Jharkhand High Court
Rajnish Mishra vs State Of Jharkhand Through Its Chief ... on 21 November, 2003
Equivalent citations: AIR2004JHAR115, [2004(1)JCR162(JHR)], AIR 2004 JHARKHAND 115, 2004 AIR - JHAR. H. C. R. 2019, (2004) 1 JCR 162 (JHA), (2004) 15 ALLINDCAS 645 (JHA), 2004 (15) ALLINDCAS 645, (2004) 1 JLJR 70
Author: P.K. Balasubramanyan
Bench: P.K. Balasubramanyan, R.K. Merathia
JUDGMENT P.K. Balasubramanyan, C.J.
1. The basic prayer in this writ petition, is to restrain the State of Jharkhand from frittering away public funds by forming unnecessarily, corporations and companies for taking up welfare projects when the same could be got done by the existing arrangements through the concerned departments and Ministries. The petitioner, a practising lawyer, submits that corporations are created and companies are incorporated just to accommodate some persons or by way of distribution of patronage and such exercise is not warranted as it is against public interest and common good. The prayer is couched as one for the issue of 54, writ of mandamus directing the State Government to justify before this Court the constitution of boards, authorities and the like bodies with reference to the need for their constitution and the expenditure that was involved in maintaining such bodies. According to the petitioner, these hoards, corporations and companies tend to become white elephants, merely eating away the wealth of the State without brining any benefit to the people of the State or a section of it for whose benefit, allegedly they are constituted. They benefit only those who are accommodated in them.
2. According to the petitioner, all boards, corporations and companies are created and appointments of Chairmen and members are resorted to, just to accommodate the followers and supporters who are really not qualified and have no experience in the concerned field and that the exercise so undertaken is a fraud on power and on the Constitution. It is contended that a State, like the newly created State of Jharkhand, can ill-afford such wasteful expenditure. The question, therefore, arises whether the creation of these bodies are really necessary and whether it does not amount to easting an unnecessary burden on the State exchequer rendering the creation vulnerable to challenge as being arbitrary and unreasonable. A right to a well managed economy may even come within the concept of the right to life under Article 21 of the Constitution and, hence it is not as if the Court cannot control the exercise of power for creation of such unnecessary bodies or to present the wasteful expenditure resulting from it. The petitioner asserts that such bodies serve no useful purpose and exhorts the Court to prevent such wasteful expenditure.
3. According to the State, Boards, Corporations and Companies are created, formed or incorporated, only for the purpose of achieving the social uplift of the people and there is no question of any distribution of patronage or practice of nepotism involved. It is also submitted that a writ petition of this nature is not maintainable and the Court cannot decide whether a particular body constituted by the State Government was necessary or not. It was a matter of policy. In any event, such a general challenge was not tenable. Of course, the Court may be able to direct the State Government to ensure that there is no wasteful expenditure. The Court may even scrutinize the decision to form a particular Corporation in the background of the facts leading to the formation of that body, but there cannot be some sort of a pre-emptive general writ relating to the creation of such bodies. Ultimately, it was a matter of policy for the Government. In the guise of entertaining a public interest litigation, the Court cannot control the functioning of the Government or the actions of the executive taken according to its conception of necessity and public interest. Thus, the writ petition with the prayer in the manner in which it is made, was not maintainable.
4. Of course, pending the writ petition, certain interim directions has been issued permitting the creation of some bodies or corporations and a few applications by the State seeking permission to create other bodies are also pending. It was in that context that the learned Advocate General submitted that the case itself must be heard and decided finally and the State should not be driven to making frequent applications for permission to create Boards, Companies or Corporations. It was acceding to the request of the learned Advocate General that the writ petition itself was finally heard.
5. Learned counsel appearing for the petitioner submitted that no Government had a right to say that it will indulge in wasteful expenditure and any attempt to fritter away the State resources could be checked and should be checked by the Court, if moved in that behalf. The petitioner was a responsible citizen and was concerned with the wasteful expenditures indulged in by the Government by creating various Boards, Corporations and Companies, which according to the petitioner, are only for the benefit of certain individuals or groups and, as a part of distribution of largesse, Nepotism and distribution of patronage was writ large. Though great expectations were raised when the State was formed, what is tragically found is the adoption of the spoils system. The jurisdiction under Article 226 of the Constitution of India is wide and this Court can certainly ask the Government to justify the creation of a body when the work could be got clone, probably more efficiently, by the existing set up, the concerned Ministry and the concerned department. The Chief Minister and his Council of Ministers are trustees of public funds and, as such trustees, they have the obligation to preserve the corpus and to avoid wasteful expenditure. The Court was not powerless to prevent such waste and squandering of public funds and when questioned, it is the duty of the Government to satisfy the Court of the need to create a new Board, a Corporation or a Company and to show that it was not intended only to benefit the Chairman, its Members and those employed or connected with such bodies. The learned Advocate General refuting these arguments submitted that in the garb of public interest litigation, this Court should not entertain such writ petitions. It was for the Government to decide whether, in connection with a particular welfare measure or activity decided upon by the Government, it should create a separate body for carrying out that object. It was a matter of policy. Whereas in a given case, a writ petitioner may be able to challenge the constitution of a particular Board, Corporation or Company with reference to the facts leading to the creation of that body and based on its failure to deliver the goods, a general prayer for restraining the State from constituting such bodies or to satisfy the Court of the need to create such bodies before its creation could not be granted. The Court can seldom interfere in matters relating to policy and this was one of policy. The prayer in the writ petition was too general and the Court would not be justified in interfering on the basis of the prayer made in the writ petition. This so-called public interest litigation was more of a publicity interest litigation.
6. In Mani Kant Pathak v. The State of Bihar, 1997 (1) PLJR 664 (FB) a full bench of the Patna High Court dealing with the question whether the State Government was liable to pay the salaries and allowances of employees of a Government Company found that there were a number of Government Companies which were created merely to benefit some person or other appointed as Chairman and even while the Company was running at a loss and some were closed, their limited resources/funds, were being utilized for payment of allowances to the Chairman who were political persons. The Full Bench held that there was no need to create a separate office of the Chairman for a Company governed by the Companies Act, and the creation of the office of a Chairman was clearly unwarranted. Having regard to the financial plight of the Companies concerned there could hardly be any justification of the Chairman to continue in their offices. The Full Bench, therefore, directed that the Chairman of all incorporated companies and corporations, including those of the Bihar Finished Leather Limited and Agro Industries Division Corporation Limited shall cease to function as from the date of the judgment. In Kapila Hingorani v. State of Bihar, JT 2003 (5) 1 (SC), the Supreme Court held that Government companies would be constitutionally liable to respect life and liberty of all persons in terms of Article 21 of the Constitution of India and, therefore, were bound to pay salaries of their employees, whatever might be their financial position. Piercing the veil, the Supreme Court further held that those entities were really deeply and pervasively controlled by the State Government and the State Government had the constitutional obligation to protect the life and liberty of the employees of the Government owned companies. On the role of the Court, the Supreme Court held that the Court was obliged to issue necessary directions to mitigate the extreme hardships of the employees which involved the violation of human rights at the hands of the State. A right to carry on business was subject to the compliance of the constitutional obligations as also the limitations provided in the Constitution. The said decision, if we may respectfully point out, has enlarged the jurisdiction of the Court to interfere in a situation when the Court felt that a question of the right of a citizen to a living was involved.
7. It is thus clear that the creation of a corporation or a Government company creates an obligation on the State to even maintain its employees. It is, therefore, necessary that before the Government, ventures into such an enterprise and incurs such an obligation, if has the duty to see whether the creation of such body or corporation is at all necessary. The creation should be resorted to only when it is found to be absolutely necessary. In this case, in its counter affidavit, the State Government has pleaded thus :
"8. That the State Government would like to assure this Hon'ble Court that Boards/Corporations etc. will not be created just for the heck of it or on any extraneous consideration, but only in situations where, after evaluating each case on merit it would be found appropriate and in the public interest to create such bodies. The State Government does believe that the appointment of persons of such bodies should be clone purely on merit through a transparent system of selection. It may not, however, be always possible to fill some posts only though the process of advertisement. However, even in such cases, in the existing process of selection, enough safeguards are there to select and appoint only capable and competent persons in such Bodies."
8. Learned counsel for the petitioner submits that this is an empty promise not intended to be kept as can be seen from the persons appointed to the Jharkhand State Public Service Commission and the Chairman appointed to the Pollution Control Board, who had absolutely no qualification to head such a Board, it is seen that this Court had occasion to refer to the qualification of persons, including the Chairman to be appointed to the State Public Service Commission and it, in fact, struck down the appointment of the Chairman to the State Pollution Control Board, a matter pending in the Supreme Court. But the learned Advocate General submits that a solemn affidavit has been filed and this Court must normally accept it. In this writ petition, we think that this assurance by the State Government can be taken at face value making it clear that if and when a specific instance arises regarding the creation of a particular corporation, board or company, it will be open to the petitioner or any other citizen to approach this Court questioning the need for creation of that particular body with reference to the facts surrounding the creation of that body and/or on the basis that this assurance by the State Government has not been kept by it while bringing into existence that particular corporation. It is also seen from the counter affidavit that the State Government constituted an advisory committee for formulating a policy in respect of the constitutional public bodies, like the corporation, board etc, and on matters relating to the continuance or abolition of some of the existing board(s)/corporation(s). The pleadings do not show that the said advisory committee made its recommendations though in an interim order, this Court directed the said advisory committee to tender its advice within a period of three months and further directed that the advisory committee would cease to exist on the expiry of three months from the date of that order, whether it rendered its advice or not. Considering the general nature of the writ petition, for the present, we are inclined to go by this assurance held out by the State Government.
9. Part XII of the Constitution deals with the finance of the Union and the States. It provides for sharing of the revenue between the Union and the States and also makes provisions for the expenditures and borrowings by the Union and the States. The Parliament and the State Legislatures are given power to enact laws regulating the financial activities of the Union and the States. Article 148 of the Constitution provides that there shall be a Comptroller and Auditor-General of India to be appointed by the President and under Article 149 of the Constitution, he has to perform such duties and exercise such power in relation to the accounts of the Union and the States and all other authorities or Bodies, as may be prescribed. His reports relating to the accounts of the Union are to be submitted to the President who shall cause the same to be laid before each House of Parliament and his report relating to the accounts of a State is to be submitted to the Governor who shall cause them to be laid before the Legislature of the State. Thus, the financial activities and its control are essentially entrusted to the Executive, subject to legislative control and subject to the checks imposed by audit of the accounts by the Comptroller and Auditor -General. It is in this background that the Court has to consider whether the Court can, and, if so to what extent, step into the arena to regulate public expenditure,
10. In this context, it cannot be forgotten that the Council of Ministers arc only public trustees or trustees of public funds. They have, therefore, an obligation to ensure that the funds are expended in a proper manner and no amount is wasted and that public revenue is not frittered away. Therefore, even if it may be the prerogative of the Executive to deal with public funds, subject to control by the legislature, in cases of breach of trust, there is, obviously an area in which a Court can exercise its jurisdiction at least in the matter of preventing a breach of trust or a waste of public money. The case of creation of a corporation has to be approached from this angle, especially in the context of the argument of the learned Advocate General that it was the privilege of the Government to spend money as it thought best and if in the process of governance it felt it necessary to constitute various corporations, the Court would not be justified in interfering with the creation of such corporations or restraining the expenditure in that behalf.
11. In our constitutional scheme, the Council of Ministers headed by the Chief Minister of a State have the responsibility to administer the State properly and to work for its prosperity, If, in that endeavour, schemes are formulated, the responsibility to implement those schemes would normally rest with the concerned Ministry under which the scheme falls The Council of Ministers is assisted by a Secretariat and each Ministry is generally assisted by a Secretary attached to that ministry. Therefore, normally any welfare scheme intended to be implemented has to be implemented through the concerned ministry and through the concerned department. A corporation is especially created or brought into existence only when it is felt that special machinery is necessary for implementing a particular scheme. The formation of a Corporation entails substantial expenditure by way of salaries, emoluments, perks and administrative expenditure. It is not unknown t hat the formation of such corporations have practically eaten away the funds set apart for the very scheme itself. Therefore, any prudent Government in its role as guardian, of public interest should cautiously consider whether it is really necessary to form a separate corporation for the purpose of dealing with a particular welfare measure. The corporation should not be created merely as a part of distribution of patronage or for rehabilitating politicians defeated at the hustings. Nor can square pegs be attempted to be fitted into round holes as has often happened. When a corporation for a specific purpose is formed, it is the duty of the Government to ensure that a person with the necessary expertise in the field and the necessary qualifications to perform such a duty, is appointed. Learned counsel for the petitioner argued that most for the corporations formed in the State are manned by persons who are actively involved in polities and are totally ill qualified to head such corporations formed for specific purposes, Of course, the learned Advocate General has sought to refute this submission, but the fact remains that more often than not, the corporations arc headed by persons who are either not qualified to hold the position considering the subject matter to be dealt with the corporation or who have no adequate interest in the work in which the corporation is involved. For this reason, it appears to us that the jurisdiction of the Court cannot be kept away completely on the plea that forming a corporation or not forming a corporation, is exclusively within the purview of the executive and the Court cannot, in any case, interfere with the exercise of such authority by the executive.
12. Obviously, there cannot be a blanket direction to the State Government not to form corporations. There cannot also be a direction as to who should be appointed as a Chairman or a member of a particular corporation. The formation of the corporation would depend upon the need to form one and that need, of course, is to be primarily decided by the Government. But the Government must realize that when it contemplates the creation of a corporation, it has the duty to consider whether it is really necessary to form such a corporation when adequate machinery is already available for implementing a particular scheme that is envisaged as a welfare measure. Similarly, the Government has also the duty to consider whether qualified persons with necessary expertise or knowledge in the field are appointed as a Chairman and as members of the corporation. It has also a duty to ensure that its employees are working diligently, honestly and with dedication. Government is required to sec to the overall development of the State and keep in mind the benefit to the public as a whole. The Government does not exist for providing employment only. The Government should try to have the best persons from wherever they are available, if they are not available locally for the present. After all, the need of the day is good governance and good and cost effective management of the affairs of the State. There can, therefore, be a direction to the Government to desist from formation of a corporation for a reason other than absolute necessity and to ensure that the corporations are manned by persons who are well qualified in the field of the activity to be entrusted to that corporation. The Government can certainly be cautioned that it is not expected to create a corporation merely to find places for some persons who could not be accommodated elsewhere in the, dispensation of things.
13. Thus, the present writ petition is disposed of accepting the undertakings contained in paragraph 8 of the counter affidavit filed on behalf of the State and extracted by us above and with a further direction to the State Government to ensure that a corporation or Government company is created only if it is absolutely necessary and only after examining all the aspects relevant to the object sought to be achieved by the creation of such a corporation or company. It is made clear that this would not bar the petitioner or any other citizen from approaching this Court, questioning the creation of a particular board, corporation or a Government company and its constitution, based on the facts relevant to the creation of that corporation.
R.K. Merathia, J.
14. I agree.