rejection of his application by Enquiring Judge, Shri Kailash Joshi has filed a separate petition, being M. P. No. 4403 of 1989, Kailash Joshi v. State of M.P. and Ors..
8. Fresh elections were held to the Legislative Assembly of the State of Madhya Pradesh in February 1990. The petitioner Shri Arjun Singh had filed his nomination from Churhat Assembly constituency and was re-elected, but candidates belonging to Bhartiya Janta Party got victory on majority of seats and Government of Bhartiya Janta Party, headed by Shri Sunderlal Patwa as Chief Minister was formed in the State. During this interval, the enquiry before Justice S. T. Ramalingam had considerably progressed up to the stage of recording of evidence. An interim audit report of N. Vishwanathan and Co., Chartered Accountant, had been submitted in the enquiry in January 1990. In February, 1990, the Director of State Lotteries and the concerned Secretary of the Government of Madhya Pradesh appeared before the Enquiring Authority for recording of their evidence. In March, 1990, the Ministry belonging to Bhartiya Janata Party took office and the influential leaders of the party made public statements that the scope of enquiry before the Judge of Madras High Court would be enlarged. The present Chief Minister Shri Sunderlal Patwa belonging to B.J.P. also made a formal statement to the same effect. This declaration in public and on the floors of the House by the present Chief Minister resulted in issuance of the impugned notification (Annexure A-1) adding three additional terms of reference to the enquiry already pending for submission of report before the Hon'ble Judge. It would be useful for decision of this case to reproduce in full the impugned notification dated 29-3-1990 whereby the scope of enquiry was enlarged by the present Government, belonging to the B. J. P., as under : -
GENERAL ADMINISTRATION DEPARTMENT"
Bhopal, the 29th March, 1990 No. F. 1-3-89-1 (i) E.C. .... Where as Hon'ble the High Court of Madhya Pradesh in M. P. No. 3909 of 1989 has in its order dated 20-1-1989 mentioned that arbitrariness, mala fides, influence, misuse of position are writ large; colossal loss of crores to the public exchequer is obvious and a thorough enquiry by an independent agency is necessary not only to clean the stables but also to maintain the rule of law that no person or official is above law : -
2. And whereas it has also been observed in the said judgment that Shri Arjun Singh owes an explanation to the Nation to show at what cost he has acquired and built his mansion at Kerwan Dam and from where he got the funds for that purchase and that Shri Arjun Singh has to clean clouds in the public interest in order to cleanse the atmosphere which is vitiated and polluted;
3. And whereas it is an admitted fact that Shri Arjun Singh was the Chief Minister when the licence was given to the Churhat Children Welfare Society to run the lottery and again when the tax exemption was given by the Cabinet on 10-5-1988 and it was also admitted by Shri Arjun Singh in the Parliament that he has link with Churhat Society and several of his relatives are members of the Governing Body thereof.
4. And whereas on the cumulative effect thereof, the Hon'ble High Court was pleased to direct that an enquiry be made by an independent High Power Agency into the affairs of Churhat Society and how the shares of its profits derived from the draws have been utilised and to take such action as may be required under the law against Churhat Society and its organising agent;
5. And whereas the State Government thereafter appointed an independent High power Agency presided over by Shri Justice S.T. Ramalingam, Judge of the Madras High Court and referred certain terms of reference to the said agency for enquiry which do not cover within their ambit all the matters as per the true intent- and spirit of the High Court's order.
6. And whereas the State Government is of the opinion that the aforementioned matters are of definite public importance and it is in the interest of justice that the same be also inquired into by the same High Power Agency presided over by Shri Justice S.T. Ramalingam, it enlarges the scope of the enquiry by referring to him the following terms of reference along with others which have been already referred to him earlier : -
A. The entire affairs and activities of Churhat Children Welfare Society from its inception to the date of the High Court Judgment including the enquiry into its assets, liabilities, income and expenditure, the illegalities committed by it and the official favour shown or given to it against the normal and legal procedure and the persons responsible for the same;
B. Whether in the matter of grant of licence to Churhat Children Welfare Society under the M. P. Lottery Adhiniyam to run the lottery and grant of tax exemption Under Section 28 of the said Adhiniyam to the Society either in anticipation of the Cabinet approval or by the Cabinet, there was any abuse of power? If so, the persons or authorities responsible for the same;
C. Since Shri Arjun Singh has failed to give the explanation to the Nation after the High Court's decision, the enquiry be also made as to at what cost he and his family members have acquired and built his mansion at Kerwan Dam and from where they got the funds for that purpose.
7. The Headquarters of the Agency shall be at Jabalpur.
By order and in the name of the Governor of Madhya Pradesh V. K. MALHOTRA, Secy."
9. We have heard at length Shri Venugopal and Shri Kapil Sibbal, learned counsel, on behalf of the petitioner. We have also heard at length Shri Mukhauti, Senior Advocate, Shri N. G. Jain, Advocate General for the State of M. P. and Shri N. S. Kale who appeared for Shri Kailash Joshi as an intervener.
10. Shri Venugopal, Senior Advocate, learned counsel for the petitioner who first addressed us on behalf of the petitioner, followed by Shri Kapil Sibbal attached the impugned notification enlarging the scope of enquiry, mainly on four grounds. Firstly, it was contended that the action is per se mala fide as it is an attempt to politically victimise the petitioner by roping him in a long drawn enquiry with a view to achieve political advantage. Secondly, the terms of reference contained in the impugned notification by way of enlargement of scope of existing enquiry are not 'definite matters of public importance' within the meaning of Section 3 of the Commissions of Inquiry Act, 1952 (hereinafter referred to as 'the Act'). The third contention is that the State Government is not 'appropriate Government' within the meaning of that expression as defined in Section 2 of the Act, because the subject matter of the enquiry in the impugned notification is neither covered by any of the entries in List II or List HI of Seventh Schedule of the Constitution of India. The last submission is that the impugned notification enlarging the scope of the enquiry is neither supported by the provisions of Section 3 nor Section 11 of the Act and the so called subjective satisfaction of the appropriate Government in ordering enlargement of the scope of enquiry by adding three terms of reference, is vitiated because of taking into consideration by it irrelevant and extraneous circumstances and ignoring the relevant circumstances.
11. Before we take up for decision the aforesaid contentions in seriatim, raised on behalf of the petitioner, it would be necessary to state the stand of the State of Madhya Pradesh and the contentions advanced in reply by the learned counsel appearing to support the impugned notification. The stand as disclosed from the return submitted by the State of Madhya Pradesh and from the oral submissions made in support thereof in short is thus. The submission is that there were pertinent observations in the opinions expressed both by Hon'ble C. P. Sen, J. and Hon'ble Y. B. Suryawanshi, J. separately in their orders in the lottery case (supra), which were deliberately ignored by the previous Government of the Congress party headed by Shri Motilal Vora, while formulating the original terms of reference (Annexure A/5). Thus, the learned Advocate General submitted, was done by the then Government of Congress party headed by Shri Motilal Vora to save their own skin, particularly to avoid involvement of Shri Motilal Vora and Shri Arjun Singh in the lottery affair. Attention of this Court was invited to the averments contained in paragraph 24 of the return of the State of Madhya Pradesh in reply to paragraph 13 of the petition.
12. Explaining the above averment, the learned Advocate General submitted that in fact the original terms of reference fomulated were comprehensive in nature to permit an enquiry to be made into the conduct of the two Chief Ministers of the Congress party in power at the relevant time so as to find out whether there was in fact any misuse or abuse of their official position by them. On a second thought and to themselves, the original terms of reference formulated and issued to the press were withdrawn and fresh terms were drafted and notified for the purpose of enquiry. The relevant file containing the decision of the Government was placed before us to demonstrate the spade work done in the Cabinet before issuance of the original notification. The contents of this file were not disclosed to the opposite party as a privilege was claimed by the State against its disclosure in the public interest and to maintain secrecy and confidence of important Government decisions.
13. According to the State and the intervener Shri Kailash Joshi, on the observations and directions of the High Court in the judgment of lottery case, a full-fledged enquiry in public interest was necessitated into all aspects of misuse of powers by the concerned officials in the affairs of Churhat Lottery Society, right from its inception to the date the lottery was held. It was also necessary to probe into the conduct of the high officials and the concerned Chief Ministers who were at the helm of affairs at the relevant time in granting alleged privileges and tax exemptions to the society in the conduct of the lottery. Our attention was pointedly invited by the learned counsel for both the parties to the following passages and opinions of the High Court in the lottery case contained in the opinion of C. P. Sen, J. and Y. B. Suryawanshi, J., respectively : -
"5. The petitioner further submitted....
Shri Arjun Singh, the respondent No. 3 had given a statement in M. P. Vidhan Sabha on his election as an independent Member on 3-3-1960 regarding corruption eating into the very vitals of democracy and made full disclosure of his assets showing his bank balance of Rs. 2,500/- only. Recently, he and his family members have constructed a bungalow at Kerva Dam and it is estimated by the people to be worth more than a crore of rupees. This is only one of his properties, besides several others. Many times issues were raised in this respect in Vidhan Sabha, without any proper answers. Since no accounts were submitted by the society regarding the draws of the lottery and the society being controlled by the close relations of Shri Arjun Singh, it is not only necessary in the interest of democracy but also with a view to maintain the dignity of the high office as Chief Minister that complete in Statement in respect of the assets of the family of Shri Arjun Singh be furnished before this Court. This is necessary because many magazines and press statement of this non-disclosure and Kerva Dam bungalow have been put as co-related and the Government Machinery has deliberately omitted to do its duty as required under the provisions of the Act. In spite of all this, the Collector on 104-1987 wrongly condoned the draws of the lottery held beyond the licence period by invoking powers under Section 23 of the Limitation Act and under the General Clauses Act. The then Chief Minister, respondent No. 2 mechanically and hurriedly granted exemption under Section 28 from payment of lottery tax on 15-4-1987 in anticipation of the Cabinet approval. All these illegalities and irregularities were perpetuated because the respondent No. 3 was Chief Minister when the licence was granted and the Cabinet gave its approval in order to oblige him and his relations. In between, he was All India Vice-President of the ruling party and also Cabinet Minister in the Central Cabinet."
14. The "portion reproduces above contains the allegations against Shri Arjun Singh and Shri Motilal Vora as Chief Ministers at the relevant time, by the petitioner Shri Kailash Joshi in his petition. With regard to the exemption from payment of tax under Section 28 of the Lottery Act, by the then Government, in the opinion of C. P. Sen, J. it has been stated as under: -
"26....................
(d) In spite of the various irregularities and illegalities and the adverse reports of the Director, the then Chief Minister in haste exempted the Society under Section 28 of the Act on 15-5-1987 in anticipation of Cabinet's approval. Exemption from payment of tax under Section 28 can only be granted if the net proceeds of the lottery are to be devoted to a charitable purpose. Admittedly, here the net proceeds of the lottery were shared by the Society and the organising agent and, therefore, the Society was disentitled to get exemption from payment of tax. Even otherwise the Chief Minister ought to have requisitioned the necessary information from the Society about the conduct of the lottery, actual amount paid towards prizes, unclaimed prizes and the total profits earned by the organising agents in conducting the 12 draws of the lottery which could not be exempted from tax and should have required the organising agent to deposit 25% of its profits towards tax under Section 10 before deciding to grant the exemption. The State Cabinet gave its approval on 10-5-1988. The exemption granted before realising the tax from the organising agent towards the profits earned by it, was not in the interest of public revenue. Under the circumstances of the case, the State Government was not justified in granting exemption to the Society from payment of tax and also in particular with regard to draws of lottery held unlawfully after the first draw. In fact the tax should have been deposited within 30 days of each draw and the plea of the Society that the Government can still recover the tax from the agent is no excuse."
15. The stand taken by Shri Arjun Singh in the lottery case was that it was not a private lottery licenced under Section 6 of the Lottery Act, but a specially authorised lottery of the State Government under Section 30(b) of the Lottery Act. Hon'ble C. P. Sen, J. held as under in paragraph 38 of the order: -
"38. In view of the finding recorded by that the Society got a licence to run a private lottery under Section 6 of the Lottery Act, we peed not go into the question as to the validity of Section 30(b) of the Act. We have also held that only Lotteries conducted by other State Government with whom there are reciprocal arrangements can alone be granted special authorisation under Section 30(b), and not to private lotteries. The Supreme Court in K. I. Shephard v. Union of India, AIR 1988 SC 686, has held :-
"Vires need not be decided as cases could be disposed of without reference to question of vires. Courts must not enter into constitutional issues and attempt interpretation of provisions unless it is necessary, for disposal of dispute."
This apart, learned Advocate General has argued that Section 30(b) is controlled by Section 30(a) since specially authorised lottery can only be run in the same way as State Lotteries and for State Lottery guidelines have been framed by M. P. Lottery Rules, 1960. But even then the lotteries conducted by the Society were contrary to these Rules. The lotteries were not conducted under the supervision of the Director of Lotteries, on the other hand the Director was kept in dark and even information sought by him were not supplied. The tickets could only be issued in denomination of rupee one only but the Society printed and sold tickets of denominations rupees 2 to 20 mostly. The tickets were not printed in the Government press or any other press authorised by the Government. The total number of tickets printed for each draw was not decided by the Government. The Government did not stand guarantee for the prize. Same person could not get more than one prize. Agents could be appointed for selling tickets and not for organising the lottery as has been done here by the organising agent. It has not been shown that the procedure prescribed under these Rules have been followed in holding the draws. If Section 30(b) permits the State Government to specially authorise such lotteries as have been conducted by the Society, then this clause gives arbitrary, discriminatory, unguided and uncanalised power to the State. In any case, it is desirable that the State Legislature sooner or later clarifies the matter and the State Government frames rules regarding specially authorised lotteries."
Thus holding that it was a private lottery, to which tax exemptions were granted by the State Government hurriedly and without due application of mind as also ignoring several violations of law and irregularities committed by it, Hon'ble C. P. Sen, J. made the following remarks against the petitioner Shri Arjun Singh in paragraphs 30 and 40 of the order reproduced hereunder: -
"39. Lastly, we must comment about the palatial mansion constructed by Shri Arjun Singh and his family' at Kerva Dam close to Bhopal near about the time or after the lotteries were conducted by Churhat Society as alleged. Shri Arjun Singh and his son Shri Ajay Singh tried to brush aside the same by simply saying that the allegations are irrelevant without trying to meet and clear the clouds raised. In fact, there is no specific denial made about the adverse allegations against them. Let us consider the averments in the petition made by a responsible person, who is the leader of the Opposition in Vidhan Sabha in this regard. Admittedly, Shri Arjun Singh was the Chief Minister when the licence was given to the Society to run the lottery and again when the tax exemption was granted by the Cabinet on 10-5-1988. It is said that Shri Arjun Singh has admitted in the Parliament that he has link with Churhat Society and it was formed after he got inspiration to do something for the welfare of the children. In fact, the Memorandum of Association is attested by an I.A.S. Officer who was his Personal Secretary then as alleged in M.P. No. 820/87. Churhat Society was being managed by his close relations, his son Ajay Singh was the Secretary of the Society and took a prominent part in conducting the lottery, answered to the queries made by the authorities concerned and kept liaison with the organising agent. The Director of State Lotteries has mentioned that Shri Han Vijay Singh, a brother of Shri Arjun Singh, was conducting the lottery from behind the scene though he was even not an office bearer of the Society. Shri Arjun Singh after being elected in the Vidhan Sabha as an Independent Member made a statement on the toor of the House that the increasing incidents of corruption is earning into the very vital of democracy and as a chosen representative of the people, it should be his first step as an MLA to place the list of his family movable and immovable assets which were being kept open for inspection by anyone. The assets declared being :-
Movables - 1. Car.
2. Rs. 2,300/- compensation paid annually in lien of resumption of Jagirdari.
3. Rs. 2,500/- bank balance.
4. Rs. 10,000/- Valuable and other articles.
5. Rs. 10,000/- Insurance Policy. Immovables - 1. 110 acres of land.
2. Farm house.
We suppose that he still owns the Farm house and 110 acres of land with him as there is statement to the contrary.
40. The petitioner has alleged that Shri Arjun Singh and his family members have got a bungalow at Kerva Dam, it is estimated by the people concerned to be worth more than a crore rupees. It is said that only one item in the bungalow i.e. laying decent marble stones of 10,000 square feet which cost Rs. 150/- per square feet, i.e. costs of laying marble alone comes to 15 lacs. So the petitioner claims that it is necessary to make the estimate of his bungalow by appointment of a commissioner. This is said to be only one of his' properties besides several others. Several times issues were raised in the Vidhan Sabha according to the petitioner but without any proper answer. So the petitioner requires him to show his present assets in full including the value of the Kerva Dam bungalow since his family members are concerned with Churhat Lottery affair regarding which the account has not been submitted still, it is not only necessary in the interest of democracy but also with a view to maintain dignity of the high office of the Chief Minister that complete statement in respect of these assets of the family of Shri Arjun Singh is furnished before the High Court. It is expected by the petitioner that there shall not be any hesitation in furnishing the same since it is presumed that the lofty ideal with which he made the disclosure in 1960 would still be persisting in the mind and heart of Shri Arjun Singh and his family members."
16. In paragraph 41, after relying on a decision of the Supreme Court in the case of Pratap Singh v. State of Punjab, AIR 1964 SC 72, Hon'ble C. P. Sen, J. remarked that Shri Arjun Singh did not file an affidavit in reply to the allegations made by Shri Kailash Joshi against him for acquisition of assets and wealth disproportionate to known sources of income. The remarks made by Hon'ble C. P. Sen, J. are as under : -
"According to us, Shri Arjun Singh owes an explanation to the Nation to show at what cost he acquired and built his mansion at Kerva Dam and from where and how he got the funds for that purpose. We are not accepting all the averments of the petitioner to be true but Shri Arjun Singh has to clear the cloud in public interest in order to cleanse the atmosphere which is vitiated and polluted according to his very first statement in the Vidhan Sabha 28 years back."
17. In the concluding paragraph 42, of the opinion of C. P. Sen, J., already reproduced above, the order of the Collector dated 10-4-1987 condoning defaults in conducting the lottery, the order dated 15-5-1987 granting exemption from payment of tax to the society by the then Chief Minister Shri Motilal Vora and by the Cabinet on 10-5-1988 were all quashed. It was declared that since it was a private lottery and licence was granted only for one draw, eleven more draws were held unlawfully. The organisers of the lottery and all its agents were directed to furnish accounts of all the draws. The learned Judge then issued directions for holding an enquiry by an independent high power agency into the affairs of Churhat Society. With regard to the enquiry the exact words used by Hon'ble C. P. Sen, J. with which the other learned Judge Hon'ble Y. B. Suryawanshi, J. expressed his full agreement, in paragraph 14 of his opinion, are as under:-
"...... an independent high power agency into the affairs of Churhat Society and how the share of its profits derived from the draws have been utilized and to take such action as may be required under the law against Churhat Society and its organising agent."
18. It is as well necessary also to pin point certain observations and conclusions in the opinion of Suryawanshi, J. which were commented and heavily relied upon by the learned counsel appearing for either side, in support of their respective contentions. Commenting on the constitution of Churhat Society, consisting admittedly of the near relations and friends of the petitioner Shri Arjun Singh, Hon'ble Suryawanshi, J. made the following comments :-
"Thirdly, it is not denied that out of five members on the Governing Body, which entirely managed the affairs of the Society, three members, Sarvashri Ajay Singh, Dr. Sajjan Singh and B. P. Singh are respectively, the son, brother and son-in-law of Shri Arjun Singh. The fourth Shri S. P. Singh is also a relation and the fifth Maharaja Martandsingh, had close links of heritage (not denied). And the General Body consisted of only three others, besides those five, total eight."
Hon'ble Suryawanshi, J. then considered the. stand taken on behalf of ShriMotilal Vora, the then Chief Minister who had taken a categorical stand in the lottery case before the High Court that the lottery in Churhat was a private lottery, licensed under Section 7 of the Act and the said lottery was not a specifically authorised lottery of the State under Section 30(b) of the Act. Considering the above argument advanced on behalf of Shri Motilal Vora, Hon'ble Suryawanshi, J. commented in paragraph 13 of his opinion, giving him a clean chit, as under : -
"According to Shri Tamaskar, Shri Vora passed the order of exemption in anticipation of council's approval which would have been a decision by corporate body but in no way he had favoured Shri Arjun Singh or organisers/promoters of Lottery, who are his (Shri Arjun Singh) relations. In our view, Shri Vora was not even remotely concerned with this lottery. In any case he was not a person to be monetarily benefitted by such shady and scandalous transactions."
19. Having thus discussed the subject matter and the legal contentions advanced in that lottery case, Hon'ble Suryawanshi, J. agreed with the conclusion and the directions given by Hon'ble C. P. Sen, J. in paragraph 14 of his opinion. This is what Hon'ble Suryavanshi; J., in last but concluding portion stated in paragraph 14 : -
"14. The learned' counsel, Shri Jain, concluded by saying that the petitioner has demonstrated that a "blanket licence" was issued to Churhat Society by the then Collector, Sidhi, without any application of mind whatsoever, which could be attributed to the oblique reasons mentioned in the petition. Subsequently, breaches were not only deliberately or under manipulation or influence ignored, but, to cap it' all, all the contraventions and consquences that could follow, were, given a ceremonial burial by "condonation order". Arbitrariness, mala fides, influence, misuse of position are writ large. Colossal loss of crores to the public exchequer is obvious. In view of the aforesaid discussion and agreeing with the directions in the penultimate para of the orders by Shri Sen, J., I am of the view that a thorough enquiry by an independent agency is necessary not only to clean the stable, but also to maintain the rule of law that no person or official is above law."
20. Having thus examined the observations, comments and conclusions of the two Hon'ble Judges delivering the judgment in the lottery case (supra), and in the background of the events which took place prior and after the passing of the judgment, which have been described above, we proceede to decide the contentions raised by the learned counsel appearing for the petitioner :
On the question of mala fides :
21. The contention advanced is that the enlargement of scope of enquiry was actuated by political motives to subdue and silence a powerful political opponent and to gain indirect advantage by involving him into a long drawn enquiry and by his character assassination. The learned counsel appearing for the petitioner submits that there is 'malice in fact' and, therefore, the action of enlarging the scope of the enquiry is misuse of the statutory powers conferred by the Commissions of Inquiry Act. Reliance is placed on the following decisions : - Pratap Singh v. State of Punjab, AIR 1964 SC 72, P. K. Kunju v. State of Kerala, AIR 1970 Ker. 252. In the letter case a minister was picked up from amongst others by setting up an enquiry into his conduct with a vicious design to drop him from the Ministry. Reliance has also been placed on the decision of the Supreme Court in the case of Ram Krishna Dalmiya v. Justice S. R. Tendolkar, AIR 1956 SC 538, Single Bench decision of the Calcutta High Court in the case of Orient Paper Mills v. Union of India and Ors. AIR 1979 Cal. 114, and M. P. Mathur and Ors. v. State of Bihar and Ors., AIR 1972 Pat. 93.
22. In reply the learned counsel appearing for the State repelled the allegations of mala fide stating that the above quoted comments and observations with the ultimate directions issued by the High Court in lottery case justify taking of such an action with a view to probe into the conduct of the then concerned Chief Ministers. It is also submitted that looking to the assets of Shri Arjun Singh as disclosed in his declaration in Vidhan Sabha in 1960, and acquisition by him of a palatial mansion approximately costing Rs. One crore was a prima facie material to probe into that subject matter through a duly constituted enquiry commission headed by a Judge of a High Court. Supporting the above argument, it is submitted that where the misconduct is by the leaders of one political party, while in office, their conduct and misuse of power if any, in natural course of events, can be gone into only by a succeeding political party in power. It is unnatural to expect that the same political party in power would set up an enquiry to go into the conduct of its own leaders who were holding such high offices as that of a Chief Minister. The reply, therefore, is that merely on this basis that the scope of the enquiry is enlarged by the Cabinet of the present political party in power, is no ground to term it malicious.
22A. On the question of mala fides, we are" not at all impressed with the arguments advanced on behalf of the petitioner. The respondents are right in their submission that ordering of an enquiry into conduct of the Chief Ministers belonging to the Congress party by the present B.J.P. Government is no ground to hold that the action is malicious. The two learned Judges in their opinions quoted above have duly taken note the conduct of the two Chief Ministers of the Congress party during the relevant time. No mala fides in fact, therefore, can be alleged against the respondents in issuing the impugned notification for enquiry. In the case of Krishna Ballabh Sahay and Ors. v. Commission of Inquiry and Ors., AIR 1969 SC 258, a similar argument, as advanced on behalf of the petitioner here, was repelled by the Supreme Court observing that "when a Minister goes out of his office his successor may consider the glaring charges against him and if justified, order an enquiry, otherwise each Ministry will become a law onto itself and the corrupt conduct of its Ministers will remain beyond scrutiny". In the case of P. V. Jagannath Rao and Ors. v. State of Orissa and Ors., AIR 1969 SC 215, the existence of political rivalry between the ruling party and the leaders of the ex-ruling party into whose doings enquiry commission is constituted to enquire, was in itself held not sufficient to declare the commission set up as illegal. The following decisions were also cited : -
Express News Papers Pvt. Ltd. and Ors. v. Union of India and Ors., AIR 1986 SC 872, Ram Manohar Lohiya v. State of Bihar and Anr., AIR 1966 SC 740, The State of Punbjab v. Ramji Lal and Ors., AIR 1971 SC 1228, and Dr. Harekrishna Mahtab v. Chief Minister of Orissa and Ors., AIR 1971 Ori. 175.
The grounds of mala fide and the contention based thereon as vitiating the notification are, therefore, rejected.
Whether the impugned notification for enlarging the scope of enquiry is a definite matter of public importance?
23. The argument on behalf of the petitioner on this aspect of the matter is that the conduct of the two Chief Ministers and the acquisition of a building at Kerva Dam by the petitioner was not a matter of definite public importance. The submission is that the only comment made by Hon'ble C. P. Sen, J. in his opinion in the lottery case (supra) is that the petitioner having built a palatial mansion at Kerva Dam owes an explanation to the Nation to shows at what costs he acquired and built the same and from where he got the funds for that purpose'. Reading the preamble of the impugned notification, it is submitted that Mere not giving of any explanation to the Nation by the petitioner, as expected of him, by the High Court, in the aforesaid remarks, does not make the subject matter of assets of the petitioner and extent of his wealth a definite matter of public importance. On behalf of the petitioner it was submitted that when such remarks were made by the High Court, the petitioner was at a loss' to understand as to what kind of explanation should be given to the Nation so as to satisfy the Court and the Nation. On behalf of the petitioner, the learned counsel submitted that the petitioner had disclosed his sources of income to the Income Tax Department and the return submitted was accepted and has attained finality. With the some issue on which the High Court had made remarks against him, the petitioner went back to the Churhat constituency for re-election and circulated a pamphlet [a copy of which is Annexure I(a)], explaining his position to the electorate. The petitioner wa6 re-elected from the same Churhat constituency by securing substantial number of majority votes. The petitioner thus has fulfilled the wishes expressed by the High Court in the aforesaid comments in the judgment. These facts were well within the knowledge of the present Government of the Bhartiya Janta Party. Therefore, there remains no definite matter of public importance for setting up an enquiry into the same. In support of this argument, submission is that the attempt by the impugned notification is nothing but to make a roving and fishing enquiry into the assets of the then Chief Minister. Apart from the comments made by the High Court while deciding the lottery case, the Government headed by the B.J.P. does not possess any other material for directing a probe into the subject. Heavy reliance has been placed by the petitioner on the Single Bench decision of Calcutta High Court in the case of Orient Paper Mills v. Union of India and Ors., AIR 1979 Cal. 114. Particularly emphasis has been laid down on paragraph 4 at page 119 and paragraphs 34, 36, 37 and 70 of the said judgment.
24. On this subject it is also stated that on the Churhat Lottery affair the enquiry set up under the first notification, has substantially progressed and the preliminary audit report submitted before it does not show that there was any diversion of funds of the lottery to any outside agency. The present Government of the B.J.P. even without waiting for the report on the terms of reference included in the first notification of February, 1989, hurriedly set up the impugned second enquiry soon after they came to power only for political verification. Thus, according to the petitioner, neither the remarks of the High Court nor the material placed in the enquiry set up under the first notification made out any definite matter of public importance justifying the enlargement of the scope of the enquiry by impugned second notification.
25. The reply on behalf of the State and the intervener Shri Kailash Joshi is that the previous Government in setting up an enquiry deliberately withheld the subject matter of enquiry into the conducts of the two Chief Ministers and the alleged abuse of powers by them and acquisition of wealth by illegitimate sources. This matter was very much in debate and controversy in the lottery case of the Division Bench (supra) and, therefore, it was a definite matter of public importance as the persons involved were not ordinary persons but public men in high offices discharging public functions. There was thus not only a matter which required a thorough probe, but also a definite matter of great public importance. In a democracy it is necessary that public confidence is restored in the functioning of public men holding high offices in the Government and such enquiries will benefit the accuser and the accused, in any event, whether the one or the other loses. If anything is found in the enquiry against the public man, the confidence of public in him is restored otherwise it is but in public interest that such public conduct be exposed and necessary action be taken against the erring public functionaries.
26. In our opinion, the various decisions of the Supreme Court right from the case of R. K. Dalmiya (supra), State of Jammu and Kashmir and Ors. v. Bakshi Gulam Mohd and Anr., AIR 1967 SC 122, P. V. Jagannath Rao and Anr v. State of Orissa and Ors., AIR 1969 SC 215 and down up to Krishna Ballabh Sahay and Ors. v. Commission of Inquiry and Ors., AIR 1969 SC 259, compel us to reject the contention raised on behalf of the petitioner. It is true that provisions of both Section 3 and Section 11 of the Act allow setting up of an enquiry only if there exists matter of definite public importance. The word 'definite' means determinate, distinct, precise and not vague. Thus in order to be definite all that necessary is that the matter must not be vague. If general allegations are not vague, they are definite matters. Where a particular instance is given, the matter becomes definite. By use of the expression 'matter of definite public importance' what the legislature intends is that no enquiry should be set up to investigate a nebulous mass of vague and unspecified rumours. The reference should confine the enquiry to the investigation of the definite matter which is causing a crisis of public confidence. In this connection, the following relevant report of the Royal Commission set up in England in 1966 be seen: -
"27. The exceptional inquisitorial powers conferred upon a Tribunal of Inquiry under the Act of 1921 necessarily expose the ordinary citizen to the risk of having aspects of his private life uncovered which would otherwise remain private, and to the risk of having baseless allegations made against him. For. these reasons, we are strongly of the opinion that the inquisitorial' machinery set up under the Act of 1921 should never be used for matters of local or minor public importance but always be confined to matters of vital public importance concerning which there is something in the nature of a nationwide crisis of confidence."
27. Applying the above test as a guide for understanding the expression 'definite matter of public importance', it is clear to us that the conduct of the two Chief Ministers of the Congress party at the relevant time in granting licence to the lottery at Churhat and granting tax exemption to the said lottery as also the alleged acquisition of disproportionate assets and wealth by the petitioner, at the relevant time, are 'definite matters of public importance' and it cannot be alleged against the State that in issuing the impugned notification attempt has been made to make a fishing and roving enquiry into the vague and unspecified allegations. The second contention, therefore, also fails. State is not an appropriate Government?
28. The next contention on behalf of the petitioner is that the State Government is not the appropriate Government as defined in Section 2 of the Commissions of Inquiry Act, because the subject matter of the impugned notification does not relate to any of the entries in list II or list III of 7th Schedule of the Constitution of India. The Central Government alone under the list I or by virtue of its residuary power of legislation under Article 248 of the Constitution is stated to be the 'appropriate Government' in the instant case. Shri Venugopal who addressed us on this aspect, on behalf of the petitioner submitted that in the definition clause in Section 2, the reference is made to the subject matter in the three legislative lists in the 7th Schedule to the Constitution and, therefore, in determining the competence of the appropriate Government in setting up enquiries, rule of 'Pith and Substance' can appropriately be applied. So far as term No. 1 in the impugned notification to probe into the disproportionate acquisition of wealth and sources of income of the petitioner is concerned, reliance is placed on entry 82 in list I and entry 86 of the said list which are as under: -
"82. Taxes on income other than agricultural income.
86. Taxes on the capital value of the assets, exclusive of agricultural land, of individuals and companies; taxes on the capital of companies."
29. It is submitted that entry 34 in list II is 'betting and gambling' and does not cover the subject matter of the impugned notification. Entry 97 is the residuary entry which is available exclusively to the Union. Reliance is placed on the following decisions:-
State of Kamataka v. Union of India and Anr., AIR 1978 SC 68 and Motabar Hossain v. H. Chakrabarty, 1980 (84) Cal. Weekly Notes 560 (579).
It was pointed out that in both the cases observations of Sir Cerel Solman at page 582 have been quoted with approval on the rule of Pith and Substance. Reliance is also placed on a Full Bench decision of Gauhati High Court in the case of Border Security Force v. State of Meghalaya, AIR 1989 Gauhati 81.
30. Learned counsel appearing for the State disputed the contention of the petitioner that the 'appropriate Government' on the subject matter was not the State, but the Union Government. Submission on behalf of the State is that the subject matter is lottery and gambling and misconduct of the ex-Chief Ministers of the State. Thus, subject matters in Pith and Substance are covered by entry 1 of List III and entry 34 of List II, which read as under : -
"List III - Concurrent List.
1. Criminal law, including all matters included in the Indian Penal Code at the commencement of this Constitution but excluding offences against laws with respect to any of the matters specified in List I or List II and excluding the use of naval, military or air forces or any other armed forces of the Union in aid of the civil power.
List - II State List
34. Betting and gambling."
Reliance is placed by the State on a latest decision of Gujarat High Court in the case of Rajendra Manu Bhai Patel v. State of Gujarat and Anr., AIR 1992 Guj. 10. Reliance is also placed on entries 8 and 45 of List III (7th Schedule), with read as under : -
List - III
8. Actionable wrongs.
45. Inquiries and statistics for the purposes of any of the matter specified in List II or List III.
31. The alternative submission is that the lapses alleged against the ex-Chief Ministers in exercising their statutory powers and making illegal gains, make their actions 'actionable wrongs' covered by entry 8. Reliance is also placed on the decision in the case of State of Karnataka v. Union of India and Anr., AIR 1978 SC 68.
32. On the subject of legislative competence, we have looked into several legislative entries on which either side has placed reliance. We agree with the legal submissions made on behalf of the petitioner that for the purpose of deciding as to who is the appropriate Government on a particular subject of enquiry, under the three lists in the 7th Schedule of the Constitution 'the rule of Pith and Substance' can be applied. Learned counsel for the petitioner is right in submitting that the definition clause in Section 2 of the Commissions of Inquiry Act, defines the word 'appropriate Government' borrowing the language of Article 246 of the Constitution in relation to various entries enumerated in the three lists of the 7th Schedule of the Constitution. It is, therefore, necessary first to determine the subject matter of the impugned notification before any one or more entries of the lists in 7th Schedule are held applicable to such matters. In the case before us, we find that the first term of reference is enquiry, into the affairs of Churhat Children's Society which conducted the lottery and the alleged misdeeds or illegalities committed therein. The setting up of an enquiry by appropriate Government is with a purpose to find out the illegalities and irregularities committed in holding the lottery and take consequent actions against those responsible for the same.
33. The terms Nos. 2 and 3 in the impugned notification are concerning the official conduct of the ex-Chief Ministers and the officials connected with the matters of granting concessions and exemptions under the Lottery Act, to the Society which conducted the lottery. Here again the purpose of enquiry set up is to take consequential penal and departmental actions against the erring Ministers and officials, based on report of the enquiry.
34. The contention on behalf of the petitioner is that the terms of the impugned notification leave no manner of doubt that the State Government essentially and for that purpose intended to make an enquiry in relation to matters which deal with income of the petitioner and other officials involved in the lottery case and the acquisition of wealth or assets by the petitioner for constructing a building. In other words, the enquiry is directly and squarely into an arena which dealt with income, expenditure and wealth of a citizen. These are matters which are covered by Income Tax Act, 1961 and Wealth Tax Act, 1957. Such matters, therefore, exclusively fall in the Central Legislative List I, entry 93 of 7th Schedule, read with entry 94 of the said list. According to the petitioner, particularly term No. 3 of the impugned notification on alleged construction of a building at Kerva Dam by the petitioner at alleged huge cost is a matter falling in list-I, available exclusively to the Central Government and hence beyond the competence of the State Government.
34-A. So far as question of competence, for setting up an enquiry by the State Government is concerned, we have to determine the nature of the enquiry from the terms of the earlier and the impugned notification in proper perspective. It is rightly submitted that rule of 'Pith and Substance' generally applied in upholding validity of legislation under the three lists in the 7th Schedule to the Constitution, has to be applied to determine the validity and the question of competence of appropriate Government in setting up enquiries under the Commissions of Inquiry Act. This is so, because the provisions of Section 2 define the word 'appropriate Government' for the purpose of setting up of enquiry under Section 3 and make reference to three lists of 7th Schedule of the Constitution. The rule of 'Pith and Substance' in short is thus explained by various decisions of the Supreme Court (infra) : -
"Parliament or State Legislature should keep within the domain assigned to it, and not trespass into the domain reserved to the others, and a law made by one which trespasses or encroaches upon the field assigned to the other is invalid. But before the legislation with respect to a subject in one List, and touching also on a subject in another List, is declared to be bad, the courts apply the rule of Pith and Substance. This rule envisages that the legislation as a whole be examined to ascertain its 'true nature and character' in order to determine in what List it falls. If according to its 'true nature and character' the legislation substantially falls within the powers conferred on the Legislature which has enacted, it, then it is not invalid 'merely because it incidentlly' trenches or encroaches on' matters assigned to another Legislature. To ascertain the true character of law, it must be looked into as an organic whole."
See - Att. Gen. for Saskatchevan v. Att. Gen. for Canada, AIR 1949 PC 190, Bombay v. Narottamdas, AIR 1951 SC 69, Atlabari Tea Co. v. Assam, AIR 1961 SC 232 and Kannan D.H.P. Co. v. Kentla AIR 1972 SC 2301.
35. Applying the above rule of Pith and Substance to the subject matter of the impugned notification, we find that an attempt thereunder is to find out illegalities and irregularities committed in conduct of the lottery by the Churhat Society and its members as also the misconducts if any, committed by Government officials and Ministers involved in it.
36. The M. P. Lottery Act is a piece of State Legislation referable to entry 62 of List II read with entry 34 of the said list of 7th Schedule, which reads as under : -
List II "62. Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling.'
37. An enquiry into affairs of the lottery and deeds or misdeeds of the Society, its members, Government authorities and the members of the Cabinet would be covered by entry 45, list III, read with entries 62 and 34 of List-II (quoted above). Entry 45 of List III reads as under : -
"45. Inquiries and statistics for the purpose of any of the matters specified in List II or List-Ill."
In our opinion terms of reference in the impugned notifications at Nos. 1 and 2 are thus squarely covered by the above entries in Lists II and III of the 7th Schedule of the Constitution. The State Government, therefore, was the appropriate Government and was fully competent to set up enquiry in relation to the above subjects. So far as term No. 3 of the impugned notification concerning allegations against the petitioner individually is concerned, the enquiry is initiated because of alleged acquisition of wealth by the petitioner during the period the lottery was held in his constituency-Churhat. A probe whether there was any diversion of lottery funds for construction of the building would be a matter substantially covered by entries 62 and 34 of List II read with entry 45, List HI quoted above. An incidental encroachment of the field for enquiry into income and assets, even though a subject of Central Legislation, would not take the matter beyond the competence of the State Govt. because in Pith and Substance, the subject is covered by the above entries in the State and Concurrent lists. In fact, as we see, by term No. 3 in the impugned notification, a probe is directed to be made on alleged misuse of official position and power by the then Cabinet and its Ministers which is a subject covered by entry 39 of List II of the 7th Schedule, which reads as under:-
"39. Powers, privileges and immunities of the Legislative Assembly and of the members and the committees thereof, and, if there is a Legislative Council, of that Council and of the members and the committees thereof, enforcement of attendance of persons for giving evidence or producing documents before committees of the Legislature of the State."
The Entry 39 of list II is attracted in this case because Cabinet is formed out of the Members of the Legislative Assembly and the subject matter of the enquiry concerns with use or misuse of powers or privileges by them as holders of those offices.
38. For the aforesaid reasons, the State Government cannot be held imcompetent in setting up the enquiry into the matters covered by the impugned notification. Whether the power to enlarge the scope of enquiry before an authority set up for enquiry has been validly exercised under the provisions of the Commissions of Inquiry Act.
39. Shri Venugopal, learned counsel appearing for the petitioner submitted that although the order or decision to set up an Enquiry Commission under the Act has to be on the basis of formation of opinion by the appropriate Government on its subjective satisfaction, but it is necessary that such subjective satisfaction should be based on objective material. His contention is that if the relevant circumstances are not taken into account or ignored and irrelevant circumstances are taken into consideration for setting up Commission, the subjective satisfaction is vitiated. Before we discuss for decision, this aspects being one of the important submissions made on behalf of the petitioner, consideration has to be bestowed on the orders passed by the Supreme Court in the Special Leave Petition, against the order of the High Court, passed in the Lottery case. Against the order of the High Court in the Lottery case, Special Leave Petitions for appeal were filed separately, by the office bearers of the Churhat Children's Society, registered as S.L.P. No. 4806/89 and by the petitioner Shri Arjun Singh as S.L.P. No. 3187/89. The office bearers of the Society challenged the entire order and directions of the High Court including the direction of the State Govt. to set up an enquiry into the affairs of the Society and the Lottery. Petitioner Shri Arjun Singh was aggrieved by the observations and comments made by the High Court in paragraphs 39, 40 and 41 of the Judgment. In the Special Leave Petition filed by the petitioner Shri Arjun Singh the Supreme Court declined to interfere, stating that paragraphs 39, 40 and 41 of the order of the High Court, contain no findings of fact. It would be better to reproduce the exact wordings of the order of the Supreme Court in S.L.P. No. 3187 of 1989 dated 19-4-1989, filed by petitioner Arjun Singh : -
"Reading the judgment of the High Court, we find that the High Court in paragraphs 39, 40 and 41 of the judgment has made no finding of fact. In that view of the matter, no interference under Article 136 of the Constitution of India is called for. No order."
40. In the Special Leave Petition filed by office bearers of the Churhat Society, the Special Leave to appeal has been granted only for consideration of the validity of the High Court's direction in first portion of paragraph 42 of the Judgment of the High Court which related to the grant of licence and tax exemption to the Churhat Society and the Lottery conducted by it. We feel it necessary to reproduce the exact words of the Supreme Court in the order dated 4-5-1989 passed in S.L.P. No. 4806/89 :
"Having considered this matter, we are of the opinion that this Special Leave Petition should be admitted for consideration of the validity of the High Court's directions in the following sentences in paragraph 42 of the judgment: -
"We therefore, allow the petition and quash the order of the Collector dated 10-4-1987 condoning defaults the exemption granted under Section 28 of the Lottery Act to Churhat Society for payment of tax by the Chief Minister on 15-5-1987 and by the Cabinet on 10-5-1988 as being without application of mind and declare that Churhat Society was granted a licence to hold only one draw for a private lottery under Section 6 but Churhat Society unlawfully held 11 more draws, Churhat Society and the organising agent to furnish complete accounts of the 12 draws including the profits earned and unclaimed prizes retained by the agent and the taxes payable, the full particulars of the prize winners of prizes of Rs. 10,000/- and above and their mode of payments."
This petition so far as is challenging the other findings or the directions of the High Court for an enquiry by an independent Commission do not require interference and, therefore, rest of the petition except the sentences above is dismissed. Upon the petitioners depositing Indira Vikas Patra with the Collector, Sidhi of the face value of Rs. 25 lakhs within four weeks from this date, there will be stay of recovery of the demand mentioned in the letter dated 1st April, 1989 of the Collector. There will be conditional stay for four weeks till the deposit as made and if the said Indira Vikas Patras are deposited, the stay will continue, pending disposal of the matter. In default of deposit, the interim order will stand vacated. The enquiry by the Commission appointed should proceed and should not be in any way prevented or hampered by the fact that the application for special leave has been admitted for consideration of the aforesaid direction of the High Court as indicated before".
41. From the order quoted above, it is clear that the Supreme Court granted leave to appeal only on the- legal question of the validity of the grant of licence and tax exemption to the lottery and whether it was a private lottery, licensed or was specially authorised lottery of the State Government. So far as the direction for setting up of an enquiry into the affairs of Churhat Society and lottery is concerned, the Supreme Court purposely refused to grant leave to appeal and refused stay of proceedings before the Commission so that the enquiry proceedings may not be hampered in any way. In the S.L.P. filed by petitioner Shri Arjun Singh, the Supreme Court did not think it necessary to interfere, because according to it there were no findings recorded against the petitioner in the order and only certain observations were made which presumably were not germane or necessary for decision of the case before the High Court.
42. According to the learned counsel for the petitioner, while exercising the power to enlarge the scope of enquiry, the following relevant considerations were ignored and irrelevant considerations were taken into account:-
(a) The High Court in paragraph 42 of its order did not direct setting up of any enquiry into the conduct of ex- Chief Minister or other officials in the matter of granting licence and tax exemption to the sociedty.
(b) The High Court also made no direction for setting up an enquiry into the means of the petitioner for construction of alleged mension at Kerva Dam. The High Court had merely expressed hope that the petitioner owed explanation about the means and manner by which he brought up such a costly construction.
(c) According to the petitioner, although the High Court had not express what kind of explanation should be offered by the petitioner to the public, after pronouncement of the dicision by the High Court , he successfully constest the election on the said controversial issue from Churhat Assembly Constituency. This was done apart form filling of income tax return by him and its acceptance by the Income Tax Department.
(d) The appropriate Government ignored that before the Commission already set up, a preliminary audit report (which is on record with the return of the State as Annexure R-2) was submitted, which did not show any diversion of funds of the society from its lottery to any outsider.
(e) The Enquiry Commission set up to enquire into the affairs of the Society and the Lottery is yet to submit its report.
(f) When the petitioner approached the Supreme Court against those directions, the Supreme Court while rejecting the S.L.P. very clearly stated that the observations and comments made against the petitioner cannot be taken to be the 'finding of facts' justifying any interference. The observation and comments of the High Court, therefore, could not be taken to be the relevant material for enlarging the scope of enquiry to include within it the alleged misdeeds of the petitioner as ex-Chief Minister in granting tax exemption to the Society and acquiring assets in the form of a building at Kerva Dam.
(g) Learned counsel for the petitioner on the same aspect also raised a plea based on the principles of 'sub judice'. It was submitted that the decision on the legal aspect based on Sections 6 and 28 of the Lottery Act, granting licence and exemption from tax to the Churhat Society are matters sub judice before the Supreme Court, as a result of grant of leave to appeal against that part of the judgment of the High Court, quoted above.
43. Lastly, on this aspect, it was submitted that there is no valid exercise of power either under Section 3 or 11 of the Commissions of Inquiry Act, because there existed no relevant material for formation of opinion for setting up an enquiry. Learned counsel for the petitioner very seriously criticised the withholding from disclosure by the Government in this Court the resolution of the Cabinet of the ruling B.J.P. Government taken on 23-3-1990 which culminated into issuance of the impugned notification enlarging the scope of enquiry, published in M.P. Rajpatra on 29th March 1990. Attention of the Court was invited to the prayer clause 1 of the petition where a specific prayer is made in its last part that the resolution of the State Government dated 24-2-1989 be called for and the notification issued thereon be quashed.
44. On behalf of the State, Shri Mukhouti and later on learned Advocate General, addressed us and tried to support the impugned notification on the basis of the following events and circumstances, which according to them, constitute relevant material for setting up an enquiry into the additional issues sought to be referred to the existing Commission by the impugned notification. Firstly it was submitted that none of the matters in the impugned notification can be said to be sub judice in the Supreme Court. In the S.L.P. filed by the office bearers of the Churhat Society, leave to appeal was granted only against that part of the decision of the High Court which decided the question of grant of licence and tax exemption to the Society under the Lottery Act. In the two orders passed by the Supreme Court in the two S.L.Ps. separately filed by the office bearers of the Society and Shri Arjun Singh, all other directions and observations made by the High Court were expressly held to be not worthy of interference by the Supreme Court. Learned counsel for the State, therefore, contended that all other issues arising in the case of Lottery against which no appeal is pending in the Supreme Court, could be subject matters of enquiry by the same commission which was earlier set up to go into the earlier issues submitted to it for enquiry.
45. On behalf of the State, it was also submitted that income tax returns were filed by the petitioner much earlier to the decision of the Lottery case by the High Court. Thereafter no explanation regarding acquisition of mansion at Kerva Dam came forth from the petitioner after the High Court had made those comments against the petitioner. Merely contesting election from Churhat constituency can, by no logic, is said to be an explanation submitted regarding the alleged acquisition of disproportionate income and assets. Even the pamphlet Annexure A-1(a), on which reliance is placed, and said to have been distributed in the constituency, does not contain any details of income and assets of the petitioner at the relevant time so as to be taken as an explanation of the petitioner, in response to the hope expressed by the High Court. According to the learned counsel for the State, the explanation expected of the petitioner can now be offered by the petitioner before the Enquiry Commission set up. Much emphasis was laid by the respondents on the fact that the appropriate Government at the relevant time headed by the Congress Ministry with Shri Motilal Vora as Chief Minister, in compliance with the order of the High Court, had taken a decision to refer all issues including the issue of alleged abuse and misuse of powers by the ex-Chief Ministers and all officers concerned with Churhat lottery. It was pointed out that in fact the original terms of reference prepared for the commission included one such term on the alleged abuse and misuse of powers by Minister and officers and those terms were also fed to the press for publication. But subsequently, the same were recalled from the press and fresh terms were prepared excluding the controversial terms only with a view to screen the misdeeds of their own party leaders. On this aspect it would be better to quote the exact plea taken in that behalf by the State Government in the return as it reflects one of the important considerations on which the scope of enquiry was enlarged by the present Government of ruling B. J. Party, as under : -
"24. In reply to para 13 :- Para 42 has to be read along with the judgment of Justice Suryawanshi. The terms of reference for which the power was given to the then Chief Minister did originally include a comprehensive term regarding abuse of power. It had reached that stage of finality that is the terms were even sent to the Press as the final draft. But then the Press communique was withdrawn and the most important term was deleted. Comments would be offered on all these aspects at the time of arguments. The file shall be kept ready for the perusal of this Hon'ble Court."
46. On the legal aspect of the question raised on behalf of the petitioner, the reply both of the Advocate General and Shri Mukhauti is. that the power to enlarge the scope of enquiry was validly exercised in accordance with the provisions both of Sections 3 and 11 of the Commissions of Inquiry Act. We find that the above stand taken on behalf of the State in their oral submissions that power was exercised both under Sections 3 and 11 of the Commissions of Inquiry Act, is not in conformity with the stand taken by them in their return on this legal aspect. See para 30(IK) of the return of the State in reply to para 20 of the petition, as under:-
"(ix) The fact of the matter is that the Supreme Court declined to interfere on the ground that there was no finding, fully justified that the matter referred to in paras 39, 40 and 41 and other relevant paras did require some forum and the present forum is the only forum in which the matter can be clarified. The enlargement of grounds of reference are, therefore, justified. The Commissions of Inquiry Act, section 11 would be very much relevant in view of the observations made in the High Court judgment and refusal by the Supreme Court to expunge the remarks. It is submitted that the provisions of Section 3 of the Commissions of Inquiry Act have not been involved. Where there is power to make reference, there is also a power to expand it, which is inherent in the jurisdiction itself". (Italic portion for purpose of emphasis).
47. For deciding the last legal submission arising in the case, it would first be necessary to examine the provisions of the Commissions of Inquiry Act, particularly Sections 3 and 11 thereof from which source of power is sought to be derived by the State in issuing the impugned notification, Section 3 reads as under : -
"3. Appointment of Commissions. - (1) The appropriate Government may, if it is of opinion that it is necessary to do so, and shall, if a resolution in this behalf is passed by each House of Parliament or, as the case may be, the Legislature of the State, by notification in the official gazette, appoint a Commission of Inquiry for the purpose of making an enquiry into any definite matter of public importance and performing such functions and within such time as may be specified in the notification and the Commission so appointed shall make the enquiry and perform the functions accordingly."
It is to be noted from the above provision that an Enquiry Commission has to be set up as a mandatory requirement of law if a resolution in that behalf is passed by the Parliament or by the Legislature of the State. Even in the absence of such resolution Enquiry Commission may be set up by the appropriate Government, only if it is of opinion that it is necessary so to do and for the purpose of making an enquiry into a definite matter of public importance, Section 11 reads as follows : -
"11. Act to apply to other inquiring authorities in certain cases. - Where any authority (by whatever name called) other than a Commission appointed under Section 3 has been or is set up under any resolution or order of the appropriate Government for the purpose of making an inquiry into any definite matter of public importance and that Government is of opinion that all or any of the provisions of this Act should be made applicable to that authority, that Government may, 'subject to the prohibition contained in the proviso to sub-section (1) of Section 3, by notification in the official Gazette, direct that the said provision of this Act shall apply to that authority, and on the issue of such a notification that authority shall be deemed to be a Commission appointed under Section 3 for the purpose of this Act." (Italic portion for the purpose of emphasis)
48. A bare perusal of the above Section 11 would show that where the authorities other than the Commission appointed under Section 3 has already been set up by resolution or order of the appropriate Government to enquire into any definite matter of public importance, the said Government, may in order to enable such authority to arm itself with all the powers for holding an effective enquiry, may issue a notification to clothe such an authority with all powers under the Act to convert it into an effective instrument or agency for enquiry. Section 11 of the Act is not an additional enabling provision, apart from Section 3, for conferring any power on the appropriate Government to set up a Commission of Enquiry.
49. Having thus, comparatively examined the nature and the scope of the power conferred on the appropriate Government under Sections 3 and 11, we proceed to deal with the question of validity of the impugned notification. In considering the above legal aspect of the valid exercise of power for setting up an enquiry under the provisions of the Act, subsidiary question included in it is based on the plea of 'sub judice' set up on behalf of the petitioner may first be disposed of. It is argued that the subject matter contained in the terms of reference under the impugned notification is sub judice before the Supreme Court in appeal and could not, therefore, be a relevant subject matter of an enquiry by a Commission set up under the Act. The short answer to the above plea of sub judice is to be found in the following observations of the Supreme Court in the case of P. V. Jagannath Rao and Anr v. State of Orissa and Ors., AIR 1969 SC 215 (226) .-
".... the inquiry cannot be looked upon as a judicial inquiry and the order ultimately passed cannot be enforced proprio vigore. The inquiry and investigation by the Government do not therefore amount to usurpation of the function of the courts of law. The scope of the trial by the Court of Law and the Commission of Inquiry- is altogether different. In any case, it cannot be said that the Commission of Inquiry would be liable for contempt of Court if it proceeded to enquire into matters referred to it by the Government Notification. In appointing a Commission of Inquiry under Section 3 of the Act the Orissa Government is exercising a statutory power and in making the inquiry contemplated by the notification, the Commission is performing its statutory duty."
See also the case of Shambhunath Jha v. Kedar Prasad Sinha and Ors., AIR 1972 SC 1515.
50. The view of the Supreme Court, therefore, clearly, is that there would be nothing illegal in directing an enquiry into a matter although sub judice before a Court of law. In the nature of things, the proceedings of such a Commission cannot affect the proceedings pending in Court of law and conversely as would appear, from the above said case, a Commission can continue with the proceedings even though a similar subject matter might be pending in a Court of law. The orders passed in two S.L.Ps. by the Supreme Court also strengthen our view because the Supreme Court by refusing stay of the proceedings of enquiry before the Commission expressly restricted the leave to appeal only against first portion of the operative part of the judgment in the lottery case contained in paragraph 34 thereof The terms of reference in the impugned notification cannot, therefore be held invalid or incompetent only because same or similar subject is pending consideration before the Supreme Court.
51. Now we proceed to deal with the validity of the impugned notification issued in purported exercise of powers under Section 3 read with Section 11 of the Act. We have been taken in sufficient detail through a line of precedents on the subject starting from the case of R. K. Dalmiya (supra) in which constitutional validity of the Commissions of .Inquiry Act itself was under challenge, the case of P. V. Jagannath Rao (supra) and the case of Krishna Ballabh Sahay (supra) down to the case of State of Jammu and Kashmir and Ors. v. Bakshi Gulam Mohd. and Anr. (supra). In the background of the above precedents with the facts and legal positions examined therein, we find that in the instant case there are such peculiar features, not to be found in any of the previous decisions cited before us by the parties on either side.
52. It cannot be seriously disputed that the first notification was issued only to give effect to the directions or writ issued by the High Court contained in the operative part of paragraph 34 of the judgment in the Lottery case. The then appropriate Government did not exercise any power under Section 3 of the Commissions of Inquiry Act. The provisions of Section 3 of the Act differ from the provisions in Section 11 of the said Act in one important aspect. For exercise of power under Section 3, there has to be 'formation of opinion' by the appropriate Government for setting up an enquiry into 'a definite matter of public importance'. Compared with the provisions of Section 3, Section 11, as its clear terms disclose, evinces a different purpose that is, if any enquiring authority, other than a Commission under Section 3, is set up, it can be clothed with all powers available to a Commission under the Act so as to enable such authority, to function effectively as an enquiring agency of the Government. On issuance of & notification under Section 11, in favour of such enquiring authority, the said authority is "deemed to be a Commission appointed under Section 3 for the purpose of the Act". In the instant case, Justice Ramalingam, a sitting Judge of Madras High Court then, was appointed as a High Power independent Agency but not a 'Commission' as understood by Section 3 of the Act, in obedience to and give effect to the directions of the High Court contained in operative part of the judgment in the lottery case. There can be no doubt about the legal complexion of such enquiring authority, as is clear from issuance of a separate notification by the then appropriate Government, under Section 11 of the Act, on the same date on which the first notification specifying terms of reference was issued. The Commission set up of Justice Ramalingam, by the then appropriate Government, was thus not a Commission appointed under Section 3 of the Act; Justice Ramalingam Enquiry Was thus set up dehors provisions of the Act, in exercise of the executive power of the State Government, only on the basis of the operative part contained in the judgment of the lottery case, by the High Court. The notification under Section 11 of the Commissions of Inquiry Act was issued with a purpose to arm such enquiring agency with all the powers and privileges conferred on a regular commission under the Act. such as those contained in Section 4 to Section 10A of the Act. In our view, by issuing me impugned second notification the appropriate Government cannot be said to have exercised any power under Section 3 of the Commissions of Inquiry Act, as there was no formation of any opinion for setting up of such enquiry independently of the orders, directions or observations contained in the judgment of the High Court, in the lottery case. The reasons stated in the preamble of the impugned notification under consideration before us, only refer to the contents of the judgment of the High Court the lottery case and it is stated that on that basis the appropriate Government thought it expedient to enlarge the scope of enquiry of the existing Commission by referring to it three additional issues for enquiry. Learned counsel Shri Mukhouti, supported in his submissions by the Advocate General, Shri N. C. Jain for the State, made attempts to contend that the second impugned notification has been issued in exercise of powers both under Section 3 and Section 11 of the Act. Shri Mukhouti contended in the course of his arguments that there is no difference in nature and extent of power under Sections 3 and 11 as the latter refers to the earlier section and power to set up the enquiry could be derived from both of them.
53. The above argument advanced by Shri Mukhouti cannot be accepted The first original notification of February 1989 is clear enough to show that the Government resolved to set up Justice Ramalingam as a High Power independent Agency for enquiry, as an 'authority other than a Commission' outside the provisions of Section 3 of the Act. Issuance of notification under Section 11 was only to clothe such 'authority' with all powers of the Commission. Section 11 of the Act provides that enquiring authority on issuance of notification is conferred with all powers under the Act and such authority would be deemed to be a Commission for the purposes of the Act. Such fiction under Section 11 of the Act for creation of 'deemed Commission', as is obvious from the scheme of the Act, is only to enable the enquiring authority to exercise all powers and functions under the Act as a regularly appointed Commission.
54. The question for consideration before us is - can the terms of reference placed for enquiry before such authority which is not a 'Commission', but 'deemed to be a Commission', for the limited purpose of Section 11, be enlarged by issuance of another notification in exercise of executive powers. The answer to the above question in the instant case has to. be found outside the provisions of Section 3 as admittedly the express stand taken by the State in its return is that in issuing the impugned notification, Section 3 of he Act was not at all involved. To begin with, an authority other than Commission was set up by the first notification issued in February 1989 solely with a purpose to carry out the directions of the High Court. For setting up an enquiry into the alleged matter, of public importance, not covered by the directions of the High Court, there has to be an independent formation of opinion, after due application of mind to the relevant material, in accordance with the provisions of Section 3 of the Act. Such a power under Section 3 of the Act, does not seem to have been exercised by the appropriate Government in the instant case
55. It is not the case of the State that it has before it any material, other than that which was before the High Court in the lottery case, and considered by it, for formation of a bona fide opinion and finding it expedient for setting up a Commission to enquire into additional issues contained in the impugned notification. The impugned notification cannot, therefore, be supported by the provisions contained in Section 3 of the Act.
56. The next question is whether the notification can be supported on the alleged valid exercise of powers under Section 11 of the Act. As we have held above, the powers of setting up of a Commission under Section 3 of the Act have not been consciously exercised by the appropriate Government in this case. That is also the clear stand taken in the return by stating that Section 3 is not involved and only Section 11 is the relevant section; although, in oral submissions before us an attempt was made to support the impugned action of issuance of notification both under Sections 3 and 11 of the Act. The second notification cannot be held to be a fresh notification under Section 11 of the Act because the power has been exercised by issuing it, for enlarging the scope of the enquiry which is a purpose alien to that for which the section is intended. By the earlier notification an enquiring authority had already been set up to carry out the directions of the High Court and along with it a separate notification under Section 11 of the Act had already been issued to confer on such authority all powers of commission under the Act. Afresh notification under Section 11, therefore, could not have been issued for the same purpose. There was in existence an enquiring agency with all powers of a commission by virtue of notification under Section 11 of the Act. There was thus no necessity or expediency of issuing a fresh notification under Section 11 of the Act. The impugned notification is issued with a specific purpose to place for enquiry additional terms of reference before the already set up Commission. Such power could , not be exercised by recourse to Section 11 of the Act. In the present case, the State claims to itself a power to' virtually amend the first notification by including additional terms therein by the impugned second notification. This was not permissible, in law because power to enlarge the scope of enquiry of an authority set up, which is deemed to be a 'Commission' for the purpose of the Act, by virtue of issuance of a separate notification under Section 11, is to be found not in Section 11, but in Section 3 and nowhere else in the Act. The impugned notification has not been issued under Section 3 of the Act. It could not have been issued under Section 11 of the Apt. It is, therefore, ultra vires and deserves to be quashed being an invalid exercise of power under the Act. The intended enlargement of the scope of enquiry before an already set up enquiring agency could have been achieved only by' a valid exercise of power under Section 3 of the Act, may be that such additional issues are to be enquired into by the same existing enquiring authority or any other agency or Commission set up.
57. It may well be argued that the same power which was exercised by the then appropriate Government headed by Congress party by issuing the first notification, can be exercised for the second time by the appropriate Government of the present ruling party by issuing the impugned second notification, to enlarge the scope of enquiry before an already set up Commission. Such argument cannot be accepted for the simple reason that the authority set up for enquiry solely with a purpose to comply with the directions of the High Court is deemed to be a 'Commission' by virtue of the deeming fiction created on issuance of notification under Section 11 of the Act. The scope of enquiry, set up in exercise of executive power of the appropriate Government, before such an enquiring authority 'deemed to be a Commission' for the purpose of the Act by virtue of notification under Section 11 of the Act, can be enlarged only by exercise of statutory powers under Section 3 of the Act and not by more exercise of executive power. The reason being that the scope of enquiry before such statutory authority deemed to be a commission under Section 11 of the Act, is circumscribed by the terms of reference placed before it. To enlarge terms of reference of such existing statutory commission, the only power available is under Section 3 of the Act and its exercise is dependent on bona fide formation of opinion of its expediency to be based on relevant material. The only safeguard against misuse of power under Section 3 of the Act, since it entails a serious consequence to the parties concerned, is that the Government has to exercise such power on the relevant available material and keeping out of consideration irrelevant material or circumstances.
58. A few settled principles of administrative law and the extent of power of judicial control over such matters need to be re-stated. Obviously, Sections 3 and 11 confer a discretionary power on the appropriate Government to set up an enquiry with a primary purpose to collect information, to decide upon its future course of action or to meet a given situation or to find a correct solution to a given problem. In our constitutional set up, where rule of law prevails, such discretion can, to certain extent be restrained from its being allowed to be turned into unrestricted and absolute power. This is to be pre-supposed in a democratic set up based on the rule of law because we have accepted "Government of Laws and not of men". The exercise of administrative power generally involves two elements - an objective element and a subjective element. Existence of the former is a condition precedent for the exercise of the power based on the latter. The former is a jurisdictional fact and is subject to judicial review, but not the latter. It is because of the objective element involved in it that a discretionary power is not completely discretionary in the sense of being entirely uncontrolled. Even when the statute uses words so as to confer ex facie an absolute discretion on the administrative authority concerned, the discretion can never be regarded as unfettered. It is an eternal principle of administrative law that there is nothing like unfettered discretion immune from judicial reviewability (See Jain and Jain on Principles of Administrative Law, 4th Edition under Chapter XV at pages 550 to 553). Thus determining the scope of judicial control or review of administrative action, the only question, which can be considered by the Court, is whether the authority vested with the power has paid attention to or taken into account the circumstances, events or material wholly extraneous to the purpose for which the power is vested and whether the proceedings have been initiated mala fide for satisfying a private or a personal grudge of the authority. Pratap Singh v. State of Punjab, AIR 1964 SC 72 (83), Ram Manohar Lohiya v. State of Bihar, AIR 1966 SC 740. In other words, a discretionary power must be exercised taking into account the considerations mentioned in the statute. If the statute mentions no such consideration, then the power is to be exercised on consideration relevant to the purpose for which it is conferred. If the authority concerned is attentive to, or takes into account wholly irrelevant or extraneous circumstances, events or matters, then the administrative action can be held ultra vires and liable to be quashed . If in exercising the discretionary power, an administrative authority ignores the relevant consideration, its action will be invalid. The authority must take into account the considerations which a statute prescribes expressly or impliedly. In case the statute does not prescribe any consideration, but confers power in a general way, the Court may still imply some relevant consideration for the exercise of power and quash the order because the concerned authority did not take this into account. This permissible limit of judicial control enables the Court to go into the circumstances, events or material placed on record to find out whether they are relevant to the action taken and whether the reasons or material supplied by the administrative authority to the Court satisfies the above test of existence of reasonable material as the basis for the action or exercise of discretionary power. (See Jain and Jain 'Principles of Administrative Law' at Pages 580 to 581).
59. Within the permissible limits of judicial control of administrative action, as explained by us, above, alternatively, we propose to examine the material and circumstances brought forth by the State in this case to decide whether the impugned notification can be supported, assuming the same to have been issued in exercise of powers under Section 3 of the Act. The main plank of the submission on behalf of the State is that the High Court in the Lottery case had commented on the parts played by the two ex-Chief Ministers in granting licence, concessions and tax exemptions to Churhat Society and its lottery. There were comments made and hope expressed from the petitioner Shri Arjun Singh having built the alleged costly mansion at Kerva Dam, disproportionate to his known sources of income during the relevant period. The aforesaid matter, although said to be alive in the mind of the than Congress Government in the State, was deliberately overlooked, to shield their own partymen in power and the terms were so framed as to avoid probe into alleged abuse and misuse of their official position and powers. The question then arises is whether the aforementioned material or circumstances in the nature of comments and observations made by the High Court in its judgment constitute valid material to enlarge the scope of enquiry in purported exercise of power under Section 3 of the Act, although, as we have seen above, power under Section 3 of the Act was never consciously exercised.
60. As has been commented above by us, the High Court did not expressly direct setting up of enquiry into the alleged misdeeds or misuse of power of ex-Chief Ministers or into the alleged disproportionate acquisition of assets or wealth by the petitioner Arjun Singh. It is not difficult to see why such specific directions to enquire into the above matters as well, were not issued by the High Court. The issue of misdeeds and misconduct of Chief Ministers as also the alleged acquisition of the asset by construction of mansion at Kerva Dam were not directly and substantially in issue in the lottery case. Those matters were only incidentaly commented upon by the High Court while deciding the main question raised in the petition and in granting relief claimed against the conduct of lottery by the Churhat Society which was found to have harmed public interest. The learned counsel Shri Venugopal, supported by Shri Kapil Sibbal, argued that since no relief at all was claimed against the petitioner in the lottery case and although there were pleadings in that petition about the construction of a building at Kerva Dam, it was not incumbent on the petitioner to have filed any counter affidavit and join issues on the question incidentaly raised in that case. It is argued that the said issue of construction of a building at Kerva Dam was not relevant or germane to the issues and reliefs claimed concerning the lottery conducted by the Society. No relief in that petition was claimed against petitioner Shri Arjun Singh. On the other hand Shri N. C. Jain, Advocate General for the State in reply submitted that the very fact that the petitioner did not controvert or refute the allegations against him by counter affidavit, has furnished justification to the Government to direct a probe into it, to cleanse the atmosphere polluted due to the lack of confidence expressed in him by the High Court. In our view, since the portion of the judgment in which the above subject of building at Kerva Dam has been dealt with by the High Court, has been held by the Supreme Court, in the two orders passed in S.L.Ps. as containing no findings of fact and since it is a part of a decision of a Division Bench having coordinate jurisdiction, it is not open to us to sit on judgment over the correctness or otherwise of that part of the decision, which decided the lottery case. It, however, appears from the reading of the entire judgment containing the two opinions of the learned Judges constituting the Bench that the observations therein were only obiter in the sense that they were on an incidental or ancillary subject not germane to the decision of the main issue before them. There was no relief claimed in the prayer clause on the aforesaid subject as would be evident from the copy of the petition filed by Shri Kailash Joshi, petitioner in that case and which is on record of this petition before us as an annexure with the counter submitted by the intervener. The question, therefore, is, can obiter observations of the High Court without any other material, were relevant and could form a valid basis for setting up an enquiry into the alleged misdeeds or misuse of power of the public functionaries directly or indirectly involved in the so called lottery scandal.
61. The counsel for the petitioner argued that apart from the above obiter observations in the judgment of the High Court and the expectations or hope expressed therein from the petitioner of giving an "explanation to the Nation" there existed no material before the appropriate Government to set up, by issuance of subsequent notification, an enquiry into acts and o misdeeds of the petitioner and the public functionaries. It is not necessary for us to consider and decide whether the expectation from the petitioner of submitting an explanation for the construction of a building at Kerva Dam, was fulfilled by the petitioner by his submitting income tax return and contesting successfully with the said issue in the subsequent election from Churhat Assembly constituency. Equally unnecessary is for us to pronounce any opinion on the argument on behalf of the present Government that the 'explanation' as hoped by the High Court from the petitioner Shri Arjun Singh, could come either by placing all details of his construction and sources of income on the floor of the Legislative Assembly or by facing the enquiry commission. The High Court in its order has not specified or indicated what kind of explanation to the Nation the petitioner is expected to offer. Obviously, the High Court never intended such explanation to be furnished before a Commission which it did not direct to be set up even though the matter arose in the course of a public interest litigation.
62. The consequent question that arises is whether the obiter comments or observations made by the High Court in its judgment and the hope expressed and explanation expected from the petitioner on construction of Kerva Dam mansion, were relevant grounds or material for setting up enquiry commission. The answer to the said question, in our opinion, is against the State.
63. Shri N. S. Kale, counsel for Shri Kailash Joshi, intervener argued that immorality or illegality in acquisition of wealth has nothing to do with tax liability under the tax law and hence the submission and acceptance of income tax return has no relevance to the alleged charge of acquisition of disproportionate wealth by the petitioner, while in office of the Chief Minister of the State. There can be no dispute with the above line of reasoning. The question, however, is that if events such as income tax returns and successful election contest by the petitioner from the same Churhat constituency, where the lottery was held, are irrelevant considerations, what are those other relevant material or circumstances, excepting comments of the High Court, which the Court itself did not find as a justification, to direct a probe or enquiry into it. It has already been noted that the High Court directed setting up of an enquiry only in the affairs of the Society and the lottery and not into the conduct of the petitioner, even though it was a public interest litigation. The observations and comments of the High Court in a public interest litigation are no substitute for the subjective satisfaction or formation of opinion by the appropriate Government to be based on some objective material for setting up a Commission of enquiry under Section 3 of the Act.
64. Looking to the scheme of the Act, with the aims and objects, which it intends to achieve, a balance has to be struck, while exercising powers conferred by the provisions of the Act, to direct a probe to discover facts of a matter of public importance on one side and likely undue harassment, expenses and inconvenience to be caused to the individuals sought to be involved in it on the other. See the following passage in Administrative Law by Jain and Jain, IV Edition at pages 334-335 : -
"Investigations initiated on vague or flimsy grounds in the hope of finding something incriminating against the individual concerned are destructive of individual liberty and may have serious impact on him and his affairs................ Though the purpose of investigation under Section 237(b) is collection of facts, yet it cannot be denied that even in such a case the consequences of ordering investigation are serious for an individual, and there is need therefore, for the Government to have some material in its possession for making an order of investigation." See the decisions in the cases of Barium Chemicals Ltd. and Anr v. Company Law Board and Ors., AIR 1967 SC 295, Rohtas Industries Ltd. v. S.D. Agarw'al and Anr., AIR. 1969 SC 707.
65. The provisions of Section 3 do not confer a blanket power on the State to set up enquiry commission. The power is circumscribed by requiring the appropriate Government to form, may be, a subjective opinion on some objective relevant material. The comments of the High Court made because of non-submission of any affidavit by the petitioner Arjun Singh in lottery case, as rightly submitted by the learned counsel Shri Venugopal for the petitioner, is not a substitute for such relevant material to constitute a valid basis for setting up a statutory commission of enquiry in the case. Section 3 of the Act is framed in subjective form using the expressions 'if the appropriate Government is of the opinion.' This form of expression at first sight seems to exclude judicial review, but if exercise of power therein pre-supposes existence of some facts and although the evaluation of those facts is for the appropriate Government alone, the Court may enquire whether those facts exist and have been taken into account and whether the opinion required to be formed has been made upon proper self direction as to those facts and whether the opinion has been made over the facts which ought not to have been taken into account. (See observations of Lord Wilberforce, reproduced in Administrative Law by Professor H.W.R. Wade at page 389). Such judicial control of investigations and public enquiries seems necessary to safeguard against the dangers to which such enquiries are prone. Professor Wade at page 873 of the aforesaid book puts it in these words :
"The inquiry is inquisitorial in character, and usually takes place in a blaze of publicity. Very damaging allegations may be made against persons who may have little opportunity of defending themselves and against whom no legal charge is preferred. The tribunal is usually presided over by an eminent Judge, who can be relied upon to mitigate these dangers, so far as possible. But an inquisitorial public enquiry is not always easily controllable, and its evils would be grave if its use were not infrequent".
66. To sum up we hold that to enlarge issues before an authority already set up for enquiry with definite issues before it and 'deemed to be a commission' by fiction, on issuance of the notification under Section 11 of the Act, recourse can be had only to Section 3 of the Act and exercise thereof has to be supported by disclosing due application of mind of the appropriate Government to the relevant material for formation of its opinion before setting up an enquiry into such alleged additional matters of public importance. Obiter observations, comments or remarks even of a Court of Law cannot be considered to be substitutes for such relevant material and basis for formation of opinion to justify setting up of a statutory commission under the Act. On the facts of the case before us and as disclosed from the contents of the impugned notification, apart from the observations and the comments of the High Court, there was nothing before the appropriate Government for enlarging the scope of existing enquriy which was set up only to comply with the directions contained in the operative part of the judgment of the High Court in the lottery case. The resolution or order of the appropriate Government dated 23-3-1990 which culminated in passing of the impugned notification on 29-3-1990 (Annexure A-1) has not been produced before us, although a specific prayer for the same was made in the prayer clause of the petition. In our opinion, therefore, the mere fact that the earlier Government had formulated certain terms of reference and fed them to the press for publication, but withdrew the same and re-framed them, is no relevant material for setting up an enquiry commission in those matters. It is also relevant to mention that the enquiry commission already set up to go into the affairs of Churhat Lottery and the Society which conducted it, has yet to complete its enquiry and submit its report. There is no material led before the commission justifying enlargement of the scope of enquiry. As we have held above, there is no conscious application of mind for the purpose of setting up the commission on enlarged issues under Section 3 of the Act, which was the only provision which could have been resorted to for issuing the impugned notification.
67. As an upshot of the above discussion, the impugned notification dated 29-3-1990 (Annexure A-1) suffers from non-exercise or invalid exercise of powers under Section 3 of the Act and is, therefore, quashed.
68. Consequently, the petition succeeds and is hereby allowed. In the circumstances of the case, there shall be no order as to costs. Amount of security, if deposited, be refunded to the petitioner.