VISHAKA & ORS. …PETITIONER
Vs.
STATE OF RAJASTHAN & ORS. …RESPONDENT

DATE OF JUDGMENT: 13/08/1997

BENCH: CJI, SUJATA V. MANOHAR, B. N. KIRPAL

J U D G M E N T

Verma, CJI:

This Writ Petition has been filed for the enforcement of the fundamental rights of working women under Articles 14, 19 and 21 of the Constitution of India in view of the prevailing climate in which the violation of these rights is not uncommon. With the increasing awareness and emphasis on gender justice, there is increase in the effort to guard such violations; and the resentment towards incidents of sexual harassment is also increasing. The present petition has been brought as a class action by certain social activists and NGOs with the aim of focussing attention towards this societal aberration, and assisting in finding suitable methods for realisation of the true concept of ‘gender equality’; and to prevent sexual harassment of working women in all work places through judicial process, to fill the vacuum in existing legislation.

The immediate cause for the filing of this writ petition is an incident of alleged brutal gang rape of social worker in a village of Rajasthan. That incident is the subject matter of a separate criminal action and no further mention of it, by us, is necessary. The incident reveals the hazards to which a working woman may be exposed and the depravity to which sexual harassment can degenerate;

and the urgency for safeguards by an alternative mechanism in the absence of legislative measures. In the absence of legislative measures, the need is to find an effective alternative mechanism to fulfil this felt and urgent social need.

Each such incident results in violation of the fundamental rights of ‘Gender Equality’ and the ‘Right of Life and Liberty’. It is clear violation of the rights under Articles 14, 15 and 21 of Constitution. One of the logical consequences of such an incident is also the violation of the victim’s fundamental right under Article 19(1)(g) ‘to practice any profession or to carry out any occupation, trade or business’. Such violations, therefore, attract the remedy under Article 32 for the enforcement of these fundamental rights of women. This class action under Article 32 of the Constitution is for this reason. A writ of mandamus in such a siltation, if it is to be effective, needs to be accompanied by directions for prevention; as the violation of fundamental rights of this kind is a recurring phenomenon. The fundamental right to carry on any occupation, trade or profession depends on the availability of a “safe” working environment. Right to life means life with dignity. The primary responsibility fro ensuring such safety and dignity through suitable legislation, and the creation of a mechanism for its enforcement, is of the legislature and the executive. When, however, instances of sexual harassment resulting in violation of fundamental rights of women workers under Articles 14, 19 and 21 are brought before us for redress under Article 32, an effective redressal requires that some guidelines should be laid down for the protection of these rights to fill the legislative vacuum.

The notice of the petition was given to the State of Rajasthan and the Union of India. The learned Solicitor General appeared for the Union of India and rendered valuable assistance in the true spirit of a Law Officer to help us find a proper solution to this social problem of considerable magnitude. In addition to Ms. Meenakshi Arora and Ms. Naina Kapur who assisted the Court with full commitment, Shri Fali S. Nariman appeared as Amicus Curiae and rendered great assistance. We place on record our great appreciation for every counsel who appeared in the case and rendered the needed assistance to the Court which has enabled us to deal with this unusual matter in the manner considered appropriate for a cause of this nature.

Apart from Article 32 of the Constitution of India, we may refer to some other provision which envisage judicial intervention for eradication of this social evil. Some provisions in the Constitution in addition to Articles 14, 19(1)(g) and 21, which have relevance are:

Article 15:

“15. Prohibition of discrimination on grounds of religion, race, caste, sex or place of birth.- (1) The State shall not discriminate against any citizen on only of religion, race, caste, sex, place of birth or any of them.

(2) xxx xxxx xxxx (3) Nothing in this article shall prevent the State from making any special provision for women and children.

(4) xxxx xxxx xxxx” Article 42:

“42. Provision for just and humane conditions of work and maternity relief – The State shall make provision for securing just and humane conditions of work and for maternity relief.” Article 51A:

“51A. Fundamental duties. – It shall be the duty of every citizen of India, – (a) to abide by the Constitution and respect its ideals and institutions, …

xxxx xxxx xxxx (e) to promote harmony and the spirit of common brotherhood amongst all the people of India transcending religious, linguistic and regional or sectional diversities; to renounce practices derogatory to the dignity of women;

xxx xxxx xxxx” Before we refer to the international conventions and norms having relevance in this field and the manner in which they assume significance in application and judicial interpretation, we may advert to some other provisions in the Constitution which permit such use. These provisions are:

Article 51 :

“51. Promotion of international peace and security – The State shall endeavour to – xxxx xxxx xxxx (c) foster respect for international law and treaty obligations in the dealings of organised people with one another;

and xxx xxx xxx” Article 253 :

“253. Legislation for giving effect to international agreements – Notwithstanding anything in the foregoing provisions of this Chapter, Parliament has power to make any law for the whole or any part of the territory of India for implementing any treaty, agreement or convention with any other country or countries or any decision made at any international conference, association or other body.” Seventh Schedule :

“List I – Union List:

xxxx xxxx xxxx

14. Entering into treaties and agreements with foreign countries and implementing of treaties, agreements and conventions with foreign countries.

xxx xxx xxx” In the absence of domestic law occupying the field, to formulate effective measures to check the evil of sexual harassment of working women at all work places, the contents of International Conventions and norms are significant for the purpose of interpretation of the guarantee of gender equality, right to work with human dignity in Articles 14, 15 19(1)(g) and 21 of the Constitution and the safeguards against sexual harassment implicit therein. Any International Convention not inconsistent with the fundamental rights and in harmony with its spirit must be read into these provisions to enlarge the meaning and content thereof, to promote the object of the constitutional guarantee. This is implicit from Article 51(c) and enabling power of the Parliament to enact laws for implementing the International Conventions and norms by virtue of Article 253 read with Entry 14 of the Union List in Seventh Schedule of the Constitution. Article 73 also is relevant. It provides that the executive power of the Union shall extend to the matters with respect to which Parliament has power to make laws. The executive power of the Union is, therefore, available till the parliament enacts to expressly provide measures needed to curb the evil.

Thus, the power of this Court under Article 32 for enforcement of the fundamental rights and the executive power of the Union have to meet the challenge to protect the working women from sexual harassment and o make their fundamental rights meaningful. Governance of the society by the rule of law mandates this requirements as a logical concomitant of the constitutional scheme. The exercise performed by the Court in this matter is with this common perception shared with the learned Solicitor General and other members of the Bar who rendered valuable assistance in the performance of this difficult task in public interest.

The progress made at each hearing culminated in the formulation of guidelines to which the Union of India gave its consent through the learned Solicitor General, indicating that these should be the guidelines and norms declared by this Court to govern the behaviour of the employers and all others at the work places to curb this social evil.

Gender equality includes protection from sexual harassment and right to work with dignity, which is a universally recognised basic human right. The common minimum requirement of this right has received global acceptance.

The International Conventions and norms are, therefore, of great significance in the formulation of the guidelines to achieve this purpose.

The obligation of this Court under Article 32 of the Constitution for the enforcement of these fundamental rights in the absence of legislation must be viewed along with the role of judiciary envisaged in the Beijing Statement of Principles of the Independence of the Judiciary in the LAWASIA region. These principles were accepted by the Chief Justices of the Asia and the Pacific at Beijing in 1995 as those representing the minimum standards necessary to be observed in order to maintain the independence and effective functioning of the judiciary. The objectives of the judiciary mentioned in the Beijing Statement are:

“Objectives of the Judiciary:

10. The objectives and functions of the Judiciary include the following:

(a) to ensure that all persons are able to live securely under the Rule of Law;

(b) to promote, within the proper limits of the judicial function, the observance and the attainment of human rights; and (c) to administer the law impartially among persons and between persons and the State.” Some provisions in the ‘Convention on the Elimination of All Forms of Discrimination against Women’, of significance in the present context are:

Article 11:

“1. States Parties shall take all appropriate measures to eliminate discrimination against women in the field of employment in order to ensure, on basis of equality of men and women, the same rights, in particular:

(a) The right to work as an inalienable right of all human beings;

xxxx xxxxx xxxx (f) The right to protection of health and to safety in working conditions, including the safeguarding of the function of reproduction.

xxx xxxxx xxxxx Article 24 :

“States Parties undertake to adopt all necessary measures at the national level aimed at achieving the full realization of the rights recognised in the present Convention.” The general recommendations of CEDAW in this context in respect of Article 11 are :

“Violence and equality in employment:

22. Equality in employment can be seriously impaired when women are subjected to gender specific violence, such as sexual harassment in the work place.

23. Sexual harassment includes such unwelcome sexually determined behavior as physical contacts and advance, sexually coloured remarks, showing pornography and sexual demands, whether by words or actions. Such conduct can be humiliating and may constitute a health and safety problem; it is discriminatory when the woman has reasonable grounds to believe that her objection would disadvantage her in connection with her employment, including recruiting or promotion, or when it creates a hostile working environment.

Effective complaints procedures and remedies, including compensation, should be provided.

24. States should include in their reports information about sexual harassment, and on measures to protect women from sexual harassment and other forms of violence of coercion in the work place.” The Government of India has ratified the above Resolution on June 25, 1993 with some reservations which are not material in the present context. At the Fourth World Conference on Women in Beijing, the Government of India has also made a official commitment, inter alia, to formulate and operationalize a national policy on women which will continuously guide and inform action at every level and in every sector; to set up a Commission for Women’s Rights to act as a public defender of women’s human rights; to institutionalise a national level mechanism to monitor the implementation of the Platform for Action. We have, therefore, no hesitation in placing reliance on the above for the purpose of construing the nature and ambit of constitutional guarantee of gender equality in our Constitution.

The meaning and content of the fundamental rights guaranteed in the Constitution of India are of sufficient amplitude to compass all the facets of gender equality including prevention of sexual harassment or abuse.

Independence of Judiciary forms a part of our constitutional scheme. The international conventions and norms are to be read into them in the absence of enacted domestic law occupying the fields when there is no inconsistency between them. It is now an accepted rule of judicial construction that regard must be had to international conventions and norms fro construing domestic law when there is no inconsistency between them and there is a void in the domestic law. The High Court of Australia in Minister fro Immigration and Ethnic Affairs vs. Tech. 128 ALR 535, has recognised the concept of legitimate expectation of its observance in the absence of contrary legislative provision, even in the absence of a Bill of Rights in the Constitution of Australia.

In Nilabati Behera vs. State of Orissa 1993(2) SCC 746, a provision in the ICCPR was referred to support the view taken that an enforceable right to compensation is not alien to the concept of enforcement of a guaranteed right’, as a public law remedy under Article 32, distinct from the private law remedy in torts. There is no reason why these international conventions and norms cannot, therefore, be used for construing the fundamental rights expressly guaranteed in the Constitution of India which embody the basic concept of gender equality in all spheres of human activity.

In view of the above, and the absence of enacted law to provide fro the effective enforcement of the basic human right of gender equality and guarantee against sexual harassment and abuse, more particularly against sexual harassment at work places, we lay down the guidelines and norms specified hereinafter for due observance at all work places or other institutions, until a legislation is enacted for the purpose. This is done in exercise of the power available under Article 32 of the Constitution for enforcement of the fundamental rights and it is further emphasised that this would be treated as the law declared by this Court under Article 141 of the Constitution.

The GUIDELINES and NORMS prescribed herein are as under:- HAVING REGARD to the definition of ‘human rights’ in Section 2(d) of the Protection of Human Rights Act, 1993, TAKING NOTE of the fact that the present civil and penal laws in India do not adequately provide for specific protection of women from sexual harassment in work places and that enactment of such legislation will take considerable time, It is necessary and expedient for employers in work places as well as other responsible persons or institutions to observe certain guidelines to ensure the prevention of sexual harassment of women:

1. Duty of the Employer or other responsible persons in work places and other institutions:

It shall be the duty of the employer or other responsible persons in work places or other institutions to prevent or deter the commission of acts of sexual harassment and to provide the procedures for the resolution, settlement or prosecution of acts of sexual harassment by taking all steps required.

2. Definition:

For this purpose, sexual harassment includes such unwelcome sexually determined behaviour (whether directly or by implication) as:

a) physical contact and advances;

b) a demand or request for sexual favours;

c) sexually coloured remarks;

d) showing pornography;

e) any other unwelcome physical verbal or non-verbal conduct of sexual nature.

Where any of these acts is committed in circumstances where under the victim of such conduct has a reasonable apprehension that in relation to the victim’s employment or work whether she is drawing salary, or honorarium or voluntary, whether in government, public or private enterprise such conduct can be humiliating and may constitute a health and safety problem. It is discriminatory for instance when the woman has reasonable grounds to believe that her objection would disadvantage her in connection with her employment or work including recruiting or promotion or when it creates a hostile work environment.

Adverse consequences might be visited if the victim does not consent to the conduct in question or raises any objection thereto.

3. Preventive Steps:

All employers or persons in charge of work place whether in the public or private sector should take appropriate steps to prevent sexual harassment. Without prejudice to the generality of this obligation they should take the following steps:

(a) Express prohibition of sexual harassment as defined above at the work place should be notified, published and circulated in appropriate ways.

(b) The Rules/Regulations of Government and Public Sector bodies relating to conduct and discipline should include rules/regulations prohibiting sexual harassment and provide for appropriate penalties in such rules against the offender.

(c) As regards private employers steps should be taken to include the aforesaid prohibitions in the standing orders under the Industrial Employment (Standing Orders) Act, 1946.

(d) Appropriate work conditions should be provided in respect of work, leisure, health and hygiene to further ensure that there is no hostile environment towards women at work places and no employee woman should have reasonable grounds to believe that she is disadvantaged in connection with her employment.

4. Criminal Proceedings:

Where such conduct amounts to a specific offence under the Indian Penal Code or under any other law the employer shall initiate appropriate action in accordance with law by making a complaint with the appropriate authority.

In particular, it should ensure that victims, or witnesses are not victimized or discriminated against while dealing with complaints of sexual harassment. The victims of sexual harassment should have the option to seek transfer of the perpetrator or their own transfer.

5. Disciplinary Action:

Where such conduct amounts to mis-conduct in employment as defined by the relevant service rules, appropriate disciplinary action should be initiated by the employer in accordance with those rules.

6. Complaint Mechanism:

Whether or not such conduct constitutes an offence under law or a breach of the service rules, an appropriate complaint mechanism should be created in the employer’s organization for redress of the complaint made by the victim. Such complaint mechanism should ensure time bound treatment of complaints.

7. Complaints Committee:

The complaint mechanism, referred to in (6) above, should be adequate to provide, where necessary, a Complaints Committee, a special counsellor or other support service, including the maintenance of confidentiality.

The Complaints Committee should be headed by a woman and not less than half of its member should be women.

Further, to prevent the possibility of any under pressure or influence from senior levels, such Complaints Committee should involve a third party, either NGO or other body who is familiar with the issue of sexual harassment.

The Complaints Committee must make an annual report to the government department concerned of the complaints and action taken by them. The employers and person in charge will also report on the compliance with the aforesaid guidelines including on the reports of the Complaints Committee to the Government department.

8. Workers’ Initiative:

Employees should be allowed to raise issues of sexual harassment at workers meeting and in other appropriate forum and it should be affirmatively discussed in Employer-Employee Meetings.

9. Awareness:

Awareness of the rights of female employees in this regard should be created in particular by prominently notifying the guidelines (and appropriate legislation when enacted on the subject) in suitable manner.

10. Where sexual harassment occurs as a result of an act or omission by any third party or outsider, the employer and person in charge will take all steps necessary and reasonable to assist the affected person in terms of support and preventive action.

11. The Central/State Governments are requested to consider adopting suitable measures including legislation to ensure that the guidelines laid down by this order are also observed by the employers in Private Sector.

12. These guidelines will not prejudice any rights available under the Protection of Human Rights Act, 1993.

Accordingly, we direct that the above guidelines and norms would be strictly observed in all work places for the preservation and enforcement of the right to gender equality of the working women. These directions would be binding and enforceable in law until suitable legislation is enacted to occupy the field. These Writ Petitions are disposed of, accordingly.

The post Vishaka & Ors. Vs. State of Rajasthan & Ors. appeared first on B&B Associates LLP.

J U D G M E N T

S.B. Majumdar.J,

M/s Northern Plastics Ltd. is the common appellant in these two appeals moved by it after obtaining special leave to appeal from this Court against a common judgement dated 9th March 1990 passed by the High Court of Delhi in two Civil Writ Petitions, one moved by M/s Hindustan Photo Films Mfg.Co.Ltd. (’HPF’ for short), respondent no.1 in C.A. No. 2035 of 1990, and the other the Union of India, respondent no.1 in the companion Civil Appal No. 2036 of 1990. The question companion Civil Appeal No. 2036 of 1990. The question posed for our consideration is as to whether 1st respondents in these Civil writ appeals could be said to be ’persons aggrieved’ within the meaning of Section 129-A of the Customs Act, 1962 (hereinafter referred to as ’the Act’) so that they could challenge before the customs, Excise and Gold (Control) Appellate Tribunal (’CEGAT’ for short) the order passed by the Additional Collector of Customs, Bombay dated 5th June 1989 agreeing with the notings made by the Assistant Collector of Customs dated 31st May 1989 recommending release of the imported goods to the common appellant on payment of full customs duty. The CEGAT took the view the respondent no.1 in both these appeals had no locus standi to prefer appeals against the said order. The High Court of Delhi by the impugned judgment has taken a contrary view and has ruled in favour of the locus standi of these respective respondents.

Before we deal with the aforesaid question it will be necessary to not the relevant background facts leading to the present controversy between the parties. The project a chequered history. The common appellant, Northern Plastics Ltd., which will hereinafter be referred to as ’the appellant’ for the sake of convenience, is said to have obtained Small Scale Industries Registration (SSI Registration) on 24th August 1985 for slitting and confectioning of jumbo rolls of various types of films. The said registration, according to the appellant, was obtained under The Industries (Development & Regulation) Act, 1951 (’IDR Act’ for short). A notification was issued by the competent authority under the said Act on 18th July 1986 effectively taking away the exemption fro requirement of licence in respect of Item 20 of 1st Schedule to the IDR Act thus making it obligatory for owner of industrial undertaking to have licence within six months. It is the case of the appellant that although it was not the owner of industrial undertaking as defined by the IDR Act, under a mistaken belief it applied for COB licence on 8th December 1986. On 7th July 1988 a notification was issued by the Central Government in exercise of its powers under subsection (i) of Section 25 of the Act exempting jumbo rolls of graphic art films and jumbo rolls of photographic colour paper, of width 1 meter or more and of length 600 meters or more, falling within Chapter 37 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), when imported into India, from so much of that portion of the duty of customs leviable thereon under the said First Schedule as was in excess of the amount calculated at the rate of 60 per cent ad valorem, subject to the following conditions:
(i) the importer undertakes conversion of the said jumbo rolls by slitting confectioning into finished products;
(ii) the importer holds an industrial licence under the Industries (Development and Regulation) Act, 1951 (65 of 1951), for slitting and confectioning of photo-sensitised materials from jumbo rolls.

According to the appellant the benefit of the this concession in import duty on the jumbo rolls of various types of films which were being imported by the appellant was available to it. The appellant had imported various consignments of articles of X-Ray films and graphic art films through the port at Bombay between January 1989 and May 1989. The shipments concerned for the same consignments were made in favour of the appellant by the foreign exporters between 15th December 1988 and 20th April 1989. According to the appellant the goods were worth Rs. 246 lacs approximately in foreign exchange. That the appellant had paid customs duty amounting to Rs. 196 lacs on these consiqnments and the additional duty if the exemption was not available to the appellant on these consignments would have become payable to the extent of Rs. 130 lac. The total value of the goods imported at Bombay port by the appellant during the aforesaid period worked up to Rs.572 lacs according to the appellant. The Assistant Collector of Customs (Bombay) had not granted the requisite relief of concessional import duty payable for the imported consignments of the appellant. Hence a writ petition being Civil Writ Petition No. 2021 of 1988 was moved by the appellant in the High Court of Delhi where principal relief sough was for the grant of benefit of the aforesaid customs exemption notification. A prayer was also made for issuance of COB licence by the competent authorities under the IDR Act. Initially the appellant had not joined M/s. ’HPF’, a public sector undertaking in the said writ petition as a respondent as it was merely a business rival of the appellant. However on an application by the HPF a Division Bench of the High Court by its order dated 8th May 1989 allowed it to be a party-respondent in the appellant’s petition. In the aforesaid writ petition filed by the appellant before High Court of Delhi initially an order was passed by a learned Single Judge directing removal and release of the jumbo rolls imported by the appellant at Bombay at concessional rate of customs duty. However this interim order set aside by a Division Bench of the High Court by its order dated 8th May 1989. Pending this writ petition on the Delhi High Court, upon an application by the appellant, an order was proposed to be passed by the Assistant Collector of Customs (Bombay) on 31st May 1989 permitting the clearance of the imported consignment of the appellant upon payment of full rate of customs duty. The said proposed order was placed for approval before the Additional Collector of Customs (Bombay). Below the said proposal the Additional Collector of Customs (Bombay) put his endorsement agreeing to the said proposal on 1st June 1989. The said order which came to be communicated to the appellant on 5th June 1989 entitled the appellant to clear the imported goods on payment of full customs duty without availing of the benefits of the concessional rate of import duty pursuant to the earlier referred notification dated 7th July 1988.

Having come to know about the order of the Additional Collector of Customs, HPF which is a public sector undertaking wholly owned by Government of India, which was already joined as a party, at its own request, to the appellant’s pending, petition, moved an interim relief application in that petition for staying the clearance and removal of the goods imported by the appellant. The High Court by its order dated 9th June 1989 in vacation granted ex-parte stay of the Collector’s order. The interim relief application of HPF was subsequently heard another Vacation Judge in the High Court on 21st June 1989 and after completion of the arguments on behalf of the HPF on 26th June 1989 a request was made for not pronouncing the judgment in the said interim relief application. However the said request was not granted and the interim relief application of HPF was dismissed on 26th June 1989 by the high Court. That thereafter HPF filed a writ petition in the High Court of Bombay on that very day, that is, 26th June 1989 praying for similar interim relief against release of the imported goods to the appellant. The High Court rejected the request for exparte interim relief. A Special Leave Petition was also moved by the HPF before this Court against the Delhi High Court order dated 26th June 1989 vacating the exparte stay granted against the releases of imported goods in favour of the appellant. The said Special Leave Petition was dismissed as withdrawn by this Court. After HPF’s Special Leave Petition was dismissed as withdrawn by this Court on 27th June 1989 a writ appeal was moved by the HPF before a Division Bench of the Bombay High Court against the order of learned Single Judge refusing to grant ex parte stay in writ petition of HPF, but no interim relief was granted by the High Court even in this writ appeal. Under these circumstances HPF filed an appeal to CEGAT on 28th June 1989 against the order of Additional Collector of Customs (Bombay) dated 5th June 1989. An exparte interim order was obtained from CEGAT for a week up to 6th July 1989. HPF then withdrew the writ petition before the Bombay High Court. In the meantime the status quo order granted by CEGAT expired on 6th July 1989 and it was not extended. HPF then filed a writ petition before the High Court of Delhi being Writ Petition No.1932 of 1989 against the order dated 7.7.1989 passed by CEGAT and the Division Bench of the High Court passed an ex parte stay of the order of the Additional Collector of Customs dated 5th June 1989 on 12th July 1989. The High Court of Delhi by its order dated 17th July 1989 disposed of Writ Petition No. 1932 of 1989 moved by the HPF against the Additional Collector’s order and directed CEGAT to dispose of the appeal of the HPF. The High Court, however, further directed that till the final disposal of the appeal by the CEGAT the stay granted on 12th July 1989 would continue. Before HPF’s appeal could be heard by the CEGAT an appeal being No. 2072 of 1989 was filed by the Ministry of Industries, New Delhi before CEGAT under Section 129-A of the Act against the very same order of Additional Collector dated 5th June 1989. A Bench of CEGAT by its order dated 31st July 1989 dismissed the appeal of HPF against Collector of Customs on the ground that HPF being a business rival of the appellant was not ’person aggrieved’ as contemplated by Section 129-A of the Act and hence the appeal was not maintainable. Thereafter on 8th August 1989 the other appeal filed by Ministry of Industries against the very same order of Additional Collector of Customs was also dismissed as not maintainable, the Ministry of Industries being held not an ’aggrieved person’ within the meaning of Section 129-A of the Act. Under these circumstances HPF filed another Writ Petition No. 2286 of 1989 in the Delhi High Court on 9th August 1989 challenging two orders- (i) the order of CEGAT dated 31st July 1989 holding its appeal as not maintainable; and (ii) the order of Additional Collector of Customs (Bombay) ordering release of the imported goods to the appellant. A Division Bench of the High Court while admitting the writ petition restrained clearance of the goods in favour of the appellant pending the writ petition. In the said writ petition Ministry of Industries was also permitted on its application to be impleaded as party-respondent. The Union of India representing Ministry of Industries in its turn filed another write petition being Civil Writ Petition No. 3023 of 1989 on 24th October 1989 before the High Court of Delhi against the order dated 8th August 1989 passed by CEGAT against it. That petition was also admitted by the High Court of Delhi. Both these writ petitions were heard together and by a common order dated 9th March 1990 a Division Bench of the High Court took the view that the appeals filed by the respective first respondents i n these appeals were maintainable before the GEGAT as they could be said to be ’persons aggrieved’ within the meaning of Section 129-A of the Act and that they had sufficient locus standi in public interest to maintain their appeals. In the result the Division Bench of the High Court partly allowed the writ Petition of both the first respondents in these appeals moved by the Union of India as well as HPF and passed the following order:

“We have held that the Union of India and M/s. Hindustan Photo Films Ltd. are ’aggrieved person’ and can maintain an appeal under Section 129-A of the Customs Act. The main question in the writ petition at the root of the entire controversy between the parties is whether the said importation of the photo-sensitized material at Bombay was legal or not would now be decided by the Appellate Tribunal. But assuming that M/s. Northern Plastics Ltd. takes an appeal against our order to the Supreme Court and our decision is reversed, still the question of the legality of the importation would be open to the parties to be argued in this writ petition before us. Thus, till the main question of legality of importation is finally disposed of, in the interests of justice, it is necessary that the subject-matter, of the controversy, viz. the imported goods, are preserved in the custody of the Customs Authorities and are not released. Since the goods are now stored under the suitable conditions of storage with M/s. Northern Plastics Ltd. there is no likelihood of their deteriorating. No variation in our order dated 9.8.89 in regard to the release of goods is, therefore, called for. The writ petition is partly allowed to the extent indicated above.”

As already noted the aforesaid common order of the Division Bench of the High Court of Delhi has resulted in present two appeals on grant of special leave by this Court. Pending these appeals it was felt by this Court that the imported goods in question were likely to deteriorate with passage of time and if the happened the contesting parties would stand to suffer irretrievably. Consequently by an order dated 25th April 1990 a Bench of two learned Judges of this Court was pleased to direct that Chief Controller of Imports and Exports may be appointed as Court Receiver for disposing of the goods in question by sale in auction as expeditiously as possible and at the maximum price they will fetch in the market. It was further directed that the amount of the sale proceeds of the auction shall forthwith be deposited by the receiver in this court to the credit of these appeals. Accordingly the goods were auctioned. By a further order dated 21st September 1990 another Bench of two learned Judges of this Court accepted the offer of four purchasers who had offered to purchase all the disputed goods for a total sum of Rs. 1,40,00,000/-. Four action sales were confirmed in favour of the concerned auction purchasers. By the same order it was directed that the auction amount shall be deposited by this Court in a Fixed Deposit Account and the amount so deposited shall remain in the custody of the Court and shall be disposed of in accordance with the final judgment in the appeals pending before the Customs, Excise and Gold (Control) Appellate Tribunal. The aforesaid order was passed for the obvious reason that by that time under the common judgment under appeal CEGAT was directed by the High Court to dispose of the appeals of Union of India as well as HPF pursuant to its judgment. However as these appeals are being disposed of finally by us by the present judgment appropriate order will have to be passed by us in connection with this deposited amount. We shall do so after considering the main question involved in controversy between the parties in these appeals.

For the purpose of these appeals we shall assume that the order of Assistant Collector of Customs (Bombay), as approved by the Additional Collector of Customs (Bombay), of 1st June 1989 was in itself appealable to CEGAT under Section 129-A of the Act being a decision and order passed by an adjudicating authority under Section 122 of the Act. We assume as aforesaid for the simple reason that Shri Dave, learned senior counsel for the appellant has vehemently contended that the said endorsement of the Additional Collector of Customs was of an administrative nature and was not appealable. Neither CEGAT nor the High Court of Delhi has considered that question and as that question strictly does not arise for our consideration in the present appeals for deciding the controversy between the parties we have assumed as aforesaid.

Rival Contentions

Shri Dave, learned senior counsel for the appellant has vehemently contended that the Division Bench of the High Court had patently erred in taking the view in the impugned common judgment that HPF as well as Industries Ministry of the Union of India were ’aggrieved person’ within the meaning of Section 129-A of the Act. According to Shri Dave, the only parties which could prefer appeal to CEGAT could be either the aggrieved importer or the Collector of Customs after following the procedure of Section 129-D of the Act. That save and except these two parties no third party had a right to appeal under the Act. That right of appeal under the appeal under the Act. That right of appeals under the Act is a creature of statute. Therefore, we have to look at the relevant provisions of the statute with a view of finding out whether an appeal lies at the instance of any third parties like the present first respondents in both these appeals. Shri Dave in this connection placed strong reliance on Section 129-A sub-section (1) as well as subsection (3) thereof. In support of his submission he placed reliance on judgment of this Court to which we will make a reference at an appropriate stage. Shri Dave submitted that the concept of locus standi as expanded be decisions of this Court in connection with public interest litigations moved before this Court under Article 32 or before the High Court under Article 226 of the Constitution of India had no application to the statutory right of appeal to be culled out for the express language of the statute creating the appellate forum and also confirming the right of appeal to the parties mentioned therein. In the alternative submitted Shri Dave, neither the Industries Ministry nor the HPF, which is a rival commercial concern, can be said to be aggrieved by the order of the Assistant Collector of Customs (Bombay) directing release of the imported goods in favour of the appellant on payment of full customs duty. Shri Dave also tried to submit that it could not be urged by the contesting respondents that the import of the goods in question was unauthorised as for additional import licence purchased by the appellant actual user test was not applicable. For resolving the present controvesy it is not necessary to consider this alternative contention of Shri Dave. We will confine our decision to the limited question whether appeals moved by each of the first respondents in these appeals before CEGAT were maintainable or not.

Learned counsel Shri Subba Rao appearing for the Union of India as well as learned counsel appearing for HPF on the other hand tried to support the decision rendered by the High Court of Delhi and submitted that on the express language of Section 129-A sub-section (1) of the Act the Industries Ministry of the Union of India as well as HPF could be said to be ’persons aggrieved’. That according to the Industries Ministry of Union of India the appellant had imported goods which were liable to confiscation under the Act and, therefore, the order of the Additional Collector of Customs (Bombay) was patently erroneous. That it affected the public revenue as well as the effective implementation of IDR Act and, therefore, it could not be said that the Industries Ministry did not represent sufficient public interest to maintain the appeal before CEGAT. Learned counsel for HPF in his turn submitted that HPF which is wholly owned Government company where more than Rs. 400 crores are sunk by Central Government from public coffers is a limb of the Union of India itself and when such large extent of public funds are involved in the working of HPF it cannot be said that it did not represent sufficient public interest to maintain the appeal against the order of Additional Collector of Customs by which huge quantity of illegally imported goods were sought to be released in favour of the appellant. That such goods, if permitted to be imported, would result in flooding the local market and would severely prejudice the working of HPF which is a public concern that has now gone sick and hence the High Court had committed no error in holding that the HPF had sufficient locus standi to maintain its appeal before CEGAT.

In the light of these rival contentions we now proceed to consider the question posed for our decision.

At the outset it must be kept in view that appeal is a creature of statute. The right to appeal has to be exercised by persons permitted by the statute to prefer appeals subject to the conditions regarding the filing of such appeals. We may in this connection usefully refer to a decision of four learned judge of this Court in the case of The Anant Mills Co. Ltd. etc. etc. v. State of Gujarat & others etc. etc. [AIR 1975 SC 1234 = (1975) 2 SCC 175]. In that case Khanna, J., speaking for the Court had to consider the question whether the provision of statutory appeal as per Section 406(2)(e) of the Bombay Provincial Municipal Corporation Act, 1949 which required the appellant to deposit the disputed amount of tax before appeal could be entertained could be said to be in any way violative of Article 14 of the Constitution of India. Repelling the aforesaid challenge to the vires of the said provision the following pertinent observations were made in para 40 of the Report :

“…The right of appeal is the creature of a statute. Without a statutory provision creating such a right the person aggrieved is not entitled to file an appeal. We fall to under stand as to why the Legislature while granting the right of appeal cannot impose conditions for the exercise of such right. In the absence of any special reasons there appears to be no legal or constitutional impediment to the imposition of such conditions. It is permissible, for example, to prescribe a condition in criminal cases that unless a convicted person is released on bail, he must surrender to custody on bail, he must surrender to custody before his appeal against the sentence of imprisonment would be entertained. Likewise, it is permissible to enact a law that no appeal shall lie against an order relating to an assessment of tax unless the tax had been paid. Such a provision was on the statute book in Section 30 of the Indian Income-tax Act, 1922. The proviso to the section provided that ’……….no appeal shall lie against an order under sub-section (1) of Section 46 unless the tax had been paid’. Such conditions merely regulate the exercise of the right of appeal so that the same is not abused difficulty in the enforcement of the order appealed against in case the appeal is ultimately dismissed. It is open to the Legislature to impose an accompanying liability upon a party upon whom legal right is conferred or to prescribe conditions for the exercise of the right. Any requirement for discharge of that liability or the fulfilment of that condition in case the party concerned seeks to avail of the said right is a valid piece of legislation, and we can discern no contravention of Article 14 in it ………”

It has also be noted that the wider concept of locus standi in public interest litigation moved before this Court under Article 32 of the Constitution of India which itself is a fundamental right or under Article 226 before High Courts which also offers a constitutional remedy cannot be imported for deciding the right of appeal under the statutory provisions contained in the Customs Act. Whether any right of appeal is conferred on anyone against the orders passed under the Act in the hierarchy of proceedings before the authorities has to be judged from the statutory settings of the Act and not before them. Therefore, in our view, the High Court in the impugned judgment had erred in drawing the analogy from the more elastic concept of locus standi under Article 32 of Article evolved by this Court by its decisions on the subject. It is also to be appreciated that the decision of this Court in Bar Council of Maharashtra v. M.V. Dabholkar etc. etc. AIR 1975 SC 2092 was based on an entirely different statutory scheme. For judging the competence and locus standi of the Union of India or the HPF for moving appeals before CEGAT against the order of Additional Collector of Customs passed under Section 122 of the Act the answer must be found from within the four corners of the Act itself.

We have, therefore, to turn to the Scheme of the Act providing for appeals. Provision of appeals is found in Chapter XV of the Act. Section 128 deals with ’Appeals to Collector (Appeals)’ and Section 128-A deals with ’Procedure in appeal’. The Appellate Tribunal is constituted as per Section 129 of the Act. Sub-section (1) thereof lays down that, ’the Central Government shall constitute an Appellate Tribunal to be called the Customs, Excise and Gold (Control) Appellate Tribunal consisting of as many judicial and technical members as it thinks fit to exercise the powers and discharge the functions conferred on the Appellate Tribunal by this Act’. It is, therefore, obvious that the Appellate Tribunal CEGAT is a creature of statute and derives its jurisdiction and powers only from the statute creating it and not outside the same. Then follows Section 129-A dealing with ’Appeals to the Appellate Tribunal’. The relevant provisions thereof read us under :

“129-A. Appeals to the Appellate Tribunal.- (1) Any person aggrieved by any of the following orders may appeals to the Appellate Tribunal against such order _ (a) a decision or order passed by the Collector of Customs as an adjudicating authority;
(b)… … … …
(c)… … … …
(d)… … … …”

Sub-sections (2) and (3) of Section 129-A are relevant for our present purpose. The read as under :

“129-A(2). The Collector of Customs may, if he is of opinion that an order passed by- (a) the Appellate Collector of Customs under Section 128, as it stood immediately before the appointed day, or (b) the Collector (Appeals) under Section 128-A, is not legal or proper, direct the proper officer to appeal on his behalf to the Appellate Tribunal or, as the case may be, the Customs and Excise Revenues Appellate Tribunal established under Section 3 of the Customs and Excise Revenues Appellate Tribunal Act, 1986, against such order. (3) Every appeal under this section shall be filed within three months from the date on which the order sought to be appealed against is communicated to the Collector of Customs, or as the case may be, the other party preferring the appeal.”

Section 129-D(1) of the Act also deserves to be noted at this stage. It reads as under:

“129-D. Powers of Board or Collector of Customs to pass certain orders.-(1) The Board may, of its own motion, call for and examine the record of any proceeding in which a Collector of Customs as an adjudicating authority has passed any decision or order under this Act for the propose of satisfying itself as to the legality or propriety of any such decision or order and may, by order, direct such Collector to apply to the Appellate Tribunal or, as the case may be Customs and Excise Revenues Appellate Tribunal established under Section 3 of the Customs and Excise revenues Appellate Tribunal Act, 1986, for the determination of such points arising out of the decision or order as may be specified by the Board in its order.”

Section 129-DA gives powers of revision to Board or Collector of Customs in certain cases and as we are concerned here with further proceedings against the order of Collector of Customs sub-section (1) of Section 129-DA would be relevant. It reads as under:

“129-DA. Powers of revision of Board or Collector of Customs in certain cases.- (1) The Board may, of its own motion or on the application of any aggrieved person or otherwise, call for and examine the record of any proceeding in which a Collector of Customs has passed any decision or order not being a decision or order passed under sub-section (2) of this section of the nature referred to in sub-section (5) of Section 129-D for the purpose of satisfying itself as to the correctness, legality or propriety or such decision or order and may pass such order thereon as it thinks fit.”

Similarly Section 129-DD gives powers of revision to Central Government to entertain revision petitions against certain orders of the Collector (Appeals). It provides as under:

129-DD. Revision by Central Government.-

(1) The Central Government may, on the application of a person aggrieved by any order passed under Section 128-A, where the order is of the nature referred to in the first proviso to sub-section (1) of Section 129-A, annul of modify such order.

Explanation .-for the purposes of this sub-section, ’order passed under Section 128-A’ includes an order passed under that section before the commencement of Section 40 of the Finance Act, 1984, against which an appeal has not been preferred before such commencement and could have been, if the said section had not come into force, preferred after such commencement to the Appellate Tribunal.”

The aforesaid provisions of the Act leave no room for doubt that they represent a complete scheme or code for challenging the orders passed by the Collector (Customs) in exercise of his statutory powers. It is axiomatic that the importer against whom the collector has passed the impugned order of adjudication and who is called upon to pay the customs duty which, according to him, is not payable an appeal under Section 129-A(1) of the Act. So far as departmental authorities themselves are concerned including the Collector of Customs no direct right of appeal is conferred on Collector to prefer appeal against his own order before the CEGAT. However there is sufficient safeguard made available to the Revenue by the Act for placing in challenge erroneous orders of adjudication as passed by the Collector of Customs by moving the Central Board of Excise and Customs under Section 129-D(1) for a direction to the Collector to apply to the CEGAT for determination of such point arising out of the decision or order as may be specified by the Board of Revenue in this connection. Similarly a statutory remedy is provided to the Collector of Customs in connection with orders of the Appellate Collector of Customs passed immediately before the appointed day and also in connection with the orders passed by Collector of Customs under Section 128-A, to direct proper officer to appeal on his behalf as laid down by Section 129-DA(1) as well as on the Central Government under contingencies contemplated by Section 129-DA(1). These are the only statutory modes contemplated by the Act by resort to which the orders of Collector (Customs) could be brought in challenge before higher statutory authorities including the CEGAT. In the light of this statutory scheme, therefore, it is not possible to agree with the contention of learned counsel for the contesting respondents that sub-section (1) of Section 129-A entitles any and every person feeling aggrieved by the decision or order of the Collector of Customs as an adjudicating authority, to prefer statutory appeal to the Appellate Tribunal. Neither the Central Government, through Industries Department, nor the rival company or industry operating in the same field as the importer can as a matter or right prefer an appeal as ’person aggrieved’ is wider than the phrase ’party aggrieved’. But in the entire context of the statutory scheme especially sub-section (3) of Section 129-A it has to be held that only the parties to the proceedings before the adjudicating authority Collector of Customs could prefer such an appeal to the CEGAT and the adjudicating authority under S.122 can prefer such an appeal only when directed by the Board under Section 129-D(1) and not otherwise. It is easy to visualise that even a third party may get legitimately aggrieved by the order of the Collector of Customs being the adjudicating authority if it is contended by such a third party that the goods imported really belonged to it and not to the purported importer or that he had financed the same and, therefore, in substance he was interested in the goods and consequently the release order in favour of the purported importer was prone to create a legal injury to such a third party which is not actually arraigned as a party before the adjudicating authority and was not heard by it. Under such circumstances such a third party might perhaps be treated to be legally aggrieved by the order of the Collector of Customs as an adjudicating authority and may legitimately prefer an appeal to the CEGAT as a ’person aggrieved’. That is the reason why the Legislature in its wisdom has used the phrase ’any person aggrieved’ by the order of Collector of Customs as adjudicating authority in Section 129-A(1). But it order to earn a locus standi as ’person aggrieved’ other than the arraigned party before the Collector of Customs as an adjudicating authority it must be shown that such a person aggrieved being third party has a direct legal interest in the goods involved in the adjudication process. It cannot be a general public interest or interest of a business rival as is being projected by the contesting respondents before us. In this connection we may refer to a Constitution Bench judgment of this Court in the case of Adi Pherozshah Gandhi v. H.M. Seervai, Advocate General of Maharashtra, Bombay [(1970 (2) SCC 484]. Question before the Constitution Bench in that case was as to whether Advocate General of the High Court who was be to issued a notice in disciplinary proceedings by the Bar Council as per the provisions of Section 35(2) of the Advocate Act, 1961 had locus standi to prefer an appeal against the order of the disciplinary authority under Section 37 of the Advocates Act before Bar Council of India. A majority of the Constitution Bench took the view that the Advocate General had no such locus standi. He could not be said to be a ’person aggrieved’ by the decision of the disciplinary authority exonerating the concerned delinquent advocate. Mitter, J., speaking for the majority considered the question in the light of the statutory settings of the Act and observed that to decide the question one had to look at the proceedings of this kind. We may refer to the pertinent observations in this connection made in paras 9 and 10 of the Report of the said judgment of Mitter, J.:

“Generally speaking. a person can be said to be aggrieved by an order which is to his detriment. pecuniary or otherwise or causes him some prejudice in some form or other. A person who is not a party to a litigation has no right to appeal merely because the judgment or order contains some adverse remarks against him. But it has been held in a number of cases that a person who is not a party to a suit may prefer an appeal with the leave of the appellate court and such leave would not be refused where the judgment would be binding on him under Explanation 6 to Section 11 of the Code of civil procedure. We find ourselves unable to take the view that because a person has been given notice of some proceedings wherein he is given a right to appear and make his submissions, he should without more have a right of appeal from an order rejecting his contentions or submission. An appeal is a creature of statute and if a statute expressly gives a person a right to appeal, the matter rests there. Innumerable statutes both in England and in India give the right of appeal to ’a person aggrieved’ by an order made and the provisions of such statutes have to be construed in each case to find out whether the person prefering an appeal falls within that expression. As was observed in Robinson v Currey [7 QBD 465] the words ’person aggrieved’ are ’ordinary meaning put upon them’. According to Halsbury’s Laws of England (Third Edition, Vol.25), page 293, footnote ’h’: ’the expression is nowhere defined and must be contrued by reference to the context of the enactment in which it appears and all the circumstances.’ Attempts have however from time to time been made to define the expression in various cases. In Ex parte Sidebotham In re Sidebotham [14 Ch D 458 at 465] it was observed by James.L.J.: ’But the words ’person aggrieved’ do not really mean a man who is disappointed of a benefit which he might have received if some other order had been made. A ’person aggrieved’ must be a man who has suffered a legal grievance, a man against whom a decision has been pronounced which has wrongfully deprived him of something, or wrongfully refused him something, or wrongfully affected his title to something.”

A Bench of four learned Judges of this Court in the case of Jasbhai Motibhai Desai v. Roshan Kumar Haji Bashir Ahmed and others [(1976) 1 SCC 671] had to examine the scheme of Bombay Cinemas Regulation Act 1953 and a rule therein with a view of finding out whether a rival cinema owner could appeal against a No objection Certificate grated to an applicant who wanted to establish a cinema theatre of his own. Sarkaria, J., speaking for the Court observed that under the relevant provisions of the Regulations no right was conferred by way of special interest on such a rival cinema owner as he did not satisfy the test of ’person aggrieved’. Nor could he be treated to be a valid objector being resident of the locality or person to whom any special right of objection was conferred by the statutory scheme. Thus he was merely a rival cinema owner who was likely to be adversely affected in his commercial interest if another cinema theatre got established and came to be run in the light of the No objection Certificate. That such an interest was considered to be too remote to clothe the objectors with a right to object to the No Objection Certificate to run a cinema under the Rules. Paras 47 and 48 of the Report in this connection deserve to be noted:

“Thus, in substance, the appellant’s stand is that the setting up of a rival cinema house in the town will adversely affect his monopolistic commercial interest, causing pecuniary harm and loss of business from competition. Such harm or loss is not wrongful in the eye of law, because it does not result in injury to a legal right or a legally protected interest, the business competition causing it being a lawful activity. Juridically, harm of this description is called damnum sine injuria, the term injuria being here used in its true sence of an act contrary to law [Salmond on Jurisprudence, 12th Edn. by Fitzgerald, p.357, para 85]. The reason why the law suffers a person knowingly to inflict harm of this description on another, without holding him accountable for it, is that such harm done to an individual is a gain to society at large.

In the light to the above discussion, it is demonstrably clear that the appellant has not been denied or deprived of a legal right. He has not sustained injury to any legally protected interest. In fact, the impugned order does not operate as a decisions against him, much less does it wrongfully affect his title to something. He has suffered no legal grievance. He has no legal peg for a justiciable claim to hang on. Therefore he is not a ’person aggrieved’ and has no locus standi to challenge the grant of the no-objection certificate.”

Shri Subba Rao, learned counsel for Union of India contended that the Central Government through the Industries Ministry had interest in the litigation in question as large public revenue was involved and the protection to be conferred on the local manufactures and those dealing in local markets had to be guarded against the onslaught of mushroom importers. That this public interest was sought to be vindicated by the Union of India by raising the present dispute. If the concerned import was found to be illegal the goods would be liable to confiscation. That when more than Rs.400 crores were sunk by the Union of India in its company HPF it could not be said that the Union of India through the Ministry of Industries was a total stranger and had no locus standi whatsoever to challenge the order of the Additional Collector of Customs. So far as the Union of India is concerned we may proceed on the basis that it may have to subserve a larger public interest by raising the present dispute and may legitimately feel aggrieved by the order of the Additional Collector of Customs. But even if it is so, the statutory procedure laid down by the Parliament in its wisdom for enabling the challenge to the adjudication order of the Collector of Customs by way of appeals or revisions, to which we have made a mention, has got to be followed in such an eventuality. Bypassing the said statutory procedure a direct frog leap to CEGAT is contra-indicated by the statutory scheme of the Act. If such direct appeals are permitted the very scheme of Section 129-D(1) would get stultified. It must, therefore, be held that direct appeal filed by the Union of India through Industries Ministry to CEGAT under Section 129-A(1) was clearly incompetent. It may by added that the Union of India could have used the mode set out in section 129D, but it did not do so.

So far as the appeal filed by HPF is concerned it is still on a weaker footing. Even though HPF may be a public limited company wholly owned by the Central Government and even if Central Government might have sunk more than Rs.400 crores in constituting it, its function would still remain in the domain of commercial enterprise. It may be a limb of the Central Government or its alter ego so far as Article 13 of the Constituting is concerned and may be treated end to answer challenges about violation of constitutional guarantees or statutory provisions under which it may be acting, but that would not clothe it with a legal locus standi to prefer a statutory appeal before CEGAT under Section 129-A(1). From the point of view of that provision it is no more than a business rival and cannot be said to be a ’person aggrieved’ by the adjudicatory order of the Collector of Customs releasing imported goods to the appellant on payment of full customs duty. It has also to be noted that the Customs Act nowhere provides for any special interest of such public concerns which may be operating as rivals in the same commercial field in which the importer may be operating. In the absence of any special statutory provision for protecting the interest of such Government concerns or public sector undertakings no statutory locus standi can be called out in their favour on the express language of the relevant provisions of the Act noted by us earlier. It must, therefore, be held that HPF was a mere business rival operating in the same commercial field and carrying on the same commercial activities as the appellant. Its locus standi to challenge the order of Additional Collector of Customs in favour of the appellant, therefore. gets squarely ruled out by the ratio of the decision of this court in the case of Jasbhai Motibhai Desai (supra). Learned counsel for the HPF in this connection submitted that if imported goods of the appellant were allowed to enter the market HPF’s commercial interest would be materially prejudiced and by now it has already become a sick unit. That is neither here nor there. The said grievance would still be in the realm of damnum since injuria as indicated in Jasbhai Motibhai Desai’s case (supra) by this Court. Consequently the appeal filed by HPF before the CEGAT also must be treated to be incompetent and could not be covered by the sweep of Section 129-A(1) of the Act.

Learned counsel for HPF invited our attention to a decision of a two-member Bench of this court in the case of K.Ramadas Shenoy v. The Chief Officers. Town Municipal Council. Udipi and others [(1975 (1) SCR 690]. In that case a resident in a locality wherein a cinema building was being constructed contrary to be binding Town Planning Scheme, was held to be entitled to challenge the said building. Said decision is rendered on its own facts. The statutory Scheme was for the benefit of persons residing in the locality. Under the said Scheme the Municipal authorities owed a public duty and obligation under the statute to see that the residential area is not spoiled by unauthorised construction. Under these circumstances it was held that the aggrieved party had sufficient locus standi under Article 226 of the Constitution of India of move the High Court against the violation of the statutory scheme by the municipal authorities. It is easy to visualise that in that case this Court was concerned with the locus standi of an ’aggrieved party’ under Article 226 of the Constitution of India which is of a wider nature as compared to the statutory right of appeal under a given statutory scheme before a statutory authority created by that very statute. The said decision is, therefore, of no avail to HPF.

As a result of the aforesaid discussion it must be held that the High Court had committed a patent error of law in taking the view that the concerned writ petitioners before it had sufficient locus standi to prefer appeals before CEGAT. The decision of CEGAT holding that they had no such locus standi was perfectly justified on the scheme of the Act and it was wrongly set aside by the High Court. Consequently the appeals will be required to be allowed.

However a further question survives for our consideration. As the High Court has noted in the impugned judgment, the other contentions in the writ petitions filed by the contesting respondents were not considered by it in view of its decision on the right of appeal which was made available to the concerned writ petitioners before the CEGAT. We have, however, to observe in this connection that the High Court was not at all justified in presuming what it should do in case the appellant’s appeal succeeded before the Court. Proper direction in that connection should have been left to be given by this Court in such an eventuality. High Court could not have been pre-empted the same by the impugned judgment. However in view of the fact that other contention in the writ petitions were not examined by the High Court in any case they will now have to be examined by it. As the decision on the right to appeal to CEGAT made available to the contesting respondents by the High Court is being set aside by us, the question remains as to what further appropriate orders can be passed in the connection. So far as this question is concerned it may be noted that tow writ petitions were moved, one by Union of India being Civil Writ Petition No. 3023 of 1989 and another by HPF being Civil Writ Petition No.2286 of 1989. As we have taken the view that HPF being a business rival of the appellant had no right to challenge the order of Additional Collector of Customs, Bombay passed in favour of the appellant its writ petition being Civil Writ Petition No.2286 of 1989 filed before the High Court will stand dismissed. However writ Petition No.3023 of 1989 will have to be permitted to proceed further on remaining controversy before the High Court in so far as Union of India seeks of challenge the order of Collector of Customs, Bombay dated 1st/5th June 1989. As we have taken the view that Union of India could legitimately challenge the said order before appropriate forum in public interest and as it has wider locus standi at least in proceedings under Article 226 of the Constitution of India if not before CEGAT, its challenge in the writ petition under Article 226 against the said order cannot be told off the gates. That challenge will have to be examined by the High Court under Article 226 on its own merits. It is obvious that it will be open to be appellant as contesting respondents to try to support the impugned order of the Assistant Collector/Collector of Customs on all legally permissible grounds. In short the said controversy between the Union of India on the one hand and the appellant on the other in Union of India’s Writ Petition No.3023 of 1989 will have to be examined by the Division Bench of the High Court on its own merits. AS the proceedings are pending since long before the High Court so far as the aforesaid challenge is concerned it would be in the interest of justice to request the High Court to decide the said writ petition on the merits of the question regarding the legality and propriety of the order of Collector/Assistant Collector of Customs dated 5th June 1989 as expeditiously as possible preferably within a period of four months from the date of receipt of a copy of this order at its end.

Now remains the last question as to what is to be done about the amount fetched in auction of the goods pursuant to the interim order of this Court dated 24th September 1990. We cannot accede to the request to the learned counsel for the appellant that the said invested amount with accrued interest may be permitted to be withdrawn by the appellant at this stage by furnishing bank guarantee. In our view as the amount is lying deposited and invested by this Court since more than six and half years by now and as we are requesting the High Court to decide the pending writ petition of Union of India on the surviving question as aforesaid within four months from the date of receipt of copy of the present order it would be in the interest of all concerned to continue the investment of the deposited amount of the auction price by this Court and to direct that the withdrawal of that amount shall abide by the final result of the writ petition of the Union of India before the High Court and shall also remain subject to the result of further appeal, if any, against the High Court’s judgment in the said writ petition.

The appeals are accordingly allowed. The common judgment under appeal as rendered by the High Court is quashed and set aside with a direction to the High Court to decide on merits the Union of India’s Writ Petition No.3023 of 1989 on the remaining grounds in the light of the observations made in this judgment. There will be no order as to costs in the facts and circumstances of these cases.

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IN THE SUPREME COURT OF INDIA
VINEET NARAIN & OTHERS …PETITIONER
Vs.
UNION OF INDIA & ANOTHER …RESPONDENT
DATE OF JUDGMENT: 18/12/1997
BENCH: S.P. BHARUCHA, S.C. SEN

J U D G M E N T

Verma.CJI:

These writ potitions under Article 32 of the Constitution of India brought in public interest, to begin with, did not appear to have the potential of escalating to the dimensions they reached or to give rise to several issues of considerable significance to the implementation of rule of law, which they have, during their progress. They began as yet another complaint of inertia by the Central Bureau of Investigation (CBI) in matters where the accusation made was against high dignitaries. It was not the only matter of its kind during the recent past. The primary question was: Whether it is within the domain of judaical review and it could be an effective instrument for activating the investigative process which is under the control of executive? The focus was on the question, whether any judicial remedy is available in such a situation? However, as the case progressed, it required innovation of a procedure within the constitutional scheme of judaical review to permit intervention by the count t find a solution to the problem. This case has develop to develop a procedure within the discipline of law for the conduct of such a proceeding in similar situation. It has also generated awareness of the need of probity in public life and provided mode of enforcement of accountability in public life. Even though the matter was brought to the court by certain individuals claiming to represent public interest, yet as the case progressed, in keeping with the requirement of public interest, the procedure devised was to appoint the petitioners’ counsel as the amicus curiae and to make such orders from time to time as were consistent with public interest. Intervention in the proceedings by everyone else was shut out but permission was granted to all, who so desired, to render such assistance as they could, and to provide the relevant material available with them to the amicus curiae for being placed before the court for its consideration. In short, the proceedings in this matter have had great educative value and it does appear that it has helped in future decision making and functioning of the public authorities.

We must at the outset place on record our great appreciation of the assistance rendered by the amicus curiac, Shri Anil Divan and the lawyers assisting him, namely, Shri Abani Kumar Sahu. Shri Anil Kumar Panda, Shri Mukul Mudgai, Shri Anil Nauriya and also Ms. Latha Krishnamurthy. We also place on record equal appreciation of the law officers and the team which has assisted them in these proceedings. At the commencement of the proceedings, the then Solicitor General Shri Dipankar P. Gupta appeared for the Union of India and the government agencies. Later after Shri depankar P.Gupta demitted office, the Attorney General Shri Ashok H.Desai appeared in this case throughout.

The law officers and their team of assistants, namely, Shri K.N.Bhat, Additional Solicitor General, Shri Pallav Shishodia, Shri Parmeswaran and Ms. Anuradha Bindra, rendered very able assistance throughout and discharged the duty expected of law officers. All of them at great personal inconvenience and expence, rose to extraordinary heights in keeping with the true traditions of the Bar. In essence, everyone of them discharged the role of animus curiae, without, at any stage, adopting the adversarial stance. If it has been possible to achieve some success in these proceedings to improve and innovate the procedure and fructify new ideas for betterment of the polity, it is only because of the positive response of the Bar and the assistance rendered by it. We must also record our appreciation of the officers of the CBI and the Revenue Department who actively participated in these proceedings and showed a definite improvement in their perception of the rule of law as the case progressed; and their ability to perform improved once they were assured of protection in the honest discharge of their duties.

This experience revealed to us the need for the insulation of these agencies from any extraneous influence to ensure the continuance of the good work they have commenced. It is this need which has impelled us to examine the structure of these agencies and to consider the necessary steps which would provide permanent insulation to the agencies against extraneous influences to enable them to discharge their duties in the manner required for proper implementation of the rule of law. Permanent measures are necessary to avoid the need of every matter being brought to the court for taking ad hoc measures to achieve the desired results. This is the occasion for us to deal with the structure, constitution and the permanent measures necessary for having a fair and impartial agency. The faith and commitment to the rule of law exhibited by all concerned in these proceedings is the surest guarantee of the survival of democracy of which rule of law is the bedrock. The basic postulate of the concept of equality: “Be you ever so high, the law is above you” , has governed all steps taken by us in these proceedings.

Facts A brief narration of the facts of this case sis necessary; On 25th March, 1991, one Ashfak Hussain Lone, alleged to be an official of the terrorist organisation Hizbul Mujahideen, was arrested in Delhi. Consequent upon his interrogation, raids were conducted by the Central Bureau of Investigation (CBI) on the premises of Surrender Kumar Jain, his brothers, relations and businesses. Along with Indian and foreign currency, the CBI seized two diaries and two note books from the premises. They contained detailed accounts of vast payments made to persons identified only by initials. The initials corresponded to the initials of various high ranking politicians, in power and our of power, and of high ranking bureaucrats. Nothing having been done in the matter of investigating the Jains or the contents of their diaries, the present writ petitions were filed on 4th October, 1993, in the public interest under Article 32 of the Constitution of the India.

The gist of the allegations in the writ petitions is that Government agencies like the CBI and the revenue authorities had failed to perform their duties and legal obligations inasmuch as they had failed to investigate matters arising out of the seizure of the “Jan diaries”;

that the apprehension of terrorists had led to the discovery of financial support to them by clandestine and illegal means using tainted funds obtained through `havala’ transactions; that this had also disclosed a nexus between politicians, bureaucrats and criminals, who were recipients of money from unlawful sources, given for unlawful consideration that the CBI and other Government agencies had failed to investigate the matter, take it to its logical conclusion and prosecute all persons who were found to have committed and offence; that this was done with a view to protect the persons involved, who were very influential and powerful; that the matter disclosed a nexus between crime and corruption at high places in public life and it posed a serious threat to the integrity, security and economy of the nation; that probity in public life, the rule of law and the preservation of democracy required that the Government agencies the compelled to duly perform their legal obligations and to proceed in accordance with law against every person involved, irrespective of where he was placed in the political hierarchy. The writ petitions prayed, inter alia, for the following reliefs:

“[a] that the above said offences disclosed by the facts mentioned in the petition be directed to be investigated in accordance with law;

[b] that this Hon’ble Court may be pleased to appoint officers of the police or others in whose integrity. independence and competence this Hon’ble Court has confidence for conducting and/or supervising the said investigation;

[c] that suitable directions be given by this Hon’ble Court and orders issued to ensure that the culprits are dealt with according to law;

xx xx xx [f] that directions be given so that such evil actions on the part of the investigating agencies and their political superiors are not repeated in future.” It will be seen that the reliefs sought in the writ petitions fall into two broad classes. The first class relates to investigations in the matter of the ‘Jain diaries”. The second class [prayer (f)[ relates to the manner in which investigations of offences of a similar nature that may occur hereafter should be conducted.

Procedure adopted We have taken the view that, given the political personalities of the propel to be investigated in the “Jain diaries” case and the time already lost in commencing the investigation it was advantageous not to hear the matter through and issue a writ of mandamus, leaving it to the authorities to comply with it, but to keep the matter pending while the investigations were being carried on, ensuring that this was done by monitoring them from time to time and issuing orders in this behalf. Our reasoned order are dated. 18.4.1995,16.1.1996 [1996 (2) Scale (SP) 42], 30.1.1996 [1996] INSC 158; [1996 (2) SCC 199], 22.2.1996 [1996 (2) Scale (SP) 84], 1.3.1996 [1997 (4) SCC 778], 13.3.1996 [1996 (4) Scale (SP) 3], 1.5.1996 [1996 (4) Scale (SP) 56], 26.7.1996 (6) Scale (SP) 24], 9.7.1997 [1994] INSC 631; [1997 (5) Scale 254]. Orders in similar matters, being the orders dated 12.2.1996 [1996 (3) Scale (SP) 35], 2.14.1996, 26.4.1996 [1996 (4) Scale (SP) 71], 26.7.1996 [1996 (6) Scale (SP) 23] and 7.10.1996 [1996 (6) SCC 354] in Writ Petition (Civil) No. 640 of 1995 – Anukul Chandra Pradhan vs. Union of India and Others- and orders dated 24.2.1997 and 18.3.1997 in Writ Petition (Civil) No. 38 of 1997 – Dr. Subramaniam Swamy vs. Director, CBI & Ors., are also relevant.

The sum and substance of these orders is that the CBI and other Governmental agencies had not carried out their public duty to investigate the offences disclosed; that none stands above the law so that an alleged offence by him is not required to be investigated; that we would monitor the investigations, in the sense that we would do what we permissibly could to see that the sense that we would do what we permissibly could to see that the investigations progressed while yet ensuring that we did not direct or channel those investigations or in any other manner prejudice the right of those who might be accused to a full and fair trial. We made it clear that the task of the monitoring court would and the moment a charge-sheet was filed in respect of a particular investigation and that the ordinary processes of the law would then take over. Having regard to the direction in which the investigations were leading, we found it necessary to direct the CBI not to report the progress of the investigations to the person occupying the highest office in the political executive this was done to eliminate any impression of bias or lack of fairness or objectivity and to maintain the credibility of the investigations. In short, the procedure adopted was of “continuing mandamus”.

Even after this matter was brought to the court complaining of the incrtia of CBI and the other agencies to investigate into the offices because of the alleged involvement of several persons holding high offices in the executive, for quite some time the disinclination of the agencies to precede with the investigation was apparent. The accusation, if true, reveled a nexus between high ranking politicians and bureaucrats who were alleged to have been funded by a source linked with the source funding the terrorists. In view of the funding also through foreign currency, some undesirable foreign elements appeared to be connected. This revealed a grave situation poising a serious threat even to the unity and integrity of the nation. The serious threat posed to the Indian polity could not be underscored. The obvious need for an expeditious and thorough probe which had already been delayed for several years could not but be countenanced. The continuing inertia of the agencies to even commence a proper investigation could not be tolerated any longer. In view of the persistence of that situation, it becomes necessary as the proceedings progressed to make some orders which would activate the CBI and the other agencies to at least commence a fruitful investigation. Merely issuance of a mandamus directing the agencies to perform their task would be futile and, therefore, it was decided to issue directions from time to time and keep the matter pending requiring the agencies to report the progress of investigation so that monitoring by the court could ensure continuance of the investigation.

It was, therefore, decided to direct the CBI and other agencies to complete the investigation expeditiously, keeping the court informed from time to time of the progress of the investigation so that the court retained siesin of the matter till the investigation was completed and the chargesheets were filed in the competent court for being dealt with, thereafter, in accordance with law.

The first order to this effect was made on 5.12.1994 when the CBI Director was required to personally supervise the investigations carried on by the CBI as the overall incharge and to report to the court the progress made from time to time. The true scope of the matter was indicated in an order dated 30th January, 1996 [reported in [1996] INSC 158; 1996 (2) SCC 199] as under:

“The true scope of this writ petition has been indicated during the carlicr hearings. At this stage, when some charge sheets have been filed in the Special Court and there is considerable publicity in the medin regarding this matter, with some speculation about its true scope, it is appropriate to make this order to form a part of the record.

The gist of the allegations in the writ petition are that Government agencies, like the CBI and the revenue authorities have failed to perform their duties and legal obligations inasmuch as they have failed to properly investigate matters arising out of the seizure of the so called “Jain Diaries” in certain raids conducted by the CBI.

It is alleged that the apprehending of certain terrorists led to the discovery of financial support to them by clandestine and illegal means, by use of tainted funds obtained through ‘havala’ transactions; that this also disclosed a nexus between several important politicians, bureaucrats and criminals, who are all recipients of money from unlawful sources given for unlawful considerations; that the CBI and other Government agencies have failed to fully investigate into the matter and take it to the logical end point of the trail and to prosecute all persons who have committed any crime; that this is being done with a view to protect the persons involved, who are very influential and powerful in the present set up; that the matter discloses a definite nexus between crime and corruption in public life at high places in the country which poses a serious threat to the integrity, security and economy of the nation; that probity in public life, to prevent erosion of the rule of law and the preservation of democracy in the country, requires that the Government agencies be compelled to duly perform their legal obligations and to person in accordance with law against cach and every person involved, irrespective of the height at which he is placed in the power set up.

The facts and circumstances of the present case do indicate that it is of utmost public importance that this matter is examined thoroughly by this Court to ensure that all Government agencies, entrusted with the duty to discharge their functions and obligations in accordance with law, do so, bearing in mind constantly the concept of equality enshrined in the Constitution and the basic tenet of rule of law : “Be you ever so high, the law is above you”.

Investigation into accusation made against each and every person on a reasonable basis, irrespective of the position and status of that person, must be conducted and completed expeditiously. This is imperative to retain public confidence in the impartial working of the Government agencies.

In this proceeding we are not concerned with the merits of the accusations or the individuals alleged to be involved, but only with the performance of the legal duty by the Government agencies to fairly, properly and fully investigate into every such accusation against every person, and to take the logical final action in accordance with law.

In case of persons against whom a prima facie case is made out and a charge sheet is filed in the competent court, it is that court which will then deal with that case on merits, in accordance with law.

However, if in respect of any such person the final report after full investigation is that no prima facic case is made out to proceed further, so that the case must be closed against him, that report must be promptly submitted to this Court for its satisfaction that the concerned authorities have not failed to perform their legal obligations and have reasonably come to such conclusion. No such report having been submitted by the CBI or any other agency till now in this Court, action on such a report by this Court would be considered, if and when that occasion arises.

We also direct that no settlement should be arrived at nor any offence compounded by any authority without prior leave of this Court.

We may add that on account of the great public interest involved in this matter, the CBI and other Government agencies must expedite their action to complete the task and prevent pendency of this matter beyond the period necessary. It is needless to observe that the results achieved so far do not match the available time and opportunity for a full investigation ever since the matter came to light. It is of utmost national significance that no further time is lost in completion of the task. ” Relevant portions of other significant orders dated 1.3.1996 [reported in 1997 (4) SCC 778] and 9.7.1997 [reported in [1994] INSC 631; 1997 (5) Scale 254] read as under:

Order dated 01.03.1996 :

…… …… …..

.

V. Criminal Misc. Petition Nos.

1153/1996:

We have heard Shri Anil Diwan ands the learned Solicitor General, Insofar as the larger relief of suitable guidelines is sought therein, that matter is deferred for consideration at the appropriate later stage of these proceedings. As for the interim relief claimed in the application, it is sufficient for us to direct as stated hereafter.

To eliminate any impression of bias and avoid erosion of credibility of the investigations being made by the C.B.I. and any reasonable impression of lack of farness and objectivity therein, it is directed that the C.B.I. would not take any instructions from report to, or furnish any particulars thereof to any authority personally interested in or likely to be affected by the outcome of the investigations into any accusation. This direction applies even ion relation to any authority which exercises administrative control over the C.B.I. by virtue of the office he holds, without any exception. We may add that this also accords with what the Learned Solicitor General has very fairly submitted before us about the mode of functioning of the C.B.I. in this matter.

We also place on record the further statement made by the learned Solicitor General on instructions from C.B.I. Director that neither the C.B.I. Director nor any of his officers has been reporting to any authority about any particulars relating to these investigations.

No further direction in this behalf is necessary at this stage.” Order dated 09.07.1997 :

“The question pertaining to interference with or shifting of any of the officer in any of the investigative teams of the C.B.I.

or any other connected investigative agency such as the Enforcement Directorate in the several matters under investigation by them which are being monitored by this Court and some of the High Courts, is under consideration by this Court in this matter which is being heard by a 3-Judge Bench and for this reason the same question even though raised in some other pending matters in this Court is not being considered therein. It is therefore, inappropriate that the same question any question connected with it is in any manner be entertained or dealt with by any other court including and High Court in any of the matters before it. It has become necessary to say so in view of the fact that we are informed that the same question in different forms is being raised in some other courts including High Courts by different persons. The question being comprehensively dealt with by this 3- Judge Bench in this matter by this Court, we make it clear that no other court including any High Court will entertain or deal with the same in any direct or indirect manner.

It is significant that the machinery of investigation started moving as a result of these orders and after investigation of the allegations made against several persons the basis of the contents of the Jain Diaries, Chargesheets were filed in the competent court in the first instance against 14 persons, as reported to the court on 22.2.1996. Chargesheets against many other persons were filed in the competent court thereafter as reported later from time to time. In all, 34 Chargesheets against 54 persons have been filed on this basis. Thus, as indicated earlier, the purpose of these proceedings to the extent of the complaint of inertia of the investigating agencies came to an end with the filing of these chargesheets, since the merits of the accusation against each individual has, thereafter, to be considered and dealt with by the competent court at the trial, in accordance with law. Trial i n the competent court is now a separate proceeding.

After the commencement of these proceedings, some other matters of a similar nature came to this Court in which the inaction of the investigating agencies to investigate into some serious offences was alleged. Two such significant matters are Writ Petition (Civil) No. 640 of 1995 – Anukul Chandra Pradhan vs. Union of India and Others – and Writ Petition (Civil) No. 38 of 1997 – Dr. Subramaniam Swamy vs.

Director, CBI & Ors. These cases revealed a serious situation eroding the rule of law, where the accusation was against persons holding high offices and wielding power.

Relevant portions of some significant orders made in the above two cases read as under :- Anukul Chandra Pradhan Order dated 12.02.1996 [reported in 1996 (3) Scale (SP) 35]:

“We do not consider it appropriate to permit any intervention in this matter. Shri Anil Diwan has been requested by us to appear as Amicus Curiae in this matte. He has kindly agreed to do so. It is open to anyone who so desires, to assist Shri Anil Diwan and to make available to him whatever material he chooses to rely on in public interest to enable Shri Diwan to effectively and properly discharge functions as Amicus Curiae. Except for this mode of assistance to the learned Amicus Curiae, we do not permit any person either to be impleaded as party or to appear as an intervenor. In our opinion, this is necessary for expeditious disposal of the matter and to avoid the focus on the crux of the matter getting diffused in the present case by the appearance of many persons acting independently in the garb of public interest.

Order dated 02.04.1996 … … …

Learned S.G. as well as Shri Anil Diwan, learned counsel, are heard, The Secretary, Revenue Shri Sivaraman, the C.B.I. Director – Shri K. Vijay Rama Rao and the Commissioner of Police – Shri Nikhil Kumar are also present. We direct that from now each of these three officers would be overall incharge of the investigations which are being carried on by their respective departments pertaining to the matters within the scope of this Writ Petition. Learned S.G. on instructions prayed for deferring t he further hearing to enable the above officers to report the progress made in the investigations by these agencies on the next date.” Order dated 07.10.1996 [reported in 1996 (6) SSC 354]:

… … …

In accordance with the directions so given, it has been reported to us that chargesheets have been filed by the C.B.I. in two cases and the Delhi Police in one case which they were investigating. These cases are :

1) St. Kitts’ Forgery Case.

(Chargesheet filed by C.B.I.) 2) Lukhubhai Pathak Cheating case.

(Chargesheet field by C.B.I.) 3) Rajendra Jain case (Chargesheet filed by Delhi Police) In view of the fact that Chargesheet has been filed under Section 173 Criminal Procedure Code in each of the above three cases in the competent court, it is that court which is now to deal with the case on merits, in accordance with law. Any direction considered necessary for further investigation, if any, or to proceed against any other person who also appears to have committed any offence in that transaction, is within the domain of the concerned court according to the procedure prescribed by law. The purpose of this proceeding is to command performance of the duty under law to property investigate into the accusation of commission of the crime and to file a chargesheet in the competent court, if a prima faice case is made out. This purpose has been served in the above three cases, in respect of which no further action in this proceeding is called for.

Accordingly, this proceeding has come to an end, in so far as it related to the above three criminal cases. For the remaining part, it is to continue till the end result prescribed by law is achieved. The concerned court in which the chargesheet has been filed has to proceed entirely i n accordance with law without the slightest impression that there is any parallel proceeding in respect of the same mttere pending in this court.

We may also observe, that the concerned court dealing with the above matters has to bear in mind that utmost expedition in the trial and its early conclusion is necessary for the ends of justice and credibility of the judicial process. Unless prevented by any dilatory tactics of the accused, all trials of this kind involving public men should be concluded most expeditiously, preferably within three months of commencement of the trial. This is also the requirement of speedy trial read into Article 21.

A note of caution may be appropriate. No occasion should arise for an impression that the publicity attaching to these matters has tended to dilute the emphasis on the essentials of a fair trial and the basic principles of jurisprudence including the presumption of innocence of the accused unless found guilty at the end of the trial. This requirement, undoubtedly has to be kept in view during the entire trial. It is reiterated, that any observation made by this Court for the purpose of the proceedings pending here has no bearing on the merits of the accusation, and is not to influence the trial in any manner. Care must be taken to ensure that the credibility of the judicial process is not undermanned in any manner.

This proceeding is to continue in respect of the remaining matters only which are incomplete.

” … … …

Dr. Subramaniam Swamy Order dated 24.02.1997 :

“.. … …

It is also made clear to the petitioner that the petition having been entertained as a public interest litigation in view of the public interest involved, the locus of the petitioner is confined only to assisting the court through amicus curiae appointed by the court and that the petitioner has no independent or additional right in the conduct or hearing of the proceedings hereafter.

We request Shri Anil Divan, Sr. Advocate to appear as amicus curiae in this case……” Order dated 18.03.1997 :

“… … …

In accordance with the practice followed by the Court in other similar pending matters, we also direct that any person wishing to bring any material or point before this Court for consideration in this behalf may do so by furnishing the same to Shri Anil B.

Divan, the learned amicus curiae, who would take the necessary steps in accordance with the need and relevance thereof, to place it before this Court in this proceeding.” In-camcra proceedings During the monitoring of the investigations, the Solicitor General/Attorney General, from time to time, reported the progress made during the course of investigation, in order to satisfy us that the agencies were not continuing to drag their feet and the “continuing mandamus” was having the effect of making the agencies perform their statutory function. The procedure adopted by us was merely to hear what they had to report or the CBI Director and the Revenue Secretary had to tell us to be satisfied that the earlier inaction was not persisting. We maintained this stance throughout. We also ensured that no observation of any kind was made by us nor was any response given which may be construed as our opinion about the merits of the case or the accusation against any accused. We also did not identify or name any accused during performance of this task. At the very outset, the then Solicitor General Shri Dipankar P. Gupta requested that a part of the proceedings be held `in camera’ to enable him to state certain facts and, if necessary, place before us material, the secrecy of which was required to be maintained for integrity of the investigation and also to avoid any prejudice to the concerned accused. In these circumstance, such a procedure was adopted only to the extent necessary for this propose, in the interest of justice, and that is how a part of some hearings was held in camera. This innovation in the procedure was made, on request, to reconcile the interest of justice with that of the accused.

It is settled that the requirement of a public hearing in a court of law for a fair trial is subject to the need of proceedings being held in camera to the extent necessary in public interest and to avoid prejudice to the accused. We consider it appropriate to mention these facts in view of the nature of these proceedings wherein innovations in procedure were required to be made from time to time to sub- serve the public interest, avoid any prejudice to the accused and to advance the cause of justice. The medium of “continuing mandamus”, was a new tool forged because of the peculiar needs of this matter.

Inertia was the common rule whenever the alleged offender was a powerful person. Thus, it became necessary to take measures to ensure permanency in the remedial effect to prevent reversion to inertia of the agencies in such matters.

Everyone against whom there is reasonable suspicion of committing a crime has to be treated equally and similarly under the law and probity in public life is of great significance. The constitution and working of the investigating agencies revealed the lacuna of its inability to perform whenever powerful persons were involved. For this reason, a close examination of the constitution of these agencies and their control assumes significance. No doubt, the overall control of the agencies and responsibility of their functioning has to be in the exhaustive, but then a scheme giving the needed insulation from extraneous influences even of the controlling executive, is imperative.

It is this exercise which became necessary in these proceedings for the future. This is the surviving scope of these writ petitions.

Point for consideration As a result of the debate in these proceedings and into experience gained thereby the Union of India came to realise that an in-depth study of the selection of personnel of these agencies, particularly the CBI and the Enforcement Directorate of the Revenue Department, and their functioning is necessary. The Government of India, sharing this perception, by an Order No. S/937/SS(ISP)/93 dated 9th July, 1993 constituted a Committee headed by the then Home Secretary Shri N.N.Vohra to take stock of all available information about the activities of crime syndicates/mafia organisations which had development links with, and were being protected by, government functionaries and political personalities. It was stated that on the basis of recommendations of the Committee the Government shall determine the need, if any, to establish a special organisation/agency to regularly collect information and pursue cases against such elements. The Committee was headed by the then Home Secretary Shri N.N. Vohra and had as its Members – Secretary (Revenue), Director, Intelligence Bureau, Director, CBI, Joint Secretary (PP), Ministry of Home Affairs. The Committee gave its recommendations dated 5.10.1993. It has made scathing comments and has painted a dismal picture of the existing sene. It has said that the network of the mafia is virtually running a parallel government pushing the State apparatus into irrelevance. The Committee recommended the creation of a nodal agency under the Ministry of Home Affairs for the collation and compilation of all information received from Intelligence Burcau (IB), Central Bureau of Investigation (CBI) and Research and Analysis Wing (R&AW) and the various agencies under the Department of Revenue. The report is significant for the dismal picture of the existing scenario which discloses a powerful nexus between the bureaucracy and politicians with the mafia gangs, smugglers and the underworld. The report of the Vohra Committee is the opinion of some top bureaucrats and it confirmed our worst suspicions focusing the need of improving the procedure for constitution and monitoring the functioning of intelligence agencies. There is, thus, no doubt that this exercise cannot be delayed further.

The same perception of the Government of India led it to constitute another Committee by Order No. 226/2/97-AVD-II dated 8th September, 1997 comprising of Shri B.G. Deshmukh, former Cabinet Secretary, Shri N.N. Vohra, Principal Secretary to the Prime Minister and Shri S.V. Giri, Central Vigilance Commissioner, called the Independent Review Committee (IRC). The order reads as under :

“WHEREAS the Government of India is of the opinion that it is necessary to set up a Committee for going into the matters mentioned hereinafter;

2. NOW, THEREFORE, a Committee of the following is hereby set up :- (i) Shri B.G. Deshmukh, former Cabinet Secretary (ii) Shri N.N. Vohra, Principal Secretary to the Prime Minister (iii) Shri S.V.Giri, Central Vigilance Commissioner Shri N.N. Vohra shall act as Convenor.

3. The terms of reference of the Committee ar as under :- (i) To monitor the functioning of the nodal agency established by the Ministry of Home Affairs in pursuance of the recommendations of the Vohra Committee Report.

(ii) To examine the present structure and working of the Central Bureau of Investigation (CBI), the Enforcement Directorate and related agencies to suggest the changes, if any, needed to ensure :

[a] that offences alleged to have been committed by any person, particularly those in positions of high authority, are registered, investigated and prosecuted fairly and expeditiously, ensuring against, inter alia, external pressure, arbitrary withdrawals or transfers of personnel etc., and ensuring adequate protection to the concerned functionaries to effectively discharge their duties and responsibilities;

[b] that there are sufficient cheeks and balances to ensure that the powers of investigation and prosecution are not misused;

[c] that there are no arbitrary restrictions to the initiation of investigations or launching of prosecutions.

4. The Committee should give its report with regard to the items mentioned in paragraph 3(ii) above within a period of 3 month s.” Before we refer to the report of the Independent Puri Committee (IRC), it would be appropriate at this stage to refer to the Single Directive issued by the Government which requires prior sanction of the designated authority to initiate the investigation against officers of the Government and the Public Sector Undertakings (PSUs), nationalised banks above a certain level. The Single Directive is a consolidated set of instructions issued to the CBI by the various Ministries/Departments in this behalf. It was first issued in 1969 and thereafter amended on many occasions. The Single Directive contains certain instructions to the CBI regarding modalities of initiating an inquiry or registering a case against certain categories of civil servants. Directive No. 4.7(3) in its present form is an under :- “4.7(3)(i) In regard to any person who is or has been a decision making level officer (Joint Secretary or equivalent of above in the Central government or such officers as are or have been on deputation to a Public Sector Undertaking; officers of the Reserve Bank of India of the level equivalent to Joint Secretary of above in the Central Government, Executive Directors and above of the SEBI and Chairman & Managing Director and Executive Directors and such of the Bank officers who are one level below the Board of Nationalised Banks), there should be prior sanction of the Secretary of the Ministry/Department concerned before SPE takes up any enquiry (PE or RC), including ordering search in respect of them. Without such sanction, no enquiry shall be initiated by the SPE.

(ii) All cases referred to the administrative Ministries/Departments by CBI for obtaining necessary prior sanction as aforesaid, except those pertaining to any officer of the rank of Secretary or Principal Secretary, should be disposed of by them preferably within a period of two months of the receipt of such a reference. In respect of the officers of the rank of Secretary or Principal Secretary to Government, such references should be made by the Director, CBI to the Cabinet Secretary for consideration of a Committee consisting of the Cabinet Secretary as its Chairman and the Law Secretary and the Secretary (Personnel) as its members. The Committee should dispose of all such references preferably within two months from the date of receipt of such a reference by the Cabinet Secretary.

(iii) When there is any difference of opinion between the Director, CBI and the Secretary of the Administrative Ministry/Department in respect of an officer up to the rank of Additional Secretary or equivalent, the matters shall be referred by CBI to Secretary (Personnel) for placement before the Committee referred to in Clause (ii) above. Such a matter should be considered and disposed of by the Committee preferably within two months from the date of receipt of such a reference by Secretary (Personnel).

(iv) In regard to any person who is or has been Cabinet Secretary, before SPE takes any step of the king mentioned in (i) above the case should be submitted to the Prime Minister for orders.” We were informed that the above Directive, in its application, is limited to officials at decision making levels in the Government and certain other public institutions like the RBI,SEBI, nationalised banks, etc. and its scope is limited to official acts. The stated objective of the Directive is to protect decision making level officers from the threat and ignominy of malicious and vexatious inquiries/investigations. It is said that such protection to officers at the decision making level is essential ton protect them and to relieve them of the anxiety from the likelihood of harassment for taking honest decisions. It was also stated that absence of any such protection to them could adversely affect the efficiency and efficacy of these institutions because of the tendency of such officers to avoid taking any decisions which could later lead to harassment by any malicious and Vexatious inquiries/investigations. It was made clear that the Directive does not extend to any extraneous or non-official acts of the government functionaries and a time frame has been prescribed for grant of sanction in such cases to prevent any avoidable delay.

Two questions arise in relation to Directive No. 4.7(3) of the Single Directive, namely, its propriety/legality and the extent of its coverage, if it be valid.

The learned Attorney General categorically stated in response to our repeated query that the Single Directive acts as a restriction only on the CBI but is inapplicable against the general power or the State Police to register and investigate any such offence under the general law, i.e., Code of Criminal Procedure. He added that it is also not an inhibition against a complaint being lodged under the Cr. P.C. before the competent court for any such offence.

The Single Directive was sought to be supported by the Attorney General on the ground that the CBI being a special agency created by the Central Government, it was required to function according to the mandate of the Central Government which has constituted this special agency for specified purpose. The desirability of the Single Directive was supported by the learned Attorney General on the ground that the officers at the decision making level need this protection against malicious or vexatious investigations in respect of honest decisions taken by them. We were also informed that during hearing of this matter when this aspect was being debated, the Ministry of Finance has set up a High Power Board of experts in finance and a retired High Court Judge to examine the merits in every case for he purpose of grant of sanction to the CBI for recording the information and investigating into any such offence, and a time frame for the devision has also been specified. Similarly, in the case of government servants, the authority for grant of sanction with a provision for appeal in case the sanction is declined has been provided. It was submitted that such a structure to regulate the grant of sanction by a high authority together with a time frame to avoid any delay is sufficient to make the procedure reasonable and to provide for an objective decision being taken for the grant of sanction within the specified time. It was urged that refusal of sanction with reasons would enable judicial review of that decision in case of any grievance against refusal of the sanction. Reliance was placed by the learned Attorney General on the decisions of this Court in K.

Veeraswami vs. Union of India and Others, [1991] INSC 164; 1991 (3) SCC 655 and State of Bihar and Another etc. vs. J.A.C. Saldanha and Others. [1979] INSC 234; 1980 (1) SCC 554 to support the argument of legality of the Single Directive. We shall advert to this aspect later.

The provision made for deciding the question of grant of sanction in the cases of officers to whom the Single Directive applies is as under :- OFFICE MEMORANDUM DATED FEBRUARY 17,1997 OF THE RESERVE BANK OF INDIA, CENTRAL OFFICE, DEPARTMENT OF ADMINISTRATION & PERSONNEL MANAGEMENT “Advisory Board on bank frauds It has been decided to set-up an `Advisory Board on bank frauds’ to advise the Bank on the cases referred by the Central Bureau of Investigation either directly or through the Ministry of Finance for investigation/registration of cases against bank officers of the rank of General Manager and above. The constitution of the Board will be as under :- Shri S.S. Tarapore, Chairman Ex-Deputy Governor Reserve Bank of India Justice Shri B.V. Chavan Retd. Judge of Bombay High Court Member Services Board.

Shri B.N. Bhagwat, Retd. Secretary, Member Government of India.

Shri Satish Sawhney, Retd. Director General of Police Member Maharashtra.

Shri Y.H. Malegam, Member Chartered Accountant & Senior Partner in M/s. S.S. Billimoria & Co.” Another action taken by Government of India is, as under :- Letter No. I 11011/33/95-IS DI(B) dated 1st, 2nd August, 1995 of Ministry of Home Affairs, Government of India “Government had through its Order No.S-7937/SS(ISP)/93 dated 9th July, 1993 constituted a Committee under the Chairmanship of Former Home Secretary (Shri N.N. Vohra) to take stock of all available information about the activities of the crime syndicates/mafia organisations which had developed links with and were being protected by Government functionaries and political personalities. The Vohra Committee in its Report submitted to the Government recommended a Nodal Set-up directly under the Home Secretary to which all existing intelligence and enforcement agencies of the Government shall promptly pass on any information which they may come across, relating to links of crime syndicated with functionaries of the Government and political personalities.

2. Accordingly, Government have now decided to set up a Group under the Chairmanship of the Home Secretary to act as a Nodal Set-up to collect and collate the information and to decide on the action that is required to be taken to ensure that the nexus of criminals with businessmen, politicians or bureaucrats is broken.

3. The Group shall comprise:

i) Home Secretary, Chairman ii)Secretary(Revenue) Member iii) Director, IB Member iv)Director ,CBI Member v) Secretary, R&AW Member

4. It is fell that it would be necessary for the Group to interact with various State Governments in order to both make the use of such information as may be available with the States as well as to utilities the expertise of the relevant agencies of the State Governments. For this purpose, the above Group would interact appropriately from time to time with Chief Secretaries and other senior functionaries of the State Governments.

5. All the Intelligence and enforcement agencies under the Government like the Intelligence Bureau, the CBI and various bodies functioning under the Department of Revenue shall forthwith report to the Home Secretary whenever substantive information/evidence of collusion of officials/politicians with criminal syndicates comes to their knowledge in the course of their working. The Group shall meet periodically to decide upon the action required to be taken and identify an agency or agencies to take up further investigations. The Nodal Group would also review the information in the above context already available with the various agencies and decide upon the follow up action that is required to be taken.

6. This issues with the approval of Home Minister.” Report of IRC The IRC has in its report accepted the legality of the Single Directive placing reliance on the decision of this Court in K. Veeraswami (supra). After considering the functions of the CBI and the Directorate of Enforcement, it has made certain recommendations which are as under :- “MEASURES FOR SPEEDY INVESTIGATIONS AND TRIALS

4.1 The Committee recommends that the following measures should be taken to ensure speedy investigations and trials :

a) Special Courts should be got established at identified stations to deal exclusively with FERA offences so that cases ca be decided speedily.

b) To ensure against delays in investigations abroad, the Revenue Secretary should be the competent authority to approve filing of applications for Letters Rogatory.

c) The Directorate of Enforcement should be delegated powers to appoint special counsels for conducting trials, who may also act as legal advisers for the Department in respect of the cases entrusted to them.

d) In many of the major cases of the Directorate, the suspects have been able to abuse the process of law by stalling the investigations at the initial stages through litigation at various levels, obtaining stay orders from High Courts and injunctions on flimsy grounds. In consultation with the Attorney General, the Revenue Department may examine the possibility of making a representation to the Apex Court to consider issuing appropriate directions so that the pace and progress of cases is not thwarted by interlocutory procedures or stay orders issued by the Courts below.

e) Taking into account the instances in which suspected persons have been able to stall investigations on alleged health grounds, the Revenue Department should approach the Ministry of Health to establish standing medical boards in identified cities to examine such persons. Such boards should comprise outstanding medical experts of unimpeachable integrity. The Courts can be requested to refer the prayer of the accused for staying proceedings on health grounds to such medical boards before passing judgement.” “CHECKS AND BALANCES

5.1 The Directorate must be provided adequate financial and administrative delegations to enable it to exercise autonomy in the conduct and pursuit of investigations without let or hindrance. Side by side, it is necessary to provide appropriate checks and balances to ensure against miscarriage of justice. In this context, the Committee recommends the following :

a) The Revenue Department should undertake regular review of the progress of cases before the Directorate. To enable this, the Directorate should regularly furnish information regarding the number of cases instituted, progress of investigations, cases settled in adjudication and those put to Courts. The Committee note that while such information is already being supplied in reply to Parliament Questions, information to be placed before the Parliamentary Committee/Standing Committee, etc., there is no established procedure for the Directorate to furnish relevant information in well devised format.

b) The present system of the Directorate furnishing fortnightly reports providing statistical information and brief outline of the cases taken up for investigation should be further fine tuned. These reports should be carefully examined by the Revenue Department to ensure that the Directorate is performing its functions officiently. The Revenue Secretary should hold regular review meetings with the Director Enforcement, also involving the Director Revenue Intelligence and other concerned officers.

c) Guidelines relating to interrogation, prosecution, adjudication, time frame for completion of investigation, etc., have been issued by the Directorate from time to time. These guidelines should be comprehensively reviewed and, based thereon, a circular should be released for the information of the public at large, to enable all concerned to know the systems and procedures followed by the Directorate.

This shall contribute to greater transparency. This effort should be concluded within 2-3 months.

5.2 It is importance that the Directorate lays down a clearly spelt out time frame for the completion of investigation, launching of prosecution and completion of adjudication proceedings and for the Director to ensure that the prescribed time limits are strictly adhered to. The Committee are of the view that the Directorate would be able to more efficiently discharge its functions if immediate steps are taken to upgrade the level and quality of its in- house legal advice mechanism. At our request, the Cabinet Secretary convened a meeting with the Revenue Department, Enforcement Directorate and other concerned officers to consider various proposals for strengthening the Directorate. The Committee hope that the various decisions taken at t he Cabinet Secretary’s level shall witness implementation within 6-8 weeks.

5.3 The Committee recommends that the Directorate should take time bound steps to establish a grievances redressal mechanism to promptly deal with complaints received from he public against actions of the Enforcement Directorate.

Insofar as complaints of arbitrary action by senior officers of the Directorate are concerned, the Committee recommends that these should b e looked into by a Committee headed by the Central Vigilance Commissioner and comprising Revenue Secretary, Director General Revenue Intelligence, Enforcement Director and a senior representative of the Ministry of Law.

5.4 As regards the pursuit of cases which appear to have a politico-beaurocrai-criminal nexus, the Home Secretary agreed with the Committees suggestion that the Nodal Agency in the Home Ministry (chaired by Home Secretary) shall also include Member (Investigation) of the Central Board Of Direct Taxes, Director General Revenue Intelligence and the Director Enforcement as members.

5.5 The Committee recommends that the Annual Report of the Department of Revenue should have a section devoted exclusively to the functioning of the Enforcement Directorate. This report should highlight the number of cases taken up for investigation by ED, raids and searches conducted, amount of Indian and foreign currency seized, etc. The report should also indicate the number of persons arrested, prosecutions launched and convictions ordered by the Courts. The Committee feels that enhanced public knowledge about the work being done by the Directorate shall demystify its operations and contribute to improved public confidence.” “SUMMARY OF RECOMMENDATIONS I. CBI AND CVC

1. CVC to be conferred statutory status; appointment of Central Vigilance Commissioner to be made under the hand and seal of the President (paper 4.2)

2. Constitution of a Committee for selection of cvc (paper 4.3)

3. CVC to overview CBI’S functioning (para 5)

4. CBI’s reporting to Government to be streamlined without diluting its functional autonomy (para 3.3)

5. CVC to have a separate section in its Annual Report on the CBI’s functioning after the supervisory functioning transferred to it (para 6)

6. Constitution of a Selection Committee for identifying a panel of names for selection of Director CBI; final selection to be made by ACC from such panel (para 3.2)

7. Central Government to pursue with the State Governments to set up credible mechanism for selection of Police Chief (para 8.3)

8. Director CBI TO Have a minimum tenure of 2 years (para 8.4)

9. Transfer of incumbent Director CBI would need endorsement of the Selection Committee(para 8.5)

10. Director CBI to ensure full freedom for allocation or work within the Agency, including constitution of investigation teams(para 8.6)

11. Selection/extension of tenure of officers upto to the level of Joint Director (JD) to be decided by a Board under Central Vigilance Commissioner; JD and above would need the approval of ACC(para 8.7)

12. Change in the existing Tenure Rules not recommended (para 8.8)

13. Proposals for improvement of infrastructure, methods of investigation, etc., to be decided urgently (para 8.9.2)

14. No need for creation of a permanent core group in the CBI (para 8.9.3)

15. Severe disciplinary action against officers who deviate from prescribed investigation procedures (para 9.1)

16. Director CBI to be responsible for ensuring time limits for filing charge sheets in courts (para 9.2)

17. Document on CBI’s functioning to be published within three months (para 9.4)

18. Essential to protect officers at the decision making levels from vexatious enquiries/prosecutions (para 10.6)

19. Secretaries to adhere strictly to prescribed time frames for grant of permission for registration of PE/RC. CBI to be free to proceed if decision not conveyed within the specified time (para 10.9)

20. Secretary of Administrative Ministry to convey a decision regarding registration of PE/RC within 2 months of receipt of request. If not satisfied with decision, Director CBI free to make fresh reference to the Committee headed by Cabinet Secretary within a period of four weeks and the latter to decide thereon within a period of four weeks (para 10,10)

21. Protection under the Single Directive not to cover offences like bribery, when prima-facic established in a successful trap (para 10.12)

22. Cases of disproportionate assets of Central Government and All India Services Officers to be brought within the ambit of the Single Directive (para 10.13) 23. Time limit of 3 months for sanction for prosecution.

Where consultation is required with the Attorney General or the Solicitor General, additional time of one month could be allowed (paras 10.14 and 10.15)

24. Government to undertake a review of the various types of offences notified for investigation by the CBI to retain focus on anti-corruption activities which is its primary objective (para 11.1)

25. Cases falling within the jurisdiction of the State Police which do not have inter-state or inter-national ramification should not be handed over to CBI by States/Courts (para 11.2)

26. Government to establish Special Courts for the trial of CBI cases (11.3)

27. Severe action against officials found guilty of high handedness; prompt action against those officials chastised by the Courts (para 11.4)

28. Director CBI to conduct regular appraisal of personnel to weed out the corrupt an inefficient, and maintain strict discipline within the organisation (para 11.5) II. ENFORCEMENT DIRECTORATE

1. Selection Committee headed by Central Vigilance Commissioner to recommend panel for appointment of Director Enforcement by the ACC (para 2.2) 2. Director Enforcement to have minimum tenure of 2 years.

For his premature transfer, the Selection Committee headed by Central Vigilance Commissioner to make suitable recommendations to the ACC (para 2.3)

3. Post of Director Enforcement to be upgraded to that of Additional Secretary/Special Secretary to the Government (para 2.4)

4. Officers of the Enforcement Directorate handling sensitive assignments to be provided adequate security for enabling fearless discharge of their functions (para 2.5)

5. Extension of tenures up to the level of Joint Directors in the Enforcement Directorate to be decided by a Committee headed by Central Vigilance Commissioner (para 2.6)

6. Proposals for foreign visits to conduct investigations to be cleared by the Revenue Secretary and the Financial Adviser (para 2.7)

7. While enjoying full internal autonomy Enforcement Directorate to be made accountable. Responsibility of Government to ensure efficient an impartial functioning (para 3.1)

8. Premature media publicity to be ensured against (para 3.3)

9. Adjudication proccedings/prosecution to be finalised by the Enforcement Directorate within a period of one year (para 3.4)

10. Director Enforcement to monitor speedy completion of investigation and launching of adjudication/prosecution. Revenue Secretary to review regularly (para 3.4)

11. The Director Enforcement to keep close watch against vexatious search; action against functionaries who act without due care (para 3.5)

12. Special Courts to be established to deal with FERA offences for speedy completion of trials [para 4.1(a)]

13. For speedy conduct of investigations abroad, Revenue Secretary be authorised to approve filing of applications for Letters Rogatory [para 4.1(b)]

14. The Enforcement Directorate to be delegated powers to appoint Special Counsels for trials [para 4.1@]

15. The Revenue Department to consult Attorney General regarding measures against conclusion of cases being thwarted by stay orders, etc. [para 4.2(d)]

16. Revenue Department to approach Health Ministry to establish Standing Medical Boards in identified cities for examination of accused persons seeking determent of proccedings on health grounds [para 4.1(c)]

17. Revenue Department to undertake regular reviews of cases pending with the Directorate [para 5.1(a) and (b)].

18. Comprehensive circular to be published by the Directorate to inform public about procedures/systems of its functioning [para 5.2@]

19. In-house legal advice mechanism to be strengthened (para 5.2)

20. Proposals for strengthening the Directorate to be implemented within 8 weeks (para 5.2)

21. Directorate to establish a grievance redressal mechanism (para 5.2)

22. Committee headed by Central Vigilance Commissioner to decide complaints of arbitrary action by Directorate officials (para 5.3)

22. Committee headed by Central Vigilance Commissioner to decide complaints o f arbitrary action by Directorate officials (para 5.3)

23. Nodal Agency headed by Home Secretary on politico- beaurocrat-criminal nexus to include Member Investigation CBDT, Director General Revenue Intelligence and Director Enforcement as members (para 5.4)

24. Annual Report of the Department of Revenue to contain an exhaustive section on the working of the Enforcement Directorate (para 5.5)

25. Suitable incentives to be provided to functionaries of Enforcement Directorate at various levels, to attract best material, to be decided within tow months (para 6.1) III. NODAL AGENCY ON CRIMINAL NEXUS

1. Requirements of inter-agency do-ordination at fields unit level to be evolved by Home Secretary (para 2.1)

2. Na’s functioning to be watched for some time before considering need for structural changes (para 3)

3. Home Secretary will hold meetings of NA every month (para 3)” The reference to paragraphs within brackets at the end of each recommendation is to the paragraphs of the report containing discussion pertaining to the Central Bureau of Investigation (CBI) and Directorate of Enforcement in Part II of the report. These recommendations have, therefore, to be read along with the discussion in the corresponding paras in Part I and Part II of the report.

Need for Court’s intervention The IRC is a body constituted by the Central Government itself as a result of its perception that the constitution and functioning of the CBI, CVC and Directorate of Enforcement require a close scrutiny in the background of the recent unsatisfactory functioning of these agencies with a view to improve t heir functioning. The view taken by the IRC is a reaffirmation of this belief shared b y everyone.

The preface to the report indicates the reason for the constitution of the IRC and says that “In the past several years, there has been progressive increase in allegation of corruption involving public servants. Understandably, cases of this nature have attracted heightened media and public attention. A general impression appears to have gained ground that the concerned Central investigating agencies are subject to extraneous pressures and have been indulging in dilatory tactics in not bringing the guilty to book. The decisions of higher courts to directly monitor investigations in certain cases have added to the aforesaid belief.” There can thus be no doubt that there is need for the exercise we were called upon to perform and which has occasioned consideration of this crucial issue by this Court in exercise of its powers conferred by the Constitution of India. The conclusions reached b y the IRC and the recommendation it has made for improving the functioning and thereby the image of these agencies is a further reaffirmation of this general belief. There can also be no doubt that the conclusions reached by the IRC and its recommendations are the minimum which require immediate acceptance and implementation in a bid to arrest any further decay of the polity. Ii follows that the exercise to be performed now by this Court is really to consider whether any modifications/additions are required to be made to be recommendations of the IRC for achieving the object for which the Central Government itself constituted the Irc. We are informed by the IRC could not be taken so far because of certain practical difficulties faced by the Central Government but there is no negative reaction to the report given by the Central Government.

The only caveat entered by the Attorney General is on the basis of a note by an individual Minister in the Central Cabinet in which emphasis has been laid that the ultimate responsibility for the functioning of these agencies to the Parliament is that of the concerned Minister and this aspect may be dept in mind. It has been specifically mentioned that the Minister would remain the final disciplinary authority and would have the power to refer complaints against the agency or its officers to an appropriate authority for necessary action. There can be no quarrel with the Minister’s ultimate responsibility to the Parliament for the functioning of these agencies and he being the final disciplinary authority in respect of the officers of the agency with power to refer complaints against them to the appropriate authority Some other specific powers of the Minister were indicated as under :-

1. The Minister has the power to review the working of the agencies which are under his Department.

2. The Minister has the power to give broad policy directions regarding investigation and prosecution of classes or categories of cases.

3. The Minister has that power to appraise the quality of the work of the Head of the agency as well as other senior officers of the agency.

4. The Minister has the power to call for information regarding progress of cases.

It is sufficient to say that The Minister’s general power to review the working of the agency and to give broad policy directions regarding the functioning of the agencies and to appraise the quality of the work of the Head of the agency and other officers to the executive head is in no way to be diluted. Similarly, the Minister’s power to call for information generally regarding the cases being handled by the agencies is not to be taken away. However, all the powers of the Minister are subject to the condition that none of them would extend to permit the Minister to interfere with the course of investigation and prosecution in any individual case and in that respect the concerned officers are to be governed entirely by the mandate of law and the statutory duty cast upon them.

It is useful to remember in this context what this Court has no several occasions in the past said about the nature of duty and functions of Policy officers in the investigation of an offence. It is sufficient to refer to one of them, namely, Union of India and Others vs. Sushil Kumar Modi and Others, 1997 (4) SCC 770, (Bihar Fodder Scam case), wherein it was said, as under :- “4. At the outset, we would indicate that the nature of proceedings before the High Court is somewhat similar to those pending in this Court in Vineet Narain v. Union of India, [1996] INSC 158; 1996 (2) SCC 199 and Anukul Chandara Pradhan v. Union of India, 1996 (6) SCC 354 and, therefore, the High Court is required to proceed with the matter in a similar manner. It has to be borne in mind that the purpose of these proceedings in essentially to ensure performance of the statutory duty by the CBI and the other government agencies in accordance with law for the proper implementation of the rule of law.

To achieve this object a fair, honest and expeditious investigation into every reasonable accusation against each and every person reasonably suspected of involvement in the alleged offences has to be made strictly in accordance with law. The duty of the Court in such proceedings is, therefore, to ensure that the CBI and other government agencies do their duty and do so strictly in conformity with law. In these proceedings, the Court is not required to go into the merits of the accusation or even to express any opinion thereon, which is a matter for consideration by the competent court in which the charge-sheet is filed and the accused have to face trial. It is, therefore, necessary that not even an observation relating to the merits of t he accusation is made by the Court in these proceedings lest it prejudice the accused at the trial. The nature of these proceeding may be described as that of “continuing mandamus” to require performance of its duty by the CBI and the other government agencies concerned. The agencies concerned must bear in mind and, if needed, be reminded of the caution administered by Lord Denning in this behalf in R.V.. Metropolitan Police Commr., 1968 (1) All ER 763/1968 (@) QB 118. Indicating the duty of the Commissioner of Police, Lord Denning stated thus : (All ER p.769) “I have no hesitation, however, in holding that, like every constable in the land, he should be, and is, independent of the executive.

He is not subject to the orders of the Secretary of State,.. I hold it to be the duty of the Commissioner of Policy, AS it is of every chief constable, to enforce the law of the land. He must take steps so to post his men that crimes may be detected;

and that honest citizens may go about their affaires in peace. He must decide whether or not suspected persons are to be prosecuted; and, if need be, being the prosecution or see hat it is brought; but in all these things he is not the servant of anyone, save of the law itself. No Minister of the Crown can tell him that he must, or must not, jeep observation on this place or that; or that he must, or must not prosecute this man or that one. Nor can any policy authority tell him so. The responsibility for law enforcement lies on him. He is answerable to the law and to the law alone.” The nature of such a proceeding in a court of law was also indicated by Lord Denning, as under :

“A question may be raised as to the machinery by which he could be compelled to do his duty. On principle, it seems to me that once a duty exists, there should be a means of enforcing it. This duty can be enforced. I think, either by action at the suit of the Attorney General; or by the prerogative order of mandamus.

(emphasis supplied) There can hardly be any doubt that the obligation of the police in our constitutional scheme is no less.

5. According to the Code of Criminal Procedure, 1973 the formation of the opinion as to whether or not here is a case to place the accused for trial is that of the police officer making the investigation and the final step in the investigation is to be taken only by the police and by no other authority, see Abhinandan Jha v. Dinesh Mishra, 1967 (3)SCR 668.

This must be borne in mind as also that the scope and purpose of a proceeding like the present is to ensure a proper and faithful performance of its duty by the police officer by resort to the prerogative writ of mandamus.” The Minister’s power in these matters has, therefore, to be understood as circumscribed by these limitations under the law.

History of CBI It is useful to refer at this stage to the history of the CBI. The Special Police Establishment was formed during the World War II when large sums of public money were being spent in connection with the War and there arise enormous potential for corruption amongst the officers dealing with the supplies. An executive order was made by the Government of India in 1941 setting up the Special Police Establishment (SPE) under a DIG in the then Department of War. The need for a central government agency to investigate c ases of bribery and corruption by the Central Government servants continued and, therefore, the Delhi Special Policy Establishment act was brought into force in 1946. Under this Act, the superintendence of the Special Police Establishment was transferred to the Home Department and its function were enlarged to cover all departments of the Government of India. The jurisdiction of the SPE extended to all the Union Territories and could also be extended to the States with the consent of the concerned State Governments. Then the SPE was put under the charge of Director, Intelligence Bureau.

Later in 1948 a post of Inspector General of Police, SPE was created and the organisation was placed under his charge.

The Central Bureau of Investigation was established on 1.4.1963 vide Government of India’s Resolution No, 4/31/61- T/MHA. This was done to meet the felt need of having a central police agency at the disposal of the Central Government to investigate into cases not only of bribery and corruption but also those relating to the breach of central fiscal laws, frauds in government departments and PSUs and other serious crimes. On enlargement of the role of CBI an Economic Offences Wing was added to the existing Divisions of the CBI. In 1887 tow Divisions were created in the CBI known as Anti-Corruption Division and Special Crimes Division, the latter dealing with cases of conventional crimes besides economic offences. In 1994 due to increased workload relating to bank frauds and economic offences a separate Economic Offences Wing was established in CBI with the result that since then the CBI has three Investigation Divisions, namely, Anti-Corruption Division, Special Crimes Division and Economic Offences Division. Further particulars thereof are not necessary in the present context.

We are informed that almost all the State Governments have given concurrence for extension of the jurisdiction of the Delhi Special Police Establishment in their States with the exception of only a few. The result is that for all practical purposes, he jurisdiction in respect of all such offences is exercised in the consenting States only by the CBI and not by the State Police. This is the significance of the role of the CBI in such matters and, therefor, technically the additional jurisdiction under the general law of the State Police in.

these matters is of no practical relevance. The pragmatic effect of the single Directive is, therefore, to inhibit investigation against the specified category of officers without sanction in accordance with the Single Directive.

Validity of directive No.4.7(3) of the Single Directive We may now refer to the two decisions on which specific reliance has been placed by the learned Attorney General before us as well as the IRC in its report.

The decision in J.A.C. Saldanha (supra) is on Section 3 of the Police, Act 1861 and deals with the ambit and scope of State Governments power of `superintendence’ thereunder.

It was held in J.A.C. Saldanha (supra) that the power of superintendence of the State Government includes its power to direct further investigation under Section 173 (8) Cr.P.C.. That was a case in which there was occasion to require further investigation because of the unsatisfactory nature of the investigation done earlier of a cognizable offence. Thus, in that case the power of superintendence was exercised for directing further investigation to complete an unsatisfactory investigation of a cognizable offence to promote the cause of justice and not to subvert it by preventing investigation. In our opinion, in the present context, that decision has no application to support the issuance of the Single directive in exercise foe of the of superintendence, since the effect of the Single Directive might thwart investigation of a cognizable offence and not to promote the cause of justice by directing further investigation leading to a prosecution.

The other decision of this court is in K. Veeraswami (supra). That was a decision in which the majority held that the prevention of Corruption Act applies even to the Judges of the High court and the Supreme Court, After taking that view, it was said by the majority (per Shetty, J.) that in order to protect the independence of judiciary, it was essential that no criminal case shall be registered under Section 154 Cr.P.C. against a Judge of the High Court or of the Supreme court unless the Chief Justice of India is consulted and he assents to such an action being taken. The Learned Attorney General contended that this decision is an authority for the proposition that in case of high officials, the requirement of prior permission/sanction from a higher officer or Hear of the Department is permissible and necessary to save the concerned officer from harassment cause by a malicious or vexatious prosecution. we are unable to accept this submission.

The position of Judges of High Courts and Supreme Court, who are constitutional functionaries, is distinct, and the independence of judiciary, keeping it free from any extraneous influence, including that from executive, is the rationale of the decision in K. Veeraswami (supra). In strict terms the Prevention of Corruption Act, 1946 could not be applied to the superior Judges and, therefore, while bringing those Judges within the purview of the Act yet maintaining the independence of judiciary, this guideline was issued as a direction but the Court. The feature of independence of judiciary has no application to the officers covered by the single directive, The need for independence of judiciary from the directive influence does not arise in the case of officers belonging to the executive. we have no doubt that the decision in K. Veeraswami (supra) has no application to the wide proposition advanced by the learned Attorney General to support the single Directive. For the same reason, reliance on that decision by the IRC to uphold the Single Directive is misplaced.

The question, however, is whether, without the aid of these decisions, the Single Directive can be upheld., In this context, meaning of the word “superintendence” in Section 4(1) of the Delhi Special Police establishment Act, 1946 requires consideration.

The Delhi special police Establishment Act, 1946 is an Act to make provision for the constitution of a special police force in Delhi for the investigation of certain offences in the Union Territories for the superintendence and administration of the said force and for the extension to other areas of the powers and jurisdiction of members of the said force in retard to the investigation of the said offences, Section 6 of the Act requires consent of the state government to exercise powers and jurisdiction under the Act by the Delhi special police establishment. This is because Police’ is a State subject, being in List Li, entry 2 of the seventh Schedule; For this reason, the learned Attorney general contended that the power and jurisdiction of the state police in respect of an offence within its jurisdiction remains intact and is not inhibited by the Single Directive; and that the CBI alone is inhibited thereby. Section 2 of the act deals with constitution and powers of the Special Police Establishment (SPE). This is how the CBI has been constituted. Section 3 provides for offences to be investigated by the SPE and says that the offences or class of offences to be investigated by the agency may be specified by notification in the Official Gazette by the Central government.

Section 3 of the Police act, 1861 is in pari materia with Section 4 of the Delhi Special Police Establishment act 1946. These sections read as under:- Section 3 of the Police act, 1861:

“3. Superintendence in the state Government:- The superintendence of the police throughout a general police district shall vest in and shall be exercised by the State government to which such district is subordinate, and except as authorised under the provisions of this Act, no person, officer or court shall be empowered by the State government to supersede or control any police functionary.

Sections 3 and 4 of the Delhi Special Police establishment Act, 1946:

“Offences to be investigated by S.P.E.

3. the Central government may beat notification in the Official gazette specify the offences or classes of offences which are to be investigate by the Delhi Special Police establishment.

Superintendence & Administration of S.P.E.

4(1) The Superintend of the Delhi Special Police Establishment shall vest in the Central Government.

(2) the administration of the said police establishment shall vest in an officer appointed in this behalf by the central Government who shall exercise in respect of that police establishment such of the powers exercisable by an Inspector general of Police in respect of the police force in a state, as the Central Government may specify in this behalf” The meaning of the word “superintendence” in Section 4(1) of the Delhi special police Act, 1946 determines the scope of the authority of the Central Government in this context.

There can be no doubt that the overall administration of the said face, i.e. CBI vests in the Central Government, which also includes, by the virtue of Section 3, the power to specify the offences or class of offences which are to be investigated by it. The general superintendence over the functioning of the department and specification of the offences which are to be investigated by the agency is not the same as and would not include within it the control of the intiation and the actual process of investigation, i.e., direction. Once the CBI is empowered to investigate an offence generally by its specification under Section 3, the process of investigation, including its initiation, is to be governed by the statutory provision which provide for the initiation and manner of investigation the offence. This is not an area which can be included within the meaning of “superintendence” in section 4(1).

It is, therefore, the notification made by the Central Government under Section 3 which confers and determines the jurisdiction of the CBI to investigate an offence; and once that jurisdiction is attracted by virtue of the notification under Section 3, the actual investigation to be governed by the statutory provisions under the general law applicable to such investigation. This appears to us the proper construction of section 4(1) in the context, and it is in harmony with the scheme of the Act, and section 3 in particular. the word “superintendence” in section 4(1) cannot be constructed in a winder sense to permit supervision of the actual investigation of an offence by the CBI contrary to the manner roved by the statutory provisions., The board proportion urged on behalf of the Union of India that it can issue any directive to the CBI to curtail or inhibit its jurisdiction to investigate an offence specified in the notification issued under section 3 by a directive under section 4(1) of three Act cannot be accepted, The jurisdiction of the 4 CBI to investigate an offence is to be determined with reference to the notification issued under Section any not by any separate order not having that character This view does not conflict with the decision in J.A.C.

Saldanha (supra) as earlier indicated. In Saldanha, the question was whether an unsatisfactory investigation already made could be undertaken by another officer for further investigation of the offence so that the offence was properly investigated as required by law, and it was not to prevent the investigation or an offence. The single Directive has the effect of restraining reforming of AIR and initiation of investigation and not of preceding with investigation, as in Saldanha, No authority to permit control of salutary powers exercised by the police to investigation an offence within its jurisdiction has been cited before us except. K.Veeraswami which we have already distinguished. The view we take accords not only with reason but also with the gunnery purpose of the law and is in consonance with the basic tenet of the rule of law.

Once the Jurisdiction is conferred on the CBI top investigate an offence by virtue of notification under Section 3 of the Act, the powers of investigation are governed by the statuary provisions and they cannot be estopped or curtailed by any executive instruction issued under Section 3(1) thereof. This result follows from the fact that conferment of jurisdiction is under section 3 of the Act and exercise of powers of investigation is by virtue of the statuary provisions covering investigation offences.

it is settled that statutory jurisdiction cannot be subject to execute control There is no similarity between a mere executive order requiring prior permission sanctions investigation of the offence and sanction needed under the stature for prosecution. The requirement of sanction for prosecution being provided in the very statue which enacts the offence, the sanction for prosecution is a pre-requisite for the court to take connivance of the offence. In the absence of any statutory requirement of prior permission or sanction for investigation, it cannot be imposed as a condition precedent for institution of the investigation once jurisdiction is conferred on the CBI to investigate the offence by virtue of the notification under section 3 of the Act. The word “superintendence” in section 4(1) of the Act in the context must be construct in a manner consistent with the other provisions of the Act and the general statutory powers of investigation which given investigation even by the CBI. The necessity of previous sanction for prosecution is provided in Section 6 of the Prevention of Corruption Act, 1947 (Section 19 of the 1988 Act) without which no court can take consistence of an offence punishable under Section 5 of that Act. There is no such previous sanction for investigation provided for either in the Prevention of Corruption Act or the Delhi Special Police establishment Act or in any other statutory provision. The above is the only manner ii which Section 4(1) of the Act can in harmonised with Section 3 and the other statutory provisions.

The Single Directive has to be examined in this background. The law does not classify offenders differently for treatment thereunder, including investigation of offences and persecution for offences. according to their status in life. Every person accused of committing the same offences is to be dealt with in the same manner in accordance with law, which is equal in its application to everyone. The Single Directive is applicable only to certain p[person above the specified level who are described as “decision making officers”. The question is whether any distinction can be made for them for the purpose of investigation of an offence of which they are accused.

Obviously, where the accusation of corruption is based on direct evidence and it does not require any inference to be drawn depend on the decision making process, there is no rational basic to classify them differently. In other words, if the accusation be of bribery which is supported by direct evidence of acceptance of illegal gratification by them, including strap cases, it is obvious that no other factor is relevant and the level or status of the offender is irrelevant. It is for this reason that it was conceded that such cases, i.e., if bribery, including trap cases, are outside the scope of the Single Directive. After some debate at the bar, no serious attempt was made by the learned Attorney General to support inclusion within the Single Directive of cases in which the offender is alleged to be in possession of disproportionate assets. It is clear that the accusation of possession of disproportionate assists by a person is also based on direct evidence and no factor pertaining to the exercise of decision making is involved therein. We have, therefore, no doubt that the Single directive cannot include within its ambit cases of possession of disproportionate assists by the offender. The question new is only with regard to cases other than those of bribery, including trap cases, and of possession of disproportioned assists being covered by the Single Directive There may be other cases where the accusation cannot be supported by direct evidence and is a matter of inference of corrupt motive for the decision, with nothing to prove directly any illegal gain to the decision maker. Those are cases in which the inference drawn is that the decision mus have been made for a corrupt motive because the decision could not have been reached otherwise by an officer at that level in the hierarchy. This is, therefore, an area where the opinion of persons with requisite expertise in decision making of that kind is relevant, and may be even decisive in reaching the conclusion whether allegation requires any investigation to be made. In view of the fact that the CBI of the Police force does not have the expertise within fold for the formation of the requisition opinion in such cases, the need for the inclusion of such a mechanism comprising of experts in the field as a part of the infrastructure of the CBI is obvious, to decide whether the accusation made discloses grounds for a reasonable suspicion of the commission of an offence and it requires investigation. In the absence of any such mechanism within the infrastructure of the CBI, comprising of experts in the field who can evaluate the material for the decision to be made, introduction therein of a body of experts having expertise of the kind of business which requires the division to be made, can be appreciated. But then, the final opinion is to be of the CBI with the aid of that advice and not that of anyone else. It would be more appropriate to have such a body within the infrastructure of the CBI itself.

The Single Directive cannot, therefore, be uphold as valid on the ground to it being permissible in exercise of the power of superintendence of the Central Government under Section 4(1) Act. The matter now to be considered de hors hors the Single Directive.

Power of the Supreme court In view of the common perception shared by everyone including the Government of India and the Independent review Committee (IRC) of the need for insulation of the need for insulation of the CBI from extrancous influence of any kind, it is imperative that some action is urgently taken to prevent the continuance of this situation with a view in ensure proper implementation of the rule of law.

This is the need of equality guaranteed in the Constitution The right to equality in a situation like this is that of the Indian polity and not merely of a few individuals. The powers conferred on this Court by the Constitution are ample to remedy this defect and to ensure enforcement of the concept of equality.

There are ample powers conferred by Article 32 read with Article 142 to make orders which have the effect of law by virtue of article 141 and there is mandate to all authorities to act in aid of the orders of this Court as provided in Article 144 of the Constitution. In a catena of decisions of this Court, this power has been recognised and exercised, if need be, by issuing necessary directions to fill the vacuum till such time the legislature steps in to cover the gap or the executive discharges its role. it is in the discharge of this duty that the IRC was constituted by the Government of India with a view to obtain its recommendations after an indepth study of the problem in order to implement them by suitable executive directions till proper legislation is enacted. The report of the IRC has been given to the Government of India but because of certain difficulties in the present context, no further action by the executive has been possible. The study having been made by a Committee considered by the Government of India itself as an expert body, it is safe top act on the recommendations of the IRC to formulate the directions of this Court, to the extent they are of assistance. In the remaining area, on the basis of the study of the IRC and its recommendations, suitable directions can be formulate to fill the entire vacuum. This is the exercise we propose to perform in the present case since this exercise can no longer be delayed. it is essential and indeed the constitutional obligation of this court under the aforesaid provisions to issue the necessary directions in this behalf.

We now consider formulation of the needed directions in the performance of this obligation. The directions issued herein for strict compliance are a to operate till such time as they are replaced by suitable legislation in this behalf.

There is another aspect of rule of law which is of equal significance. Unless a proper investigation is made and it is followed by an equally proper prosecution, the effort made would not bear fruition. The recent experience in the field of prosecution s also discouraging. To emphasise this point, some reference has to be made to a large number of prosecution launched as a result of monitoring by the court in this matter which have resulted in discharge of the accused at the threshold. It took serval years for the CBI to commence investigation and that too as a result of the monitoring by this Court. It is not as if the CBI, on conclusion of the investigation, formed the opinion that no case was made out for prosecution so that the earlier inaction may have been justified. The CBI did file numerous chargesheets which indicated that in its view a prima facie case for prosecution had been made out.

This alone is sufficient to indicate that the earlier inaction was unjustified. However, discharge of the accused on filing of the chargesheet indicates, irrespective of the ultimate outcome of the matters pending in the higher courts, that the trial court at least was not satisfied that a prima facie case was made out by the investigation. These facts are sufficient to indicate that either the investigation or the prosecution or both were lacking. A similar result of discharge of the accused in such a large number of cases where chargesheets has been filed by the CBI is not consistent with any other inference. The need for a strong and competent prosecution machinery and not merely a fair and competent investigation by the CBI can hardly be over emphasised. This is the occasion for us to take the view that a suitable machinery for prosecution of the cases filed in court by the CBI is also essential to ensure discharge of its full responsibility by the CBI. Unless a competent prosecution follows a fair and competent investigation, the exercise in the ultimate analysis would be futile. Investigation without improving the prosecution machinery is of no practical significance. We would, therefore, consider the aspect of prosecution also in the formulation of the guidelines.

In exercise of the powers of this Court under Article 32 read with Article 142, guidelines and directions have been issued in a large number of cases and a brief reference to a few of them is sufficient. In Erach Sam Kanga etc. vs.

Union of India & Anr. (Writ Petition No. 2632 of 1978 etc.

etc.) decided on 20th march, 1979, the Constitution Bench laid down certain guidelines relating to the Emigration Act.

In Lakshmi Kant Pandey vs. Union of India (in re: Foreign Adoption)[1984] INSC 25; , 1984 (2) SCC 244, guidelines for adoption of minor children by foreigners were laid down. Similarly in State of West Bengal & Ors. etc. vs. Sampat Lal & ors. etc.

[1984] INSC 226; 1985 (2) SCR 256, K. Veeraswami vs. Union of India and Others, [1991] INSC 164; 1991 (3) SCC 655, Union Carbide Corporation and Others vs. Union of India and Others, [1991] INSC 252; 1991 (4) SCC 584, Delhi Judicial Service Association etc. vs. State of Gujarat and Others etc.(Nadiad Case)[1991] INSC 229; , 1991 (4) SCC 406, Delhi Development Authority vs. Skipper Construction Co. (P) Ltd.

And Another[1996] INSC 655; , 1996 (4) SCC 622 and Dinesh Trivedi, M.P. and Others vs. Union of India and Others, 1997 (4) SCC 306, guidelines, were laid down having the effect of law, requiring rigid compliance. In Supreme Court Advocates-on- Record Associations and Others vs. Union of India (IInd Judge Case), 1993 (4) SCC 441, a 9-Judge Bench laid down guidelines and norms for the appointment and transfer of Judges which are being rigidly followed in the matter of appointments of High Court and Supreme Court Judges and transfer of High Court Judges. More recently in Vishakha and Others vs. State of Rajasthan and Others, 1997 (6) SCC 241, elaborate guidelines have been laid down for observance in work places relating to sexual harassment of working women. In Vishaka, it was said:

“The obligation of this court under Article 32 of the Constitution for the enforcement of these fundamental rights in the absence of legislation must be viewed along with the rule of judiciary envisaged in the Beijing Statement of Principles of the Independence of the Judiciary in the LAWASLA region. These principles were accepted by the Chief Justices of Asia and the Pacific at Beijing in 1995 (*) As amended at Manila, 28th August, 1997 as those representing the minimum standards necessary to be observed in order to maintain the independence and effective functioning of the judiciary The objectives of the judiciary mentioned in the Beijing Statement are:

“Objectives of the Judiciary:

10. The objectives and functions of the Judiciary include the following:

(a) to ensure that all persons are able to live securely under the Rule of Law:

(b) to promote, within the proper limits of the judicial function, the observance and the attainment of human rights; and (c) to administer the law impartially among persons and between persons and the State.” Thus, an exercise of this kind by the court is now a well settled practice which has taken firm roots in our constitutional jurisprudence. This exercise is essential to fill the void in the absence of suitable legislation to cover the field.

As pointed out in Vishakha (supra), it is the duty of the executive to fill the vacuum by executive orders because its field is coterminous with that of the legislature, and where there is inaction even by the executive, for whatever reason, the judiciary must step in, in exercise of its constitutional obligations under the aforesaid provisions to provide a solution till such time as the legislature acts to perform its role by enacting proper legislation to cover the field.

On this basis, we now proceed to give the directions enumerated hereafter for rigid compliance till such time as the legislature steps in to substitute them by proper legislation. These directions made under Article 32 read with Article 142 to implement the rule of law wherein the concept of equality enshrined in Article 14 is embedded, have the force of law under Article 141 and, by virtue of Article 144, it is the duty of all authorities, civil and judicial, in the territory of India to act in aid of this Court. In the issuance of these directions, we have accepted and are reiterating as far as possible the recommendations made by the IRC.

It is a similar perception in England which has led to the constitution of a Committee headed by Lord Nolan on ‘Standards in Public Life’. In Volume 1 of Lord Nolan’s Report (1995), the general recommendations made are:

General recommendation

4. Some of our conclusions have general application across the entire service;

Principles of public life

5. The general principles of conduct which underpin public life need to be restated. We have done this. The seven principles of selflessness, integrity, objectivity, accountability, openness, honesty and leadership are set out in full on page 14.

Codes of Conduct

6. All public bodies should draw up Codes of Conduct incorporating these principles Independent Scrutiny

7. Internal systems for maintaining standards should be supported by independent scrutiny.

Education

8. More needs to be done to promote and reinforce standards of conduct in public bodies, in particular through guidance and training, including induction training”.

The Seven Principles of Public Life are stated in the Report by Lord Nolan, thus:

“The Seven Principles of Public Life Selflessness Holders of public office should take decisions solely in terms of the public interest. They should not do so in order to gain financial or other material benefits for themselves, their family, or their friends.

Integrity Holders of public office should not place themselves under any financial or other obligation to outside individuals or organisations that might influence them in the performance of their official duties.

Objectivity In carrying out public business, including making public appointments, awarding contracts, or recommending individuals for rewards and benefits, holders of public office should make choices on merit Accountability Holders of public office are accountable for their decisions and actions to the public and must submit themselves to whatever scrutiny is appropriate to their office Openness Holders of public office should be as open as possible about all the decisions and actions that they take. They should give reasons for their decisions and restrict information only when the wider public interest clearly demands.

Honesty Holders of public office have a duty to declare any private interests relating to their public duties and to take steps to resolve any conflicts arising in a way that protects the public interest.

leadership Holders of public office should promote and support these principles by leadership and example.” These principles of public life are of general application in every democracy and one is expected to bear them in mind while scrutinising the conduct of every holder of a public office. It is trite that the holders of public offices are entrusted with certain powers to be exercised in public interest alone and, therefore, the office is held by them in trust for the people. Any deviation from the path of rectitude by any of them amounts to a breach of trust and must be severely dealt with instead of being pushed under the carpet. If the conduct amounts to an offence, it must be promptly investigated and the offender against whom a prima facie case is made out should be prosecuted expeditiously so that the majesty of law is upheld and the rule of law vindicated. It is duty of the judiciary to enforce the rule of law and, therefore, to guard against erosion of the rule of law.

The adverse impact of lack of probity in public life leading to a high degree of corruption is manifold. It also has adverse effect on foreign investment and funding from the International Monetary Fund and the World Bank who have warned that future aid to under-developed countries may be subject to the requisite steps being taken to eradicate corruption, which prevents international aid from reaching those for whom it is meant. Increasing corruption has led to investigative journalism which is of value to a free society. The need to highlight corruption in public life through the medium of public interest litigation invoking judicial review may be frequent in India but is not unknown in other countries: R v Secretary of State for Foreign and Commonwealth Affairs, [1994] EWHC Admin 1; (1995) 1 WLR 386.

Of course, the necessity of desirable procedures evolved by court rules to ensure that such a litigation is properly conducted and confined only to mattes of public interest is obvious. This is the effort made in these proceedings for the enforcement of fundamental rights guaranteed in the Constitution in exercise of powers conferred on this Court for doing complete justice in a cause. It cannot be doubted that there is a serious human rights aspect involved in such a proceeding because the prevailing corruption in public life, if permitted to continue unchecked, has ultimately the deleterious effect of eroding the Indian polity.

As a result of the aforesaid discussion, we hereby direct as under:

I. CENTRAL BUREAU OF INVESTIGATION (CBI) AND CENTRAL VIGILANCE COMMISSION (CVC)

1. The Central Vigilance Commission (CVC) shall be given statutory status.

2. Selection for the post of Central Vigilance Commissioner shall be made by a Committee comprising the Prime Minister, Home Minister and the Leader of the Opposition from a panel of outstanding civil servants and others with impeccable integrity to be furnished by the Cabinet Secretary. The appointment shall be made by the President on the basis of the recommendations made by the Committee. This shall be done immediately.

3. The CVC shall be responsible for the efficient functioning of the CBI. While Government shall remain answerable for the CBI’s functioning, to introduce visible objectivity in the mechanism to be established for over viewing the CBI’s working, the CVC shall be entrusted with the responsibility of superintendence over the CBI’s functioning. The CBI shall report to the CVC about cases taken up by it for investigation; progress of investigations; cases in which chargesheets are filed and their progress. The CVC shall review the progress of all cases moved by the CBI for sanction of prosecution of public servants which are pending with competent authorities, specially those in which sanction has been delayed or refused.

4. The Central Government shall take all measures necessary to ensure that the CBI functions effectively and efficiently and is viewed as a non-partisan agency.

5. The CVC shall have a separate section in its Annual Report on the CBI’s functioning after the supervisory function is transferred to it.

6. Recommendations for appointment of the Director, CBI shall be made by a Committee headed by the Central Vigilance Commissioner with the Home Secretary and Secretary (Personnel) as members. The views of the incumbent Director shall be considered by the Committee for making the best choice. The Committee shall draw up a panel of IPS officers on the basis of their seniority, integrity, experience in investigation and anti – corruption work. The final selection shall be made by Appointments Committee of the Cabinet (ACC) from the panel recommended by the Selection Committee. If none among the panel is found suitable, the reasons the reasons thereof shall be recorded and the Committee asked to draw up a fresh panel.

7. The Director, CBI shall have a minimum tenure of two years, regardless of the date of his superannuation. This would ensure that an officer suitable in all respects is not ignored merely because he has less than two years to superannuate from the date of his appointment.

8. The transfer of an incumber Director, CBI in an extraordinary situation, including the need for him to take up a more important assignment, should have the approval of the Selection Committee.

9. The Director, CBI shall have full freedom for allocation of work within the agency as also for constituting teams for investigations. Any change made by the Director, CBI in the Head of an investigative team should be for cogent reasons and for improvement in investigation, the reasons being recorded.

10. Selection/extention of tenure of officers upto the level of Joint Director (JD) shall be decided by a Board comprising the central Vigilance Commissioner, Home Secretary and Secretary (Personnel) with the Director, CBI providing the necessary inputs. The extension of tenure or premature repatriation of officers upto the level of Joint Director shall be with final approval of the Board. Only cases pertaining to the appointment or extension of tenure of officers of the rank of Joint Director or above shall be referred to the Appointments Committee of the Cabinet (ACC) for decision.

11. Proposals for improvement of infrastructure, methods of investigation, etc. should be decided urgently. In order to strengthen CBI’s in-house expertise, professionals from the revenue, banking and security sectors should be inducted into the CBI.

12. The CBI Manual based on statutory provisions of the Cr.

P.C. provides essential guidelines for the CBI’s functioning. It is imperative that the CBI adheres scrupulously to the provisions in the Manual in relation to its investigative functions, like raids, scizure and arrests. Any deviation from the established procedure should be viewed seriously and severe disciplinary action taken against the concerned officials.

13. The Director, CBI shall be responsible for ensuring the filing of chargesheets in courts within the stipulated time limits, and the matter should be kept under constant review by the Director, CBI

14. A document on CBI’s functioning should be published within three months to provide the general public with a feedback on investigations and information for redress of genuine grievances in a manner which does not compromise with the operational requirements of the CBI.

15. Time limit of three months for grant of sanction for prosecution must be strictly adhered to. However, additional time of one month may be allowed where consultation is required with the Attorney General (AG) or any other law officer in the AG’s office.

16. The Director, CBI should conduct regular appraisal of personnel to prevent corruption and/or inefficiency in the agency.

III. ENFORCEMENT DIRECTORATE

1. A Selection Committee headed by the Central Vigilance Commissioner and including the Home Secretary, Secretary (Personnel) and Revenue Secretary, shall prepare a panel for appointment of the Director, Enforcement Directorate. The appointment to the post of Director shall be made by the Appointments Committee of the Cabinet (ACC) from the panel recommended by the Selection Committee.

2. The Director, Enforcement Director like Director, CBI shall have a minimum tenure of two years. In his case also, premature transfer for any extraordinary reason should be approved by the aforesaid Selection Committee headed by the Central Vigilance commissioner.

3. In view of the importance of the post of Director, Enforcement Directorate, it shall be upgraded to that of a Additional Secretary/Special Secretary to the Government.

4. Officers of the Enforcement Directorate handling sensitive assignments shall be provided adequate security to enable them to discharge their functions fearlessly.

5. Extensions of tenure upto the level of Joint Director in the Enforcement Directorate should be decided by the said Committee headed by the Central Vigilance Commissioner.

6. There shall be no premature media publicity by the CBI/Enforcement Directorate.

7. Adjudication/commencement of prosecution shall be made by the enforcement Directorate within a period of one year.

8. The Director, Enforcement Directorate shall monitor and ensure speedy completion of investigations/adjudications and launching of prosecutions. Revenue Secretary must review their progress regularly.

9. For speedy conduct of investigations abroad, the procedure to approve filing of applications for Letters Rogatory shall be streamlined and, if necessary, Revenue Secretary authorised to grant the approval

10. A comprehensive circular shall be published by the Directorate to inform the public about the procedures/systems of its functioning for the sake of transparency.

11. In-house legal advice mechanism shall be strengthened by appointment of competent legal advisers in the CBI/Directorate of Enforcement.

12. The Annual Report of the Department of Revenue shall contain a detailed account on the working of the Enforcement Directorate.

III. NODAL AGENCY

1. A Nodal Agency headed by the Home Secretary with Member (Investigation), Central Board of Direct Taxes, Director General, Revenue Intelligence, Director, Enforcement and Director, CBI as members, shall be constituted for coordinated action in cases having politico-bureaucrat- criminal nexus.

2. The Nodal Agency shall meet at least once every month.

3. Working and efficacy of the Nodal Agency should be watched for about one year so as to improve it upon the basis of the experience gained within this period.

IV PROSECUTION AGENCY

1. A panel of competent lawyers of experience and impeccable reputation shall be prepared with the advice of the Attorney General Their services shall be utilised as Prosecuting Counsel in cases of significance. Even during the course of investigation of an offence, the advice of a lawyer chosen from the panel should be taken by the CBI/Enforcement Directorate.

2. Every prosecution which results in the discharge or acquittal of the accused must be reviewed by a lawyer on the panel and, on the basis of the opinion given, responsibility should be fixed for dereliction of duty, if any, of the concerned officer. In such cases, strict action should be taken against the officer found guilty of dereliction of duty.

3. The preparation of the panel of lawyers with approval of the Attorney General shall be completed within three months.

4. Steps shall be taken immediately for the constitution of an able and impartial agency comprising persons of unimpeachable integrity to perform functions akin to those of the Director of Prosecutions in U.K. On the constitution of such a body, the task of supervising prosecutions launched by the CBI/Enforcement Directorate shall be entrusted to it.

5. Till the constitution of the aforesaid body, Special Counsel shall be appointed for the conduct of important trials on the recommendation of the Attorney General or any other law officer designated by him.

The learned amicus curiae had urged us to issue directions for the appointment of an authority akin to the Special or Independent Counsel in the United States of America for the investigation of charges in politically sensitive matters and for the prosecution of those cases and to ensure that appointments to sensitive posts in the CBI and other enforcement agencies and transfers therefrom were not made by the political executive. We are of the view that the time for these drastic steps has not come. It is our hope that it never will, for we entertain the belief that the investigative agencies shall function far better now, having regard to all that has happened since these writ petition were admitted and to the directions which are contained in this judgment. The personnel of the enforcement agencies should not now lack the courage and independence to go about their task as they should, even where those to be investigated are prominent and powerful persons.

In view of the problem in the States being even more acute, as claborately discussed in the Report of the National Police Commission (1979), there is urgent need for the State Government also to set up credible mechanism for selection of the Police Chief in the States. The Central Government must pursue the matter within the State Governments and ensure that a similar mechanism, as indicated above, is set up in each State for the selection/appointment, tenure, transfer and posting of not merely the Chief of the State Police but also all police officers of the rank of Superintendent of Police and above.

It is shocking to hear, a matter of common knowledge, that in some States the tenure of a Superintendent of Police is on an average only a fee months and transfers are made for whimsical reasons. Apart from demoralising the police force, it has also the adverse effect of politicizing the personnel. It is, therefore, essential that prompt measures are taken by the Central Government within the ambit of their constitutional powers in the federation to impress upon the State Governments that such a practice is alien to the envisaged constitutional machinery. The situation described in the National Police Commission’s Report (1979) was alarming and it has become much worse by now. The desperation of the Union Home Minister in his letters to the state Governments, placed before us at the hearing, reveal a distressing situation which must be cured, if the rule of law is to prevail. No action within the constitutional scheme found necessary to remedy the situations is too stringent in these circumstances.

In the result, we strike down Directive No. 4.7(3) of the Single Directive quoted above and issue the above directions, which have to be construed in the light of the earlier discussion. The Report of the Independent Review Committee (IRC) and its recommendations which are similar to this extent can be read, if necessary, for a proper appreciation of these directions. To the extent we agree with the conclusions and recommendations of the IRC, and that is a large area, we have adopted the same in the formulation of the above directions. These directions require the strict compliance/adherence of the Union of India and all concerned.

The writ petitions are disposed of in the above terms Criminal Misc. Petition Nos. 5879-5882 of 1997 In view of the disposal of the writ petitions in the manner indicated above and in the facts and circumstances of the cases, we do not consider it necessary now to examine the appointment of Shri R.C. Sharma as Director, CBI.

Moreover, the tenure of Shri Sharma as Director, CBI is to end soon. We make it clear that Shri Sharma is not to be continued as CBI Director beyond the date of expiry of his present tenure. Accordingly, these Crl. M. Ps. are disposed of in this manner.

In view of the withdrawal of C.W.P.No.2992 of 1997 in the Delhi High Court as required by this Court’s order dated 11.9.1997, no further order for the disposal of C.W.P. No.

2992 of 1997 is necessary.

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IN THE SUPREME COURT OF INDIA
VISHAKA & ORS. …PETITIONER
Vs.
STATE OF RAJASTHAN & ORS. …RESPONDENT
DATE OF JUDGMENT: 13/08/1997
BENCH: CJI, SUJATA V. MANOHAR, B. N. KIRPAL

J U D G M E N T

Verma, CJI:

This Writ Petition has been filed for the enforcement of the fundamental rights of working women under Articles 14, 19 and 21 of the Constitution of India in view of the prevailing climate in which the violation of these rights is not uncommon. With the increasing awareness and emphasis on gender justice, there is increase in the effort to guard such violations; and the resentment towards incidents of sexual harassment is also increasing. The present petition has been brought as a class action by certain social activists and NGOs with the aim of focussing attention towards this societal aberration, and assisting in finding suitable methods for realisation of the true concept of ‘gender equality’; and to prevent sexual harassment of working women in all work places through judicial process, to fill the vacuum in existing legislation.

The immediate cause for the filing of this writ petition is an incident of alleged brutal gang rape of social worker in a village of Rajasthan. That incident is the subject matter of a separate criminal action and no further mention of it, by us, is necessary. The incident reveals the hazards to which a working woman may be exposed and the depravity to which sexual harassment can degenerate;

and the urgency for safeguards by an alternative mechanism in the absence of legislative measures. In the absence of legislative measures, the need is to find an effective alternative mechanism to fulfil this felt and urgent social need.

Each such incident results in violation of the fundamental rights of ‘Gender Equality’ and the ‘Right of Life and Liberty’. It is clear violation of the rights under Articles 14, 15 and 21 of Constitution. One of the logical consequences of such an incident is also the violation of the victim’s fundamental right under Article 19(1)(g) ‘to practice any profession or to carry out any occupation, trade or business’. Such violations, therefore, attract the remedy under Article 32 for the enforcement of these fundamental rights of women. This class action under Article 32 of the Constitution is for this reason. A writ of mandamus in such a siltation, if it is to be effective, needs to be accompanied by directions for prevention; as the violation of fundamental rights of this kind is a recurring phenomenon. The fundamental right to carry on any occupation, trade or profession depends on the availability of a “safe” working environment. Right to life means life with dignity. The primary responsibility fro ensuring such safety and dignity through suitable legislation, and the creation of a mechanism for its enforcement, is of the legislature and the executive. When, however, instances of sexual harassment resulting in violation of fundamental rights of women workers under Articles 14, 19 and 21 are brought before us for redress under Article 32, an effective redressal requires that some guidelines should be laid down for the protection of these rights to fill the legislative vacuum.

The notice of the petition was given to the State of Rajasthan and the Union of India. The learned Solicitor General appeared for the Union of India and rendered valuable assistance in the true spirit of a Law Officer to help us find a proper solution to this social problem of considerable magnitude. In addition to Ms. Meenakshi Arora and Ms. Naina Kapur who assisted the Court with full commitment, Shri Fali S. Nariman appeared as Amicus Curiae and rendered great assistance. We place on record our great appreciation for every counsel who appeared in the case and rendered the needed assistance to the Court which has enabled us to deal with this unusual matter in the manner considered appropriate for a cause of this nature.

Apart from Article 32 of the Constitution of India, we may refer to some other provision which envisage judicial intervention for eradication of this social evil. Some provisions in the Constitution in addition to Articles 14, 19(1)(g) and 21, which have relevance are:

Article 15:

“15. Prohibition of discrimination on grounds of religion, race, caste, sex or place of birth.- (1) The State shall not discriminate against any citizen on only of religion, race, caste, sex, place of birth or any of them.

(2) xxx xxxx xxxx (3) Nothing in this article shall prevent the State from making any special provision for women and children.

(4) xxxx xxxx xxxx” Article 42:

“42. Provision for just and humane conditions of work and maternity relief – The State shall make provision for securing just and humane conditions of work and for maternity relief.” Article 51A:

“51A. Fundamental duties. – It shall be the duty of every citizen of India, – (a) to abide by the Constitution and respect its ideals and institutions, …

xxxx xxxx xxxx (e) to promote harmony and the spirit of common brotherhood amongst all the people of India transcending religious, linguistic and regional or sectional diversities; to renounce practices derogatory to the dignity of women;

xxx xxxx xxxx” Before we refer to the international conventions and norms having relevance in this field and the manner in which they assume significance in application and judicial interpretation, we may advert to some other provisions in the Constitution which permit such use. These provisions are:

Article 51 :

“51. Promotion of international peace and security – The State shall endeavour to – xxxx xxxx xxxx (c) foster respect for international law and treaty obligations in the dealings of organised people with one another;

and xxx xxx xxx” Article 253 :

“253. Legislation for giving effect to international agreements – Notwithstanding anything in the foregoing provisions of this Chapter, Parliament has power to make any law for the whole or any part of the territory of India for implementing any treaty, agreement or convention with any other country or countries or any decision made at any international conference, association or other body.” Seventh Schedule :

“List I – Union List:

xxxx xxxx xxxx

14. Entering into treaties and agreements with foreign countries and implementing of treaties, agreements and conventions with foreign countries.

xxx xxx xxx” In the absence of domestic law occupying the field, to formulate effective measures to check the evil of sexual harassment of working women at all work places, the contents of International Conventions and norms are significant for the purpose of interpretation of the guarantee of gender equality, right to work with human dignity in Articles 14, 15 19(1)(g) and 21 of the Constitution and the safeguards against sexual harassment implicit therein. Any International Convention not inconsistent with the fundamental rights and in harmony with its spirit must be read into these provisions to enlarge the meaning and content thereof, to promote the object of the constitutional guarantee. This is implicit from Article 51(c) and enabling power of the Parliament to enact laws for implementing the International Conventions and norms by virtue of Article 253 read with Entry 14 of the Union List in Seventh Schedule of the Constitution. Article 73 also is relevant. It provides that the executive power of the Union shall extend to the matters with respect to which Parliament has power to make laws. The executive power of the Union is, therefore, available till the parliament enacts to expressly provide measures needed to curb the evil.

Thus, the power of this Court under Article 32 for enforcement of the fundamental rights and the executive power of the Union have to meet the challenge to protect the working women from sexual harassment and o make their fundamental rights meaningful. Governance of the society by the rule of law mandates this requirements as a logical concomitant of the constitutional scheme. The exercise performed by the Court in this matter is with this common perception shared with the learned Solicitor General and other members of the Bar who rendered valuable assistance in the performance of this difficult task in public interest.

The progress made at each hearing culminated in the formulation of guidelines to which the Union of India gave its consent through the learned Solicitor General, indicating that these should be the guidelines and norms declared by this Court to govern the behaviour of the employers and all others at the work places to curb this social evil.

Gender equality includes protection from sexual harassment and right to work with dignity, which is a universally recognised basic human right. The common minimum requirement of this right has received global acceptance.

The International Conventions and norms are, therefore, of great significance in the formulation of the guidelines to achieve this purpose.

The obligation of this Court under Article 32 of the Constitution for the enforcement of these fundamental rights in the absence of legislation must be viewed along with the role of judiciary envisaged in the Beijing Statement of Principles of the Independence of the Judiciary in the LAWASIA region. These principles were accepted by the Chief Justices of the Asia and the Pacific at Beijing in 1995 as those representing the minimum standards necessary to be observed in order to maintain the independence and effective functioning of the judiciary. The objectives of the judiciary mentioned in the Beijing Statement are:

“Objectives of the Judiciary:

10. The objectives and functions of the Judiciary include the following:

(a) to ensure that all persons are able to live securely under the Rule of Law;

(b) to promote, within the proper limits of the judicial function, the observance and the attainment of human rights; and (c) to administer the law impartially among persons and between persons and the State.” Some provisions in the ‘Convention on the Elimination of All Forms of Discrimination against Women’, of significance in the present context are:

Article 11:

“1. States Parties shall take all appropriate measures to eliminate discrimination against women in the field of employment in order to ensure, on basis of equality of men and women, the same rights, in particular:

(a) The right to work as an inalienable right of all human beings;

xxxx xxxxx xxxx (f) The right to protection of health and to safety in working conditions, including the safeguarding of the function of reproduction.

xxx xxxxx xxxxx Article 24 :

“States Parties undertake to adopt all necessary measures at the national level aimed at achieving the full realization of the rights recognised in the present Convention.” The general recommendations of CEDAW in this context in respect of Article 11 are :

“Violence and equality in employment:

22. Equality in employment can be seriously impaired when women are subjected to gender specific violence, such as sexual harassment in the work place.

23. Sexual harassment includes such unwelcome sexually determined behavior as physical contacts and advance, sexually coloured remarks, showing pornography and sexual demands, whether by words or actions. Such conduct can be humiliating and may constitute a health and safety problem; it is discriminatory when the woman has reasonable grounds to believe that her objection would disadvantage her in connection with her employment, including recruiting or promotion, or when it creates a hostile working environment.

Effective complaints procedures and remedies, including compensation, should be provided.

24. States should include in their reports information about sexual harassment, and on measures to protect women from sexual harassment and other forms of violence of coercion in the work place.” The Government of India has ratified the above Resolution on June 25, 1993 with some reservations which are not material in the present context. At the Fourth World Conference on Women in Beijing, the Government of India has also made a official commitment, inter alia, to formulate and operationalize a national policy on women which will continuously guide and inform action at every level and in every sector; to set up a Commission for Women’s Rights to act as a public defender of women’s human rights; to institutionalise a national level mechanism to monitor the implementation of the Platform for Action. We have, therefore, no hesitation in placing reliance on the above for the purpose of construing the nature and ambit of constitutional guarantee of gender equality in our Constitution.

The meaning and content of the fundamental rights guaranteed in the Constitution of India are of sufficient amplitude to compass all the facets of gender equality including prevention of sexual harassment or abuse.

Independence of Judiciary forms a part of our constitutional scheme. The international conventions and norms are to be read into them in the absence of enacted domestic law occupying the fields when there is no inconsistency between them. It is now an accepted rule of judicial construction that regard must be had to international conventions and norms fro construing domestic law when there is no inconsistency between them and there is a void in the domestic law. The High Court of Australia in Minister fro Immigration and Ethnic Affairs vs. Tech. 128 ALR 535, has recognised the concept of legitimate expectation of its observance in the absence of contrary legislative provision, even in the absence of a Bill of Rights in the Constitution of Australia.

In Nilabati Behera vs. State of Orissa 1993(2) SCC 746, a provision in the ICCPR was referred to support the view taken that an enforceable right to compensation is not alien to the concept of enforcement of a guaranteed right’, as a public law remedy under Article 32, distinct from the private law remedy in torts. There is no reason why these international conventions and norms cannot, therefore, be used for construing the fundamental rights expressly guaranteed in the Constitution of India which embody the basic concept of gender equality in all spheres of human activity.

In view of the above, and the absence of enacted law to provide fro the effective enforcement of the basic human right of gender equality and guarantee against sexual harassment and abuse, more particularly against sexual harassment at work places, we lay down the guidelines and norms specified hereinafter for due observance at all work places or other institutions, until a legislation is enacted for the purpose. This is done in exercise of the power available under Article 32 of the Constitution for enforcement of the fundamental rights and it is further emphasised that this would be treated as the law declared by this Court under Article 141 of the Constitution.

The GUIDELINES and NORMS prescribed herein are as under:- HAVING REGARD to the definition of ‘human rights’ in Section 2(d) of the Protection of Human Rights Act, 1993, TAKING NOTE of the fact that the present civil and penal laws in India do not adequately provide for specific protection of women from sexual harassment in work places and that enactment of such legislation will take considerable time, It is necessary and expedient for employers in work places as well as other responsible persons or institutions to observe certain guidelines to ensure the prevention of sexual harassment of women:

1. Duty of the Employer or other responsible persons in work places and other institutions:

It shall be the duty of the employer or other responsible persons in work places or other institutions to prevent or deter the commission of acts of sexual harassment and to provide the procedures for the resolution, settlement or prosecution of acts of sexual harassment by taking all steps required.

2. Definition:

For this purpose, sexual harassment includes such unwelcome sexually determined behaviour (whether directly or by implication) as:

a) physical contact and advances;

b) a demand or request for sexual favours;

c) sexually coloured remarks;

d) showing pornography;

e) any other unwelcome physical verbal or non-verbal conduct of sexual nature.

Where any of these acts is committed in circumstances where under the victim of such conduct has a reasonable apprehension that in relation to the victim’s employment or work whether she is drawing salary, or honorarium or voluntary, whether in government, public or private enterprise such conduct can be humiliating and may constitute a health and safety problem. It is discriminatory for instance when the woman has reasonable grounds to believe that her objection would disadvantage her in connection with her employment or work including recruiting or promotion or when it creates a hostile work environment.

Adverse consequences might be visited if the victim does not consent to the conduct in question or raises any objection thereto.

3. Preventive Steps:

All employers or persons in charge of work place whether in the public or private sector should take appropriate steps to prevent sexual harassment. Without prejudice to the generality of this obligation they should take the following steps:

(a) Express prohibition of sexual harassment as defined above at the work place should be notified, published and circulated in appropriate ways.

(b) The Rules/Regulations of Government and Public Sector bodies relating to conduct and discipline should include rules/regulations prohibiting sexual harassment and provide for appropriate penalties in such rules against the offender.

(c) As regards private employers steps should be taken to include the aforesaid prohibitions in the standing orders under the Industrial Employment (Standing Orders) Act, 1946.

(d) Appropriate work conditions should be provided in respect of work, leisure, health and hygiene to further ensure that there is no hostile environment towards women at work places and no employee woman should have reasonable grounds to believe that she is disadvantaged in connection with her employment.

4. Criminal Proceedings:

Where such conduct amounts to a specific offence under the Indian Penal Code or under any other law the employer shall initiate appropriate action in accordance with law by making a complaint with the appropriate authority.

In particular, it should ensure that victims, or witnesses are not victimized or discriminated against while dealing with complaints of sexual harassment. The victims of sexual harassment should have the option to seek transfer of the perpetrator or their own transfer.

5. Disciplinary Action:

Where such conduct amounts to mis-conduct in employment as defined by the relevant service rules, appropriate disciplinary action should be initiated by the employer in accordance with those rules.

6. Complaint Mechanism:

Whether or not such conduct constitutes an offence under law or a breach of the service rules, an appropriate complaint mechanism should be created in the employer’s organization for redress of the complaint made by the victim. Such complaint mechanism should ensure time bound treatment of complaints.

7. Complaints Committee:

The complaint mechanism, referred to in (6) above, should be adequate to provide, where necessary, a Complaints Committee, a special counsellor or other support service, including the maintenance of confidentiality.

The Complaints Committee should be headed by a woman and not less than half of its member should be women.

Further, to prevent the possibility of any under pressure or influence from senior levels, such Complaints Committee should involve a third party, either NGO or other body who is familiar with the issue of sexual harassment.

The Complaints Committee must make an annual report to the government department concerned of the complaints and action taken by them. The employers and person in charge will also report on the compliance with the aforesaid guidelines including on the reports of the Complaints Committee to the Government department.

8. Workers’ Initiative:

Employees should be allowed to raise issues of sexual harassment at workers meeting and in other appropriate forum and it should be affirmatively discussed in Employer-Employee Meetings.

9. Awareness:

Awareness of the rights of female employees in this regard should be created in particular by prominently notifying the guidelines (and appropriate legislation when enacted on the subject) in suitable manner.

10. Where sexual harassment occurs as a result of an act or omission by any third party or outsider, the employer and person in charge will take all steps necessary and reasonable to assist the affected person in terms of support and preventive action.

11. The Central/State Governments are requested to consider adopting suitable measures including legislation to ensure that the guidelines laid down by this order are also observed by the employers in Private Sector.

12. These guidelines will not prejudice any rights available under the Protection of Human Rights Act, 1993.

Accordingly, we direct that the above guidelines and norms would be strictly observed in all work places for the preservation and enforcement of the right to gender equality of the working women. These directions would be binding and enforceable in law until suitable legislation is enacted to occupy the field. These Writ Petitions are disposed of, accordingly.

The post Vishaka & Ors vs State of Rajasthan appeared first on B&B Associates LLP.

MALPE VISHWANATH ACHARYA & ORS. …PETITIONER
Vs.
STATE OF MAHARASHTRA & ANR. …RESPONDENT

DATE OF JUDGMENT: 19/12/1997

BENCH : B.N. KIRPAL, M. SRINAVASAN

ACT:

WITH
(WRIT PETITION (C) NOS. 17 AND 824 OF 1996) THE 19TH DAY OF DECEMBER, 1997 Present:

Hon’ble the Chief Justice Hon’ble Mr. Justice B.N. Kirpal Hon’ble Mr. Justice M. Srinivasan F.S. Nariman, Sr. Adv., Mulraj Shah, P.H. Parekh, Jagdish Karia, Subhash Sharma, Ms. Dhun Chapgar, Ms. Sunita Sharma, Nikhil Sakhardande, Sameer Parekh, Advs. with him for the appellants.

M.S. Nargolkar, Sr. Adv., D.M. Nargolkar, S.M. Jadhav, Advs.

with him for the Respondents.

M.N. Shroff, Adv. for K.V. Sreekumar, Adv. for Intervenor.

The following Judgment of the Court was delivered:

With WRIT Petition @ Nos. 17 and 824 of 1996 Kirpal, J.

Lex injusta non est lex’, unjust laws are not laws, is what is being contended by the landlords in their challenge in these appeals, and the connected writ petitions, to the validity of the relevant provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (hereinafter referred to as ‘the Bombay Rent Act’) in so far as it provides that landlords cannot charge rent in excess of the standard rent.

The appellants are landlords or their representatives of different premises in Bombay which have been given on rent to various tenants. They had filed in the High Court of Bombay writ petitions challenging the constitutional validity of Section 5(10) (B), Section 11 (1) and Section 12(3) of the Bombay Rent Act, inter alia, on the ground that the said provisions pertaining to standard rent were ultra vires Articles 14, 19 and 21 of the Constitution anc consequently void. The main challenge to the said provisions was on the ground that the restriction on the right of the Landlords to increase rents, which ha been frozen as on 1st September, 1940 or at the time of the first letting, was no long a reasonable restriction and the said provisions had, with the passage of time, become arbitrary, discriminatory, unreasonable and consequently ultra vires Article 14 of the Constitution. By the impugned judgment the High Court dismissed the writ petitions, inter alia, holding that the object of the Bombay Rent Act was not to provide to the landlord an adequate return on its investment and it was not open to him to claim an increase in the rent by taking into account the increase in the land privies etc. The Court also observed that the writ petitions lacked particulars in order to satisfy the Court that the relevant provisions of the Bombay Rent Act were unreasonable or arbitrary.

The Bombay Rent Act came into force on 13th February, 1938 This Act was meant to be a temporary measure. The original act was enacted only for two years, with a power to the Government to extend the same by notification in this behalf. this Act has been extended from time to time a least on twenty occasions and the present extension remains in force upto 31st March, 1998. Sections 5(10), 7, 9(b) and 11(1)(a) which are being impugned in the present cases read as follows:

“5(10) “Standard rent” in relation to any premises means- (a) Where the standard rent is fixed by the Court and the Controller respectively under the Bombay Rent Restriction Act, 1939, or the Bombay Rents, Hotel Rates and Lodging House Rates (control) Act, 1944, such standard rent; or (b) when the standard rent is not so fixed,- subject to the provisions of section 11,- (i) the rent at which the premises were let on the first day of September 1940, (ii) where they were not let on the first day of September 1940, the rent at which they were last let before that day, or (iii) where they were first let after the first day of September 1940, the rent at which they were first let or (iii-a) notwithstanding anything contained in paragraph (iii), the rent of the premises referred to in sub-section (1A) of section 4 shall, on expiry of the period of five years mentioned in that sub- section, not exceed the amount equivalent to the amount of net return of fifteen per cent, on the investment in the land and building and all the outgoing in respect of such premises: or] (iv) on any of the cases specified in section 11, the rent fixed by the Court;

7. [(1)] Except where the rent is liable to periodical increment by virtue of an agreement entered into before the first day of September 1940, it shall not be lawful to claim or receive on account of rent for any premises any increase above the Standard rent, unless the landlord was, before the coming Standard rent, unless the landlord was, before the coming into operation of this Act, entitled to recover such increase under the provisions of the Bombay Rent Restriction Act, 1939, or the Bombay Rents, Hotel Rates and Lodging House Rates (Control) Act, 1944 or is entitled to recover such increase under the provisions of this Act [either before or after the commencement of the Bombay Rents, Hotel and Lodging House Rates Control (Amendment) Act, 1986].

(2) (a) No person shall claim or receive on account of any license fee or charge for any premises or any part thereof, anything in excess of the standard rent and permitted increase(or, as the case may be, a proportionate part thereto), for such premises if they had been let, and such additional sum as is reasonable consideration for any amenities or other services supplied with the premises.

(b) All the provisions of this Act in respect of the Standard rent and permitted increases in relation to any premises let, or if let, to a tenant, shall mutatis mutandis apply in respect of any license fee or charge and permitted increases and the additional sum mentioned above ].

9.(b) Before making any increase under clause (a), the landlord shall obtain a certificate from the local authority that he was required by it to make or to provide such additions, he was required by it to make or to provide such additions, alterations, improvements or amenities and has completed them in conformity with its requirements.

11.(1) [ Subject to the provisions of section 11A in any of the following cases the Court may, upon an application made to it for that purpose, or in any suit or proceedings, fix the standard rent at such amount as, having regard to the provisions of this Act and circumstances of the case, the Court deems just- Where any premises are first let after the first day of September 1940 and the rent at which they are so let is in the opinion of the Court excessive; or Where the Court is satisfied that there is no sufficient evidence to ascertain the rent at which the premises were let in any one of the cases mentioned in [paragraphs (1) to (iii) of sub-clause (10) of Section 5; or Where by reason of the premises having been ; let at one item as a whole or imparts and at another time in parts or as a whole, or for any other reason, any difficulty arises in giving effect to this Part; or Where any premises have been or are let rent-free or at a nominal rent or for some consideration in addition to rent; or Without prejudice to the provisions of sub-section (1A) of section 4 and paragraph (iii-a) of sub-clause (b) of clause (10) of Section 5, where the Court is satisfied that the rent in respect of the premises referred to therein exceeds the limit of standard rent laid down in the said paragraph (iii-a); or Where there I any dispute between the landlord and the tenant regarding the amount of standard rent, Section 10 provides for an increase in rent where after the commencement of the Bombay Rents, Hotel and Lodging House Rates Control (Amendment) Act, 1986 a landlord is required to pay any fresh rate, cases, charges, tax land assessment, ground rent of land or any other levy on lands and buildings. Section 10 A enables the landlord to make an increase in the rent of the premises by a percentage specified therein in respect of those premises which were let on or before the first day of September 1940. Section 12, inter alia, provides that ordinarily there shall be no ejectment of a tenant if he is ready to pay or is willing to pay the standard rent with permitted increase in the manner provided therein.

From the aforesaid provisions it is clear that in so far as the question of fixation of standard rent is concerned when the Act was enacted the premises fell into two categories; (a) those let on 1st September, 1940 and;

(b) those let for the first time after 1st September, 1940.

According to Mr. Nariman these provisions provide as under:

A. Premises let out before 1st September, 1940.

In respect of (a) i.e. premises let out on or before 1.9.1940. rent paid on that date is the standard rent.

i) and thus the ret is pegged at the rent paid as on 1.9.1940, subject to the increases mentioned below.

ii) Those increases are of three types:

a) those permitted U/s 10A In respect of premised let on or before 1.9.1940; increases are permitted to the extent of 5% to 7.5% over the standard rent for residential premises:

And 7.5% – 12.5% in respect of non- residential premises- This is a one time permitted increase.

b) Increase on account of heavy repairs, additional amenities and repairs required to be carried out under requisition from local authorities; increase in monthly rent is permitted to the extend of 15% per year on the actual cost incurred without interest (Section 9) c) Increase in ground rent, in respect of leasehold premises paid to the government, local authority and statutory authority is allowed to be passed on to the tenant by a proportionate increase in monthly rent (Section 10) d) increase in amount of property taxes after 13.2.1948 is allowed to be passed on to the tenant by a proportionate increase in monthly rent (Section 10) The cost which have to be absorbed and borne by the landlord (without entitlement to pass on to tenants) therefore:

Entire cost of “tenantable” repairs U/s 23, which if the landlord does not carry out, and the tenant carries out the same, the tenant is permitted to deduct and recover the same from the landlord from year to year to the extent of 3 months rent in a year together with interest at the rate of 15% p.a.; under Section 23 as amended in 1987 by Maharashtra Act No. 18 of 1987.

Landlord has had to bear the repair cases from 1.1.1970: first levied under the Bombay Building Repair and Reconstruction Board Act, 1969 replaced by Maharashtra Housing and Area Development Act, 1976 ( MHADA) – to the extent of 10% of the “ratable” value ( 8.5% of actual rent in a year), which in effect works out to one month’s rent in a year.

50% of the total tax levied in lieu of the abolition of the Inami tenures ( w.e.f. 1.4.1971) under Bombay city (Inami & Special tenures) Abolition and Maharashtra Land Revenue Code (Amendment ) Act, 1969; Sections 7,8,10.

In case of leasehold land, the increase in ground rent paid by the landlord to private parties, i.e.

parties other then Government, total authority, statutory authority, etc. the entire increase is to Be borne by the landlord and no part of it can be passed on to tenant. ( This is the effect of Section 10 as amended by Maharashtra Act No. 18 of 1987.) B. Premises let out for the first time after 1.9.1940-such premises fall into 2 categories;

a) Where the landlord is himself the owner of the building in which flats are let to different tenants mostly from 1940-1950.

b) Where the landlord is himself a member of a co-operative housing society and holds the flat as owner member; but has let out the flat to a tenant – the rent will stand frozen at the amount paid on the date of the first letting; by reason of the definition of “standard rent” under Section 5 (10) (b)(iii) of the Act (“where they were first let after the first day of September, 1940 the rent at which they were first let”). These are “ownership flats” in “cooperative society buildings” constructed in the post -1950 period. Almost all constructions after 1950 are on this pattern.

c) In the decades of the fifties, sixties and seventies, the landlord member is invariably out of pocket as the ever increasing amounts of the outgoing and maintenance paid to the Society are invariably more than the actual amount of rent received ( which had been frozen at first letting)/ In the decade of the eighties and the nineties however, the amount of the first letting being considerably higher, this incidence does not occur. Since increase in maintenance charges is absorbed in the amount of rent fixed.

In both classes of cases i.e. the premises let on or before 1st September, 1940 and premises let on or after 1.9.1940, there are no statutory provisions which entitle the landlord to move the Count for an increase in standard rent. The Scheme of the Act negatives any such right (see Section 5 (10) read with Sec. 11(1)(a)).

Mr. F.S. Nariman, learned senior counsel on behalf of the appellants submitted that a legislation which, when enacted, was justified on considerations of necessity and expediency may, with the passage of time, become arbitrary and unreasonable in changing circumstances. In view of the constant escalation in privies due to inflation and corresponding fall in the value of the rupee, ceiling on rentals, such as the one imposed by Section 5 (10)(a) and (b) read with Section 7 and 11 of the Bombay RENT Act, is totally arbitrary and unrealistic and , therefore, unreasonable.

In reply it was submitted by Mr. N.S. Nargolkar, learned senior counsel for the respondents that the writ petitions which were filed by the appellants did not give sufficient details as regards the rents which they were receiving from the tenanted premises. It was, therefore, contended that the claims made were hypothetical as there was no sufficient material to decide the truth of the assertions made by the appellants as regards negative returns from their rented properties. It was further submitted by the learned counsel that the respondent – State has become aware of the rising prices at least since 1986 and this had resulted in Maharashtra Act 18 of 1987 being passed whereby the Bombay Rent Act was amended. It was contended that an important concession which was made by the Amending Act was the introduction of Section 4 (1) A, which provided that the provisions relating to standard rent and permitted increases was not to apply for a period of five years to any premises the construction or reconstruction of which was completed on or after the appointed date, namely, 1.10.1987. This Amending Act also introduced Section 9 which; allowed to landlord to increase the rent for an improvement or structural alteration of the premises, excepting repairs under, Section 23 of the Bombay Rent Act.

Furthermore, it was submitted that the amended Section 6 also entitled to landlord to increase the rent by addition of an amount not exceeding 15 per cent of the expenses incurred on account of special addition or special alterations or additional amenities, improvements or structural alterations. The landlord was further entitled to temporarily increase the rent at a rate not exceeding 18 per cent of the standard rent for special or heavy repairs.

Reference was also made to Section 10 and 10A introduced by the Amending Act of 1986 whereby landlord could increase the rent in case he was required to pay fresh rates, charges etc. to the Government or if he was required to cover the increase in water and electricity charges. The learned counsel reiterated that the State was aware and conscious about the problem of the landlords and was proceeding in the right direction to obviate their difficulties. In this connection the attention of the Court was invited to the constitution of a committee headed by Mr. V.K. Tembe in 1979 for the purpose of preparing a Unified Rent Control Act for the entire State. The State Law Commission had examined the recommendations of the Tembe Committee and submitted its report. The Cabinet Sub- Committee had considered this report as well as the Model Rent Control Bill, forwarded to it by the Central Government, and this had resulted in a new Rent Control Bill being introduced in the upper house of the State Legislature in July, 1993. This bill has been referred to the Select Committee and it was accepted that the reading of the bill clause will be commenced in the State Legislature.

There is considerable judicial authority in support of the submission of learned counsel for the appellants that with the passage of time a legislation which was justified when enacted may become arbitrary and unreasonable with the Bhopal Sugar Industries [ [1964] INSC 38; (1964) 6 S.C.R. 846 ] dealing with a question whether geographical classification due to historical reasons would be valid this Court at page 853 observed as follows:

“Differential treatment arising out of the application of the laws so continued in different regions of the same reorganised State, did not therefore immediately attract the clause of the Constitution prohibiting discrimination. But by the passage of time, considerations of necessity and expediency would be obliterated, and the grounds which justified classification of geographical regions for historical reason may cease to be valid. A purely temporary provision which because of compelling forces justified differential treatment when the Reorganisation Act was enacted cannot obviously be permitted to assume permanency, so as to perpetuate that treatment without a rational basis to support is after the initial expediency and necessity have disappeared.” India and Anr. [(1964) 7 S.C.R. 55] the challenge was to the validity of Section 87 B of the Code of Civil Procedure which granted exemption to the rulers of former India State from being sued except with the consent of the Central.

Government, Dealing with this question it was observed at page 60 as follows:

” If under the Constitution all citizens are equal, it maybe desirable to confine the operation of s.87B to past transactions and not to perpetuate the anomaly of the distinction between the rest of the citizens and Rulers of former Indian States. With the passage of time, the validity of historical considerations on which s. 87B is founded will wear Civil Procedure may later be open to serious challenge.” Commissioner, Hindu Religious & Charitable Endowments Department and Ors. [ [1979] INSC 158; (1980) 1 S.C.R. 368] this Court was called upon to consider the validity of the continued application of the provisions of the Madras Hindu Religious Endowment Act, 1951 in the area which had formerly been part of State of Madras and which had latter become part of the new State Of Mysore ( now Karnataka ) as a result of the State Re- Organisation Act, 1956. In this connection at page 387-388 it was observed by this Court as follows:

An indefinite extension and application of unequal laws for all time to come will militate against their true character as temporary measures taken in order to serve a temporary purpose. Thereby, the very foundation of their constitutionality shall have been destroyed the foundation being that section 119 of the State Reorganisation Act serves the significant Purpose of giving reasonable time to the new units to consider the special circumstances obtaining in respect of diverse units. The decision to withdraw the application of unequal laws to equals cannot be delayed unreasonably because of the relevance of historical reasons which justify the application of unequal laws is bound to wear out with the passage of time. In Broom’s Legal; Maxim ( 1939 Edition, page 97) can be found a useful principle “Cessante Ratione legis Cessat Ipsa Lex”, that is to say, “Reason is the sour of the law, and when the reason of any particular law ceases, so does the law itself”.

This Court in Motor General Traders and Anr. Etc. etc.

S.C.R. 594] had to consider the validity of Section 32B of the Andhra Pradesh Building (Lease, Rent and Eviction) Control Act, 1960. This section provided that the Act would not apply to buildings constructed after 26th August, 1957.

This exemption had continued for nearly a quarter of a century and it was argued that because of shortage of housing accommodation since the section had been valid from the commencement of the Act, therefore, it could not be struck down at any time after it came into force. While of Madhya Pradesh [(1962) Suppl. 2 S.C.R. 257] and Bhopal Sugar Industries Ltd. (supra) it was observed at page 606 as follows “what may be unobjectionable as a transitional or temporary measure at an initial stage can still become discriminatory and hence violative of Article 14 of the Constitution of it is persisted in over a long period without any justification.” Dealing with the contention that the impugned provisions had been in existence for over 23 years and had once been held to be valid by the High Court and therefore this Court should not pronounce upon its validity at this late stage, it was observed at page 614 that “what was justifiable during a short period has turned out to be a case of hostile discrimination by lapse of nearly a quarter of century… We are constrained to pronounce upon the validity of the impugned provision at this late stage because of grab of constitutionality which it may have possessed earlier has become worn out and its unconstitutionality is now brought to a successful challenge”.

Anr. [(1986) 3 SCC 385 ] this Court had to consider the validity of Section 30 (ii) of the Tamil Nadu Buildings (Lease and Rent ) Control Act, 1960 which provided that tenants of residential building being monthly rent exceeding Rs. 400 were exempted from the protection of the Act whereas no such restriction was imposed in respect of tenants of non- residential buildings under the said Act. Holding that the tenants of the residential buildings required greater protection and that there was no justification in picking out the class of tenants of residential buildings paying a rent of more than Rs. 400/- per month and to deny them the right conferred generally on all tenants of buildings, residential or non-residential, and for this reason holding Section 30 (ii) of the Said Act as being violative of Article 14 at page 389 and 390 it was observed as follows:

“It certainly cannot be pretended the provision is intended to benefit the weaker sections of the people only.

We must also observe here that whatever justification there may have been in 1973 when Section 30 (ii) was amended by imposing a ceiling of Rs. 400 on rent payable by tenants of residential buildings to entitle them to seek the protection of the Act, the passage of time has made the ceiling utterly unreal. We are entitled to take judicial notice of the enormous multifold increase of rents throughout the country. Particularly in urban areas. it is common knowledge today that the accommodation which one could have possible got for Rs. 400 per month in 1973 will today cost at least five times more. In these days of universal, day to day escalation of rentals any ceiling such as that imposed by Section 30 (ii) in 1973 can only be considered to be totally artificial and irrelevant today. As held by this court in Motor General Traders v. State of A.P. a provision which was perfectly valid at the commencement of the Act could be challenged later on the ground of unconstitutionality and struck down on that basis. What was once a perfectly valid legislation, may in course of time, i become discriminatory and liable to challenge on the ground of its being violative of Article 14”.

Lastly reference need be made to be made to Synthetics [(1990) 1 SCC 109] where at pages 156-157 it was observed that “restriction valid under one circumstance may become invalid in changed circumstances”. Reliance in support of this view was not only placed on some American decisions but also on the decision of this Court in Motor General Traders case (supra).

Mr. Nargolkar referred to the decision of this Court in and contended that the ratio of the said decision is clearly applicable to the present case. In Sant Lal’s case a two Judge Bench of this Court was called upon to consider the validity of Section 4 of the East Punjab Urban Rent Restriction Act, 1949, which inter alia, provided that in determining the fair rent the rent controller shall fix the basic rent by taking into consideration the prevailing rates of rent in the locality for the same or similar accommodation in similar circumstances during a twelve months prior to 1st January, 1939. It was held in that case that the act in question had been passed in 1949 and it pegged the rent prevalent for similar houses in 1938 and as such it was not unreasonable per se. Even though there was an increase in the rents after the second world war and the partition of the country, it was held that fixing of the rents at the 1938 level could not be regarded as unreasonable when one of the objects of the act was to restrict the increase by providing for certain provisions as to fixation of a fair rent. In that case the main emphasis of the appellants was to assail Section 4 by comparing the said law with the legislation of different states. There was no argument raised or considered, as is being done in the present case, while relying on the decision of a Three Judge Bench in the cases of Rattan Arya, Motor General Traders and Synthetics and Chemicals (supra) that with the passage of time and with the consequent change of circumstances the continued operation of an act which was valid when enacted may become arbitrary and unreasonable.

The aforesaid decisions clearly recognise and establish that a statute which when enacted was justified may, with the passage of time, become arbitrary and unreasonable. It is, therefore, to be seen whether the aforesaid principle is applicable in the instant case. Can it be said that even though the provisions relating to the fixation of standard rent were valid when the Bombay Rent Act was passed in 1947 the said provision, as amended, can still be regarded as valid now? Reports of different committees and resolutions of the minsters have been placed on record in an effort to show that these official agencies have, since over the last two decades, themselves felt that increase in rents was called for. The correctness or the authenticity of this material has not, in any way been doubted an therefore we see no reason as to why this cannot be taken into consideration in order to determine whether the submission of Mr. Nariman merits acceptance. Reference may now be made to some of this material:-

1. A rent act inquiry committee of 1977 commonly known as Tembe Committee, was constituted by the Government of Maharashtra which in its report submitted in the same year recognised that the pegging down of the rents to a date nearly thirty years back (at that time) had deprived the property owners of a reasonable return on their properties commensurate with the increase in the cost of living and the cost of building materials. It recognised that there were several small property owners all over the State who had invested the life time savings in building houses partly for the residence and partly for being let out in order to assure a steady income in old age. As a result of rent control act, the return they got is inadequate even for subsistence because of the step increase in the cost of living. In para 6 (10) it observed that ” having regard to the general increase in the cost of living, the Committee is of the view that there is a case for some general increase although not to the extent claimed by the property owners as the period of twenty years has elapsed since the last increase was allowed.

2. The Maharashtra State Law Commission which submitted its report in the year 1977 recommended the increase in the rents in the following terms “the commission, feels that there is immediate need for reasonable increase in standard rent.”

3. In the 12th report of Maharashtra State Law Commission 1979 on the rent control legislation para 91 dealing with this aspect reads as follows:

” The Commission does not want the rents to be static for long. The inflationary trend reflected by the rising consumer price index numbers at all centers in the State makes it imperative to make an objective assessment of the situation at regular intervals so that the remedial action may be possible by periodical variation in rents according as the situation demanded. Suggestions for such periodical survey was also made to the Commission by various representatives in evidence. The Commission by various representatives in evidence. The Commission feels that such a periodical survey would be much helpful in maintaining the balance between the landlord and the tenant. The possibility of the inflationary the landlord and the tenant. The possibility of the inflationary trend receding in future – though such possibility is not easy to entertain – cannot be totally ruled out, in which case the rents could be brought down to as reasonable level. if on the other hand, the inflationary trend continues unabated, then a reasonable rent increase may have to be resorted to . it is true that the Govt. can always take stock of the situation and come up with an appropriate measure to meet the situation at any given time. But the Commission does not want to leave the matter to an action being thought of by the Government. The Commission thinks that it would be proper to make a specific provision in the unified Act which would cast an obligation on the Government to hold periodical reviews and to take effective actions for rent variations according as the circumstances may warrant.” The Commission further stated:

” In big cities like Bombay, a large number of slums have come into existence. if the rigorous of the Rent Act had not been there, new houses would have been constructed. At present 30 lakhs of people in the city of Bombay stay in slums and 11/2 lakh on pavement.

If new buildings had been constructed, people who stay in slums today might have been in a position to get some decent accommodation.

It was further stated “The increase in the standard rent must be considered from the point of view of the Consumer Price Index.

” It was pointed out to the Commission that 46 percent of the lands belong to low income group, 27 percent belong to middle income group, and only 25 per cent belong to the higher income group. These figures will indicate that 75 per cent of the so-called landlords are really people who depend upon the rent of the property for their livelihood. To designate them as ‘landlords’ itself is undesirable.

When one considers the financial position of the tenants, compared to the positions in 1940s, one clearly sees that the monthly income of these tenants has gone up from 100 to 400 at least. However, there has not been a proportionate increase in the rents.”

4. A Report of Economic Administrative Reforms Commission on Rent Control (commonly known as L.K. Jha Committee) was presented to the Government of India in September 1982. In paragraph 51 of the said report, it stated as follows:

” We now turn to the problem of existing tenancies. Many of these are very old and the rents were fixed a few decades ago. These old an frozen rents bear little relation to the present day maintenance costs, or to the current returns from alternative investments, or to the prevailing market rents in respect of new accommodation. In the case of new construction we have suggested that the periodical revision of rents should be based on a partial neutralisation of the effects of inflation. Applying the same principle to existing tenancies where rents have remained frozen for at least 5 years, what needs to be done is to update those rents by neutralising 50 per cent of the inflation which has taken place from the time of initial determination of those rent upto the present time.” The report further reads as under:

“Similarly in the case of existing tenancies, all that needs to be done is to provide a formula for updating the old frozen rents, and thereafter periodically revising them.”

5. On 21/22.5.1987 a conference of the Housing Ministers of all the States was held to discuss various problems.

Decisions taken at that Conference were recorded in the form of resolutions. With regard to Rent Control the unanimous resolution at the conference of Housing Ministers reads as under:

“RESOLUTION NO. IV RENT CONTROL 4.1. Realising the existing Rent Control Laws, have resulted in:

(i) disincentive to further investment in construction of houses for rental purposes;

(ii) neglect of timely repairs and maintenance of existing rental housing stock; and (iii) debilitating the resources of municipal bodies by virtually freezing their income from property taxes which are based on rateable values.

4.2 This conference urges upon the Government of India to formulate and communicate to the State Governments for necessary action suitable guidelines as soon as possible during the current year for their consideration so as to provide for the expeditious amendment of Rent control Laws wit a view to providing for:

(a) a reasonable return on investment in housing which will be comparable to, if no more favourable then, the return from and other avenues of investment, (b) periodical upward revision of rents to neutralise the crosion in the real value of rents (c) enabling expeditious resumptions of possession of a dwelling units for self occupation by a landlord who is the owner of only one such dwelling unit;

(d) delinking of municipal property taxation from reteable values to the extent they are regulated by the Rent Control Laws, (e) Leave and licence system, (f) period tenancy, (g) protection to tenants from arbitrary eviction, (h) exemption from the provisions of the Act of new construction less than 5 years, (i) obviating delays in ligation by laying down suitable expeditious procedures, only one appeal to a higher authority instead of multi- level appeals constitution of tribunals to deal with disputes arising under the Act and barring the jurisdiction of Civil Court Act. ”

6. In the Letter dated 24.7.1987 from the Ministry of Home Affairs Government of India while communicating President’s assent to 1987 amendment to the Bombay Rent Act it was stated as follows:

“It is suggested that the State Government may make subsequent amendments to the principal Act preferably within next 6 months by incorporating the following recommendation of the above conference ( Housing Ministers conference).

(a) Periodical upward revision of rents to neutralise the erosion in the real value of rents.”

7. A conference of Chief Ministers of all states was held at New Delhi in 1992. One of the topics discussed pertained to static rents and the problems arising therefrom. A unanimous recommendation of this conference made on 9.3.1992 in this regard was as under:

” 4.3 The frozen rents have led to emergence of practices like key money. this apart from creating a block market in rental housing, the Act has reduced the accessibility of low income groups to rental housing, as they cannot afford to pay large deposits for rented premises.”

4.4 The widening divergence between the interests of landlords and tenants has not only led to increased litigation under Rent Control Acts ( the rent control cases make for a majority of the cases in courts) but also to increased crimes.

A large number of criminal cases have their origin in disputes over rented properties.” The recommendation further reads:

” The important principle is that while the tenant will enjoy security of tenure is controlled premises, he should agree to pay a rent that provides adequate return on investment and provides for proper maintenance and taxes, so that he does not enjoy an unfair advantage over the landlord.” A perusal of the aforesaid extracts of reports and resolutions clearly demonstrates that since the last two decades the authorities themselves seem to be convinced that the pegging down of the rents to the pre war stage and even thereafter, is no longer reasonable. Unfortunately apart from lip service little of note has been done. Even the Rent control Bill introduced in 1993 has not yet become law.

It was submitted by Mr. Nariman that even after the promulgation of the Rent Control act 1948 during the 1950s and 1960s there was not much escalation in the market rents.

The rents which were determined during this period has become the standard rent by virtue of the definition in Section 5 (10) of the Bombay Rent Act. In the last few years, due to rapid inflation there has been step escalation of the expenses which the landlords have to incur without there being any corresponding increase in the rents. This has resulted, it was submitted, in the buildings not being repaired as the expenses involved made it uneconomical for the landlords to undertake this task.

As already noticed it had been contended by MR.

Nargolkar that realising the need being there for providing some relief to the landlords amendments amendments were made in the Bombay Rent Act in 1987. it was submitted that as a result of these amendments the landlords will be able to charge more rents and it cannot now be said that the Rent Control Act is not valid.

It is true that some amendments were made in 1987 which clearly indicate that the State Legislature was conscious of the fact that there was a need to increase the standard rent. The question, however, is whether the exercise which was undertaken was merely cosmetic or did it bring about any tangible increase in the standard rent. section 4 (10)A was incorporated which provides that the provisions relating to standard rent would be inapplicable for a period of five years in respect of premises constructed or reconstructed after the appointed date, namely,. 1.10.1987. Once this ‘holiday’ comes to an end the tenant would be entitled to get the standard rent fixed. The amendment of 1987 does not do away with the principle of pegging down of the rent at a rate when the premises are first let out. Increase in the cost of maintenance or fall in the value of money or the rise in the cost of index does not entitle a landlord to any increase. There has been no other material change in the act in this behalf. What the Amending Act of 1987 has done is merely to consolidate and rearrange the sections of the earlier act. Provisions contained in the present Sections 9, 10 and 10A were found earlier, prior to the amendment in 1987, in Sections 10, 10A, 10AA, 10AAA, 10C, 10D, 10E, and 10G. The only change introduced in these sections was that the rate of return on the expenses incurred for additional amenities for heavy repairs has been increased. The following tabulated comparative statement of the relevant provisions before and after 1.10.1987 will bring out the effect of the alteration, if any.

Tabulated Cooperative Statement ———————————————————— After Amending Before Amending Act 1987 Act of 1987 ———————————————————— S.9 (1) increase in rent on Identical provision in S.9 account of structural which is there in the original alterations or improvement Act since 1948.

made with Tenants’ written consent.

S.9 (2) increase on account of Similar provision in S.

10D(1) special additions or additional which was introduced in 1953.

amenities.

S.9(3) increase on account of Similar provision in S.

10D(4) additions, improvements or which was introduced in 1953.

additional amenities.

f S.9 (3)(a)- Temporary increase Similar provision in S.

10E is rent in account of special introduced in 1964.

or heavy repairs.

S.10- Increase in or fresh Similar provision in S.10 rate, cess, charge or tax (since inception of Act) S.10A paid to local authority. ( introduced in 1949), S.10AA ( introduced in 1953) S.10AAA (introduced in 1962).

S.10 increase in rent on S. 10G introduced in 1973 account of increase in ground permitted recovery of one rent paid to Govt. local third of increase.

authority or statutory authority.

During the course of his arguments Mr. Mr. Nariman filed a statement indicating the financial impact of the rent restriction provisions on the assumption that the monthly rent on 1.9.1940 was Rs. 100. This statement takes into account the permitted increases incorporated in the Act including that of 1987 from time to time. The submission was as follows:

Assumption: that monthly rent on 1.9.1940 was Rs. 100 (exclusive of Municipal taxes) This is an accurate approximate average of rents paid in September 1940 in respect of flats of large areas situated in good localities.

1(a) From September 1940 till 13.21948, when the Rent Act came into force, the landlord continued to retain Rs. 100/- since the burden of tenantable repairs was on the tenant under Section 108 (m) of the T.P. Act.

(b) After 13.2.1948 this burden has been transferred to the landlord (section 23): From 1.10.1987 upto date, the tenant is permitted to carry out ” tenantable repairs” and recover the entire cost with interest at 15% per annum by deducting an amount equivalent to 3 months rent in a year.

(c) Hence invariably the landlord gets 25 per cent less than Rs.

100/- (Rs. 1200/- per year reduced to Rs. 900/- per year) as “tenantable repairs” are necessarily recurring in old buildings, and the cost of tenantable repairs keeps rising.

2. From 1.1.1970 onward the landlord has had to bear continuously ten per cent of “rateable value” (equivalent to 8.5% of the yearly rent) as “repair cess” i.e. one month’s rent in a year.

3. Thus in case of all buildings constructed prior to 1.1.1970- (date of levy of compulsory repair cess – they constitute majority of buildings in all urban areas the landlord retains only 8 months rent in hand every year as against 12 months rent he was getting in September 1940:- (a)) this is without taking into consideration further inroads as a result of ground rent paid in respect of private leasehold lands where increase in ground rent is not permitted to be passed on effect of Section 10) (b) this is also without taking into ‘account ever increasing outgoings and maintenance charges paid to co-operative Housing Societies by landlord members: not permitted to be passed on to tenants.

4. Meanwhile all this is further accentuated by the fall in the value of the rupee and rise in the wholesale price index which has totally eroded the amount receivable as rent in the hands of the landlord.

(A) taking base in 1940 at Rs.

100/- the value of the rupee in 1996 was only Rs. 1.5 in 1996 (B) in 1940 the wholesale price index was 13.2. This has risen to 876 by 1996 66 time (C) Value of one rupee silver coin of 1940, as on the 5th Dec. 1992 was Rs. 44/- (D) Price of silver on 30.12.1939 was Rs. 52 per kg. It rose to Rs.

6945 per kg. On 31.12.1996, that is, by 130 times.

5. Thus if in 1940 the landlord was getting Rs. 1200/- per year as rent (exclusive of Municipal taxes in 1996 or 1997 he is getting Rs. 800 per year and in terms of value of rupee in 1940, this amount of Rs.

800 works out to only Rs. 12.12 (800/66)- against Rs. 1200 he was getting in 1940.” To put simply in a tabulated from the following is the comparative position of rent between 1940 and 1997 and the amount retained by the landlord Per Month ———————————————————— 1940 1997 ———————————————————— 1) Rent per month inclusive of Municipal Taxes (Rs.) 100 170.09 2) Amount of Municipal Taxes to be paid by Owner (Rs.) 21.54 103.47 3) Amount of repair cess to be paid by Owner (Rs.) @ 10% of rateable value Nil 7.62 4) Amount retained by owner after payment of Municipal taxes & repair cess (Rs.) 78.46 64.00 N.B. No correction has been made for:- 1) The inflation/fall in purchasing value of the rupee which was about 66 times between 1940 & 1996 and the value of Rs. 100 in 1940 has come down to Rs. 1.5 in 1996.

2) Further in 1940 the tenants could not deduct any amount towards repairs but under Section 23 of the Rent Act in 1997 they can deduct 3 months Rent per year.

The aforesaid illustration, which has not been seriously disputed, clearly brings out the arbitrariness of the standard rent provisions contained in the Bombay Rent Act. It is true that the aforesaid illustration has references to the monthly rent of Rs. 100 as on 1.9.1940 and does not relate to the premises which are let out after the Act had come in force. As far as Section 5 (10) is concerned the standard rent of the premises let out after 1.9.1940 is that rent at which the premises were fist let.

Even so with the rapid increase in the expenses for repair and other outgoings and the decreasing net amount of rent which remains with the landlord, clearly shows that the non provision in the Act for reasonable increase in the rent, with the passage of time, is leading to arbitrary results.

This is also demonstrated from the facts in the case of petitioner no.3 who owns Unit No. A-18 on the first floor admeasuring 808 sq. ft. in the property known as Shri Ram Industrial Estate situated at 13 J.D. Ambedkar Road, Mumbai.

The said building belongs to a cooperative society and unit no.A-18 was given on lease and license basis b an agreement dated 23rd August, 1964 by the appellant to Lokmitra Sahakari Printing and Publishing Society ltd. on a monthly compensation of Rs. 686.80 per month. Liabilities of repairs is on the appellant and according to it this amount received in respect of the said unit by the appellant is Rs. 563 . 65 per month inclusive of all taxes. Out of this sum the appellant no. 3 has to pay Rs. 216.33 as municipal taxes leaving a balance of Rs. 320.22. From this amount the society outgoings is Rs. 250 per month, leaving a balance of only Rs. 70.20 per month with the said appellant. Another instance which has been given is that of appellant no.4 who owns a property known as Ram Mahal situated at 8, Dinshaw Vachha Road, Mumbai. The said building has 20 residential flats and the building was purchased by appellant no. 4 in the year 1955, although it had been constructed prior to 1940, Flat no. 15 on the 5th floor of the said building had been let out by the previous owners to M/s Bennet Coleman & Co. Ltd., who were the sitting tenants at the time when the property was purchased. The flat measures 1710 sq. ft. and monthly rent for the same is Rs. 460 per month inclusive of permitted increase and repairs. According to the appellant the income by way of rent has remained constant while the expenditure has been increased and the total gross rent of the building which he receives is Rs. 1,72,032 per annum while it incurs an annual expenses of Rs. 1,93,245 consisting of BMC taxes, repairs, ground rent, maintenance charges inclusive of small electricity bill and the insurance premium. He is, therefore, suffering a loss of Rs.

21,213 every year. It is not necessary to examine the correctness of these details except to note that what was reasonable on 1st September, 1940 or in 1950s or in 1960s can no longer be regarded as reasonable at this point of time.

That the tenants are, by and large, now getting an unwarranted benefit or windfall can also be illustrated by taking an example of hypothetical tenant, i.e., an Assistant in the Government of India posted at Bombay in the year 1948. At that time the pay scale of the Assistant was Rs.

160-10-300-15-450+20% H.R.A. + Rs. 15.50 C.C.A. On the basis that he was drawing the maximum of scale, his total monthly emoluments would be Rs. 485.50 and if he had in 1948 taken premises on rent at Rs. 100/- per month, he would be paying approximately 20% of his total emoluments by way of rent, without taking into consideration any deduction for repairs.

That Assistant in 1997, after the report of 5th pay Commission, would get a maximum basic salary of Rs. 9000+ 30% H.R.A.+ Rs. 200 P.M. as CCA making the total emoluments of Rs. 11900/- P.M. After taking into consideration the 1987 increase in rent, he would be paying about Rs. 170 p.m. in respect of the same premises instead of Rs. 100/- which he was paying in 1948. This enhanced rent, would, however, represent only 0.9% of his salary. With the passage of time, the percentage of rent which would be paid by that hypothetical tenant would have gone down from 20% of his total salary to only 0.9% and this wold be the case of most of the tenants as we can take judicial notice of the fact that from 1948 till now, incomes have increased considerably, whereas the rent has increased only from Rs.

100/- p.m. to Rs. 170/- p.m.

On the other hand, in the aforesaid example, the hardship to the landlord is that it was only in 1940 that he had agreed to accept rent of Rs. 100 p.m. That was the real income from rent which he had agreed to receive. Now with the increase in taxes etc., he gots only Rs. 54 p.m. whereas n 1940, he got Rs. 100 minus Rs. 21.54 (municipal tax ) i.e.

Rs. 78.46. So not only is he getting lesser amount in hand but in terms of real value, after taking inflation into account, he is getting only a pittance. For Rs. 100 p.m. of gross rent which he was getting in 1940, he now in 1997 gets a gross rent of about Rs. 170 which in real money terms, after taking the inflation into account, will be only about Rs. 2/- P.M. of the 1940 value. Had the Rent Control Act not been in force the landlord today may have been able to get todays equivalent of Rs. 100 of 1940 as rent i.e. about Rs.

6650 p.m.

It is true that one of the reasons for enacting the rent control legislation is to prevent exploitation of the tenants by the landlords. One of the protections which has been provided to the tenants in the rent legislation throughout the country is the concept of standard rent. Each State has definite laws with regard thereto. In some case, like in Delhi, the rent control act is not applicable if the rent is Rs. 3500/- or more while in the other states rent control act is not applicable to certain categories of persons. In the Bombay Rent Act, with which we are concerned, the standard rent as on 1st September, 190 or the first rent of the premises which was let out thereafter is the standard rent. The paging down of rent, coupled with the inability of the landlord to evict the tenants, has given rise to unlawful tendencies. In the statement of objects and reasons annexed to the L.A. Bill No. 79 of 1986 introduced in the Maharashtra Legislature providing for amendment to the Bombay Rent Control Act with regard to clause 3 it was, inter alia, stated as follows:

” The freezing of standard rent prevailing on the 1st September, 1940 has deprived the landlords of getting reasonable and adequate return to undertake maintenance and repairs to the old buildings.

Despite the penal provisions in the Act for charging any premium from a tenant, such freezing of rent results in charging ‘pugree” or deposit or similar illicit payment which are widely prevalent. The con-structio of new tenements on rental basis has considerably caused with the result that low and middle income groups are not getting premises on rent…………… ” (emphasis added) Notwithstanding the fact that the State Legislature was conscious of the illegal payments which are made because of the rent restriction law no effective steps have been taken so far to strike a balance between the interests of the landlords and the tenants.

It is true that whenever a special provision, like the rent control act, is made for a section of the Society it may be at the cost of another section, but the making of such a provision or enactment may be necessary in the larger interest of the society as a whole but the benefit which is given initially if continued results in increasing injustice to one section of the society and an unwarranted largess or windfall to another, without appropriate corresponding relief, then the continuation of such a law which necessarily, or most likely, leads to increase in lawlessness and undermines the authority of the law can no longer be regarded as being reasonable. Its continuance becomes arbitrary.

The Legislature itself, as already noticed hereinabove, has taken notice of the fact that puggrie system has become prevalent in Mumbai because of the rent restriction act.

This Court was also asked to take judicial notice of the fact that in view of the unreasonably low rents which are being received by the landlords, recourse is being taken to other methods to seek redress. These methods, which are adopted are outside the fore corners of the Law and are slowly giving rise to a state of lawlessness where, it is feared, the courts may become irrelevant in deciding disputes between the landlords and tenants. This should be a cause of serious concern because if this extn judicial back- lash gathers momentum the main sufferers will be the tenants, for whose benefit the Rent Control Acts are framed.

In so far as social legislation, like the rent control act is concerned, the law must strike a balance between rival interests and it should try to be just to all. The law ought not to be unjust to one and give a disproportionate benefit or protection to another section of the society.

When there is shortage of accommodation it is desirable, nay, necessary that some protection should be given to the tenants in order to ensure that they are no exploited. At the same item such a law has to be revised periodically so as to ensure that a disproportionately larger benefit them the one which was intended is not given to the tenants. It is not as if the government does not take remedial measures to try and offset the effects of inflation. In order to provide fair wage to the salaried employees the government provides for payment of dearness and other allowances from time to time. Surprisingly this principle is lost sight of while providing for increase in the standard rent-the increase made even in 1987 are not adequate, fair or just and the provisions continue to be arbitrary in todays context.

When enacting socially progressive legislation the need is greater to approach the problem from a holistic perspective and not to have a narrow or short sighted parochial approach. Giving a grater than due emphasis to a vocal section society results not marly in the miscarriage of justice but in the abdication of responsibility of the legislative authority. Social Legislation is treated with deference by the Courts not merely because the Legislature represents the people but also because in representing them the entire spectrum of views is expected to be taken into account. The legislature is not shackled by the same constraints as the courts of law. But it’s power is coupled with a responsibility. It is also the responsibility of the Courts to look at legislation from the alter of Article 14 of the Constitution. This article is intended, as is obvious from its words, to check this tendency; giving under performance some over others.

Taking all the facts and circumstances into consideration we have no doubt that the existing provisions of the Bombay Rent Act relating to the determination and fixation of the standard rent can no longer be considered to be reasonable. The said provisions would have been struck down as having now become unreasonable and arbitrary but we think it is not necessary to strike down the same in view of the fact that the present extended period of the Bombay Rent Act comes to an end on 31st march, 1998. The government’s thinking reflected in various documents itself shows that the existing provisions have now become unreasonable and, therefore, require reconsideration. The new bill is under consideration and we leave it to the legislature to frame a just and fair law keeping in view the interests of all concerned and in particular the resolution of the State Ministers for Housing of 1992 and the National Model law which has been circulated by the Central Government in 1992.

We are not expressing any opinion on the provisions of the said Model law but as the same has been drafted and circulated amongst all the States after due deliberation and thought, there will, perhaps, have to be very good end compelling reasons in departing from the said Model Law. Mr.

Nargolkar assured us that this Model law will be taken into consideration in the framing of the proposed new Rent Control Act.

We, accordingly, dispose of these appeals without granting any immediate relief but we hold that the decision of the High Court upholding validity of the impugned provisions relating to standard rent was not correct. We however refrain from striking down the said provision as the existing Act elapses on 31.31998 and we hope that new Rent Control Act will be enacted with effect from 1st April, 1998 keeping in view the observations made in this judgment in so far as fixation of standard rent is concerned. It is, however, made clear that any further extension of the existing provisions without bringing them in line with the views expressed in this judgment, would be invalid as being arbitrary and violative of Article 14 of the Constitution and therefore of no consequence. The respondents will pay the Costs.

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