Skip to content


Sales Tax Officer Vs. Indian Wood Products Co. Ltd. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtDelhi High Court
Decided On
Case NumberLetter Patent Appeal Nos. 71 and 72 of 1968
Judge
Reported inILR1971Delhi147; [1972]30STC132(Delhi)
ActsCentral Sales Tax Act, 1956 - Sections 3; Constitution of India - Article 116
AppellantSales Tax Officer
RespondentIndian Wood Products Co. Ltd.
Cases ReferredSee Pragu Toots Corporation v. C. V.
Excerpt:
(i) central sales tax act (1956) - section 3(a) &, 9--tax payable--goods manufactured at u.p. and consigned to delhi--sills raised from delhi--situs of--assessed assessed at u.p.--whether can be assessed again at delhi.; that under section 9 of the central sales tax, the tax payable by any dealer under the said act on sales of goods effected by him in the course of inter-state trade or commerce irrespective of the fact whether such sales fell within clause (a) or clause (b) of section 3, shall be levied by the government of india and a tax so levied, shall be collected by the central government in accordance with the provisions of sub-section (2) in the state from which the movement of the goods is commenced. it is, thereforee, obvious that the sales tax under the sales tax act has.....v.s. deshpande, j. (1) the english phrase 'he will never set the thames on fire' (corresponding in french and german to 'he will never set the seine on fire' and 'he will never set the rhine on fire') to denote the highly improbable failed to find a parallel in india when in march 1968 the newspapers carried the sensational headlines 'ganga on fire'.(2) when the barauni refinery was established near the town of monghyr on ganga in 1964, it was required by section 12(1) of the factories act, 1948, to make effective arrangements for the disposal of wastes and effluents arising in the manufacturing process at the refinery. the scheme brd 39 prepared by it to. discharge the effluents into the ganga was approved by the bihar government under section 12(2) thereof. the refinery followed the.....
Judgment:

V.S. Deshpande, J.

(1) The English phrase 'He will never set the Thames on fire' (corresponding in French and German to 'He will never set the Seine on fire' and 'He will never set the Rhine on fire') to denote the highly improbable failed to find a parallel in India when in March 1968 the newspapers carried the sensational headlines 'Ganga on fire'.

(2) When the Barauni Refinery was established near the town of Monghyr on Ganga in 1964, it was required by section 12(1) of the Factories Act, 1948, to make effective arrangements for the disposal of wastes and effluents arising in the manufacturing process at the Refinery. The scheme Brd 39 prepared by it to. discharge the effluents into the Ganga was approved by the Bihar Government under section 12(2) thereof. The Refinery followed the said scheme of discharging its effluent into the Ganga. On 3rd March 1968 the water -supply to Monghyr town was suspended as oil was noticed on the surface of the water near the intake pumping sets. A fire was reported near the barge which carried the pumping sets. Again on the 6th of March 1968 there was a minor fire near the river bank. There were also reports of five or six deaths and the hospitalization of many people as a result of water pollution. The working of the Refinery was, thereforee, stopped from 7th of March 1968 for sometime. Meanwhile experts made inquiries and found accumulation of oil content in the effluent matter in the sandy part of the river bed beyond the discharge point. As a consequence the effluent from the Refinery instead of discharging into the river from the effluent pipe, flowed through a channel of its own before joining the main stream. Steps were then taken to stop the flow of the effluent through the existing channel and provide an effective flow direct from the discharge point into the river. After this was done, the Refinery started functioning again. Since it was found necessary to determine what actually happened and allocate responsibility and devise steps to guard against such events in future, the Central Government appointed a Four-Member Commission (including a retired Judge of Patna High Court as Chairman) under the Commissions of Inquiry Act, 1952 (hereinafter called the Act) by the folowing notification:- 'NOTIFICATION New Delhi 20th April 1968, 31st Chaitra 1890 S. Resolution No. 22(13)/68-OR.-The Government of India have decided to set up a Commission under the Commissions of Inquiry Act, 1952, consisting of the following : Chairman Sri Manohar Pershad Members Sri N. V. Modak Sri K. R. Bhide Dr. M. G. Krishna.

(3) The terms of reference of the Commission will be as follows : (i) to determine the correct facts of the contamination with oil of the river Ganges near the downstream of the Barauni Oil Refinery during the last week of February and the first week of March 1968 (or earlier); (ii) to determine to what extent the Barauni Oil Refinery has been responsible for the happenings; (iii) to recommend the steps that must be taken to prevent the recurrence of such happenings in refineries in the future; (iv) to advise on whether there has been any negligence or carelessness on the part of the refinery management and staff in the discharge of their prescribed duties; (v) arising out of (iv) : to recommend further action, if any, that must be taken; (iv) to report on the loss or damage to the public caused by the pollution of the water and to recommend what, if any, restitution the Indian Oil Corporation should make in that connection to those adversely affected; and (vii) generally, to report on any other matter that is relevant in the opinion of the Commission.

(4) The Commission will be assisted by special consultants whereever necessary and desired by it. The Commission will devise its own procedure. It may call for such information and take such evidence as it may consider necessary. The Ministries/Departments of Government of India will furnish such information and render such assistance as may be required by the Commission. The Government of India trust that the Government of Bihar and all others concerned will extend their fullest co-operation and assistance to the Commission.

(5) The Commission will submit its report within a period of three months. Order Ordered that the Resolution be published in the Gazette of India in Part I, Section 1..'........ sd/- E. N. Mangatrai, Special Secretary to Government of India.' Under section 12(2)(b) of the Act, the Central Government has made the Central Commissions of Inquiry (Procedure) Rules, 1960 which are as follows :- 'G.S.R. 531, dated the 7th May, 1960.-In exercise of the powers conferred by section 12 of the Commissions of Inquiry Act, 1952. the Central Government hereby makes the following rules, namely :- 1. Short title and application.-These rules may be called the Central Commissions of Inquiry Procedure) Rules, 1960. (2) They shall apply to Commissions of Inquiry appointed by the Central Government. 2. Notice to persons for giving evidence.-(1) The Commission shall, as soon as may be after its appointment,- (a) issue a notice to every person, who in its opinion should be given an opportunity of being heard in the inquiry, to furnish to the Commission a statement relating to such matters as may 'be specified in the notice; (b) issue a notification to be published in such manner as it may deem fit, inviting all persons acquainted with the subject-matter of the inquiry to furnish to the Commission a statement relating to such matters as may be specified in the notification. (2) Every statement furnished under sub-rule (1) shall be accompanied by an affidavit in support of the facts set out in the statement sworn by the person furnishing the statement. (3) Every person furnishing a statement under sub-rule (1) shall also furnish to the Commission along with the statement a list of the documents, if any, on which he proposes to rely and forward to the Commission, wherever practicable, the originals or true copies of such of the documents as may be in his possession or power and shall state the name and address of the person from whom the remaining documents may be obtained. 3. Recording of evidence.-(1) The Commission shall examine all the statements furnished to it under rule 2 and if, after such examination the Commission considers it necessary to record evidence it shall first record the evidence, if any, produced by the Central Government and may thereafter record in such order as it may deem (a) the evidence of any person who has furnished a statement under rule 2 and whose evidence the Commission, having regard to the statement, considers relevant for the purpose of the inquiry; (b) the evidence of any other person whose evidence, in the opinion of the Commission, is relevant to the inquiry. (2) If, after all the evidence is recorded under sub-rule (1), the Central Government applies to the Commission to recall any witness already examined or to examine any new witness, the Commission shall, if satisfied that it is necessary for the proper determination of any relevant fact so to do, recall such witness or examine such new witness. 4. Persons likely to be prejudicially affected to be heard.-If, at any stage of the inquiry, the Commission- (a) considers it necessary to inquire into the conduct of any person; or (b) is of the opinion that the reputation of any person is likely to be prejudicially affected by the inquiry, the Commission shall give to that person a reasonable opportunity of being heard in the inquiry and to produce evidence in his defense. 134 5. Right of cross-examination and representation by legal practititioner. -The Central Government, every person referred to in ruie 4 and with the permission of the Commission, any other person whose evidence is recorded under rule 3- (a) may cross-examine a witness other than a witness produced by it or him; (b) may address the Court; and (.c) may be represented before the Commission by a legal practitioner or, with the consent of the Cornmission, by any other person.

(6) Procedure in matters not provided in the rules.-The Cornmission shall have the power to regulate its own procedure in respect of any matter for which no provision is made in these rules.' The Commission called for statements from Monghyr Municipal Board, Barauni Refinery, Jamalpur Railway Workshop and the Bihar Government under rule 2(l)(a). All these parties filed statements supported by affidavits on the subject-matter of the inquiry. The affidavit of the Refinery was signed by the General Manager. The petitioners Mr. G. S. Harnal and Mr. C. D. Ayyar were then the Deputy General Manager and Chief Electrical Engineer respectively. Questionnaire was served on them also by the Commission and answers to the Questionnaires were also submitted by the petitioners in the beginning of April 1969. The Refinery was represented by a lawyer who fully presented the Refinery's point of view. On 14th April 1969, the lawyer for the Refinery took the plea that one of the Members of the Commission, Shri K. R. Bhide, had approved the scheme Brd 39 as the Chief Engineer, Bihar Government. As the vulnerabiljty of the scheme was on the anvil before the Commission. Shri Bhide was disqualified from being a judge in his own cause. The Commission disallowed the objection on the ground that it was taken for the first time at the fag-end of the inquiry when the Commission was hearing final arguments and after the arguments for the Monghyr Municipality and the Bihar Government had been concluded. They also observed that the Refinery knew full-well that Shri Bhide had given the sanction to the scheme Brd 39 and if it had any objection to his sitting as a Member of the Commission, the objection should have been raised before the inquiry began. But the Refinery participated in the inquiry lasting for one 'year without any such objection. The Commission further observed that it is only a fact-finding commission and Shri Bhide was sitting as an expert on the Public Health Engineering aspect. His participation as such could not conceivably amount to his having any personal interest against the Refinery.

(7) In July 1969 the Commission submitted its report to the Central Government, inter alia, finding on term No. (iv) of the reference that the three top officers of the management of the Refinery, namely, Shri Balwant Singh, the ex-General Manager of the Refinery, Shri G. S. Harnal, the Deputy General Manager and Shri C. D. Ayyar, the Chief Electrical Engineer, failed to ensure the efficient treatment of the effluent and to discharge it in the proper manner into the river. The Barauni Refinery is a unit of the Indian Oil Corporation which is a Government company. Under Article 144 of the Articles of Association of the said Corporation, the President may issue such directive or instructions as may be considere,d necessary in regard to the finance, conduct of business and affairs of the comapny, and the company shall give immediate effect to the directives or the instructions so issued. Acting under this power, the President issued a directive to the Corporation to hold a departmental inquiry against these three top officers of the management of the Barauni Refinery. Accordingly, chargesheets were served on them.

(8) The petitioners have by these writ petitions (Civil Writs 1042 and 1353 of 1970) challenged the validity of the whole proceeding, namely, the appointment of the Commission, their terms of reference, the proceedings of the Commission, the report of the Commission and the follow-up action consisting of the chargesheets served on the petitioners for holding a disciplinary inquiry against them on the following grounds, namely :-

(1)The notification dated 20th April 1968 appointing the Commission of Inquiry was ultra virus section 3 of the Commissions of Inquiry Act, 1952. (2) The petitioners were not given an adequate opportunity to defend themselves before the Commission. (3) The report of the Commission was further vitiated because Sarva shri K. R. Bhide and N. V. Modak who had previously approved the scheme Brd 39 and who were thus biased were sitting as Members of the Commission. (4) The President had no authority to issue a directive to the Indian Oil Corporation to hold a disciplinary inquiry against the petitioners. (,5) Shri S. K. Ranganathan who was not an officer of the Indian Oil Corporation was not competent to hold the disciplinary inquiry against the petitioners. The petitions are resisted both by the Indian Oil Corporation and by the Central Government who point out that the notification appointing the Commission was legal; that the petitioners had an adequate opportunity of defending themselves before the Commission; that Sarvashri K. R. Bhide and N. V. Modak were not at all biased in any way and that the President of India had the authority to direct the Indian Oil Corporation to hold disciplinary inquiry against the petitioners.

(9) We shall, thereforee, examine the contentions of the petitioners in the order in which they are set out above. 1. The learned counsel for the petitioners objected to the terms (iv) and (v) of the reference to the Commission on the ground that these could not have been validly referred to the Commission under section 3 of the Act. They relied on the decision of the Supreme Court in Ram Krishna Dalmia v. Justice S. R. Tend'olkar & Others, 1959) SCR. 2790 in support of this contention. In Dalmia's case, the tenth term of reference ased the Commission to recommend action to be taken 'as and by way of securing redress or punishment' to act as a preventive in future cases. At pages 294-295 of the report Das C. J. speaknig for the Court considered the argument by. the learned counsel for the petitioners to the effect that the Commission could not be asked to suggest any measure, legislative or executive, to be taken by the appropriate Government and observed as follows:- We are unable to accept the proposition so widely enunciated. An inquiry necessarily involves investigation into facts and necessitates the collection of material facts .from the evidence addu.eed before or brought to the notice of -the .person or body conducting the inquiry and the recording of its findings on those facts in its report cannot but be reganded as ancillary to the inquiry itself, for the inquiry becomes useless unless the findings of the inquiring body are made available to the Government which set up the inquiry...... The whole purpose of setting up of a Commission of Inquiry consisting of experts will be frustrated........ if the opinion and the advice of the expert body.................... cannot be placed before the Government for consideration notwithstanding that doing so cannot be to the prejudice of anybody because it has no force of its own.... . . . -From this point of view, there can be no objection even to the Commission of Inquiry recommending the imposition of some form of punishment which will, in its opinion, be sufficiently deterrent to delinquents in future.'

(10) The only exception made by the Supreme Court was that 'there can be no point in the Commission of Inquiry making recommendations for taking any action 'as and by way of securing redress or punishment' which, in agreement with the High Court, we think, refers, in the content, to wrongs already done or committed, for redress or punishment for such wrongs, if any, has to be imposed by a court of law properly constituted exercising its own discretion.' The terms (iv) and (v) of the reference in the present case do not ask the Commission to recommend action as and by way of securing redress or punishment. They merely ask the Commission to advice whether there has been negligence on the part of the Refinery management and the staff and to recommend further action, if any. This was perfectly legal and within the scope of the authority of the Government acting under section 3 of the Act. The Supreme Court has actually gone further and held that such a Commission can even be asked to recommend the imposition of some form of punishment which will deter such delinquents in future. This objection of the petitioners against these terms of reference has. thereforee,, no merit at all. 2. In considering the nature and the quantum of hearing to be given by the Commission to the petitioners, we must first ascertain the precise nature of the inquiry made by the Commission. At page 293 of the report of Ram Krishna Dalmia's case referred to above. the Supreme Court observed as follows :-

'Aclear distinction must, on the authorities, be drawn between a decision which, by itself, has no force and no penal effect and a decision which becomes enforceable immediately or which may become enforceable by some action being taken. thereforee, as the Commission what we are concerned with is merely to investigate and record its findings and recommendations without having any power to enforce them, the inquiry or report cannot be looked upon as a judicial inquiry in the sense of its being an exercise of judicial function properly so called.'

(11) Admittedly the inquiry by the Commission in the present case was only a fact-finding inquiry. It was not a disciplinary inquiry. The general rule is well-established that the purpose of the fact-finding inquiry is merely to collect material for the information of the Government or the authority concerned. Prof. G. W. Keeton in his book 'Trial by Tribunal' (1960) has studied the working of the various inquiries held under the U.K. Tribunals of Inquiry (Evidence) Act, 1921 and by the House of Commons Committee prior to that Act. The observations of two eminent authorities as to the nature of these inquiries cited by him at pages 225 and 235 to 236 are worth quoting:- Lord Shuwcross observed-'the procedure of the Tribunal is inquisitional rather than accusatorial. This is quite unavoidable if the principal function of the Tribunal is to remain fact-finding, and at most censorial', (page 225)

(12) Lord Kilmair observed--'one must frankly admit that there is a conflict between the need of the State that the truth should be discovered on weightly matters which reflect on the functioning of its important agencies, and the position of the individual who finds himself involved. The vital point, as I think every peer has said, is that the procedure should only be invoked for weightly and important matters, for it is only then that the sacrifices on the part of the individual can be fairly demanded.' (p. 235-236) The general rule is well-established that in a fact-finding inquiry, there is no person who is in the position of an accused or a defendant. The purpose of the inquiry is only to gather material for the information of the Government or the authority concerned. It is only if the material so gathered discloses a prima fade case against a person that a disciplinary inquiry would be held against him. In such a disciplinary inquiry, he would be in the position of a defendant or an accused and would be given a full opportunity to defend himself. thereforee, no question of giving such an opportunity of defending himself in a fact-finding inquiry arises at all. (See Amalendu Ghosh G v. District Traffic Superintendent, North Eastern Railway, : (1960)IILLJ61SC , Champak Lal v. Union of India, : (1964)ILLJ752SC , State of U.P. v. Akbar Ali Khan, : (1967)ILLJ70SC and Parry-Jones v. Law Society (1968) 2 Wlr 397.

(13) An exception to this general rule is, however, made when the fact-finding inquiry is made by a statutory commission acting under the Commissions of Inquiry Act, 1952, (corresponding to the U.K. Tribunals of Inquiry (Evidence) Act, 1921]. The reason for this exception is expressed by Prof. S. A. de Smith in his 'judicial Review 10-68SHCD/71 of Administrative Action' Second Edition, page 219, in the following words:- Exceptionally, it may be necessary to import the rules natural justice into the conduct of an inquiry or investigation. the holding of which is not a prerequisite of further proceedings or action. Since the hearings and report of a judicial tribunal of inquiry set up to investigate an alleged public scandal attract a great deal of publicity, it is unfairto deny a person against whom damaging allegations may be made before the tribunal the procedural protection accorded to a defendant in legal proceedings.'

(14) The Royal Commission on Tribunals of Inquiry (1966) underLord Justice Salmon also recommended the grant of a hearing to a person involved in such a statutory inquiry. The same learned Judge in delivering the Lionel Cohen Lectures (1967) on 'Tribunals of Inquiry', however, obser inquisitorial. There is no lis, no plaintiff or defendant, no prosecutor or accused; there are no pleadings defining the issues to be decided, no charges, indictments or depositions.'

(15) The hearing given in a fact-finding inquiry is, thereforee, a limited one. It is not as elaborate as is given in a disciplinary inquiry. In Wiseman v. Borneman (1969) 3 Wlr 706 under section 28 of the U.K. Finance Act, 1960, only a limited hearing was given to an assessed before the existence of a prima fade case against him was ascertained by a statutory authority. For, the assessed was to get full hearing if on the strength of the priina fade case, action was instituted against him. A unanimous House of Lords held that this was sufficient hearing in the circumstances.

(16) The Central Commissions of Inquiry (Procedure) Rules 1960 provide such a hearing to the persons whose conduct is the subject- matter of the inquiry by the Commission. Under these rules, the Commission acts in two stages. The first stage is the invitation of statements from persons under rule 2(l)(a). These are persons who, in the opinion of the Commission, should be given an opportunity of being heard in the inquiry. Similarly members of the general public acquainted with the subject-matter of the inquiry may also file statements under rule 21(l)(b). Then comes the next stage. If after examining the statements filed under rule 2, the Commission thinks it necessary, it may record oral evidence of persons who have filed the statements under rule 2 or of other persons whose evidence is relevant to the inquiry. This is done under rule 3. Some persons including those submitting statements under rule 2, may be prejudicially affected by the inquiry. These persons and those who are examined as witnesses under rule 3 are, thereforee, given a full opportunity of defending themselves under rules 4 and 5. In the inquiry made by the Commission in the present case, a statement was called for from the Refinery under rule 2. This statement have the version of the Refinery as to the facts under inquiry. It, thereforee, took care to defend the Refinery and the petitioners who were among the top management officers of the Refinery. Even at the initial stage the Chairman of the Monghyr Municipal Board suggested that these two petitioner should be examined as witnesses (at page 8 of the report). Apparently the Municipal Board believed that the petitioners were more involved than other officers of the Refinery. But at that stage the Commission had not considered the statements filed under rule 2 and had not formed any opinion about the responsibility or negligence of the petitioners and, thereforee, the petitioners were not examined. Later after considering the statements and the evidence of other witnesses, the Commission apparently wanted to hear the petitioners on certain specific questions. The Commission, thereforee, served on the petitioners questionnaires which were answered by the petitioners. The Commission, however, did not orally examine the petitioners as witnesses under rule 3.

(17) The conduct of the Refinery (including the petitioners) was the subject-matter of the inquiry by term No. (iv) of the reference. The Refinery and the petitioners were, thereforee, entitled to the right of defending themselves under rules 4 and 5. This is why the lawyer for the Refinery represented them before the Commission. He also addressed the Commission. Presumably he cross-examined the witnesses examined by the Monghyr Municipal Board and other parties. All the rights given by rule 5 were, thereforee, exercised by the Refinery which included the petitioners.

(18) Under rule 4, the hearing given to the Refinery and the petitioners consisted of the statement filed by the Refinery under rule 2(l)(a) and the answers to the questionnaires filed by the petitioners presumably under rule 4. The Refinery had of course every right from the very beginning to produce evidence in its defense if it wanted to do so. Certain officers of the Refinery were examined by the Commission as witnesses under rule 3. Apart from them, it is not known whether the Refinery examined any other witnesses on its behalf. It was free to do so. If it did not choose to do so however, it cannot complain that opportunity of adducing defense evidence was denied to it. During the inquiry, the lawyer of the Rcfinery was aware of the. evidence that was coming before the Commission. He must also be aware that the evidence disclosed negligence on the part of Shri Bal want Singh the then General Manager and the petitioners. He had, thereforee, full opportunity to adduce evidence to clear these officers if he wanted to do so.

(19) Learned counsel for the pefitioners argued that the petitioners as individuals were distinct from the Refinery. They complained that the petitioners as apart from the Refinery were not given the opportunity to defend themselves under rules 4 and 5. We are unable to accept this argument. The inquiry was against the Refinery, its management and the staff from the very beginning according to the teyms of reference. All these persons were, thereforee, put on notice to defeud themselves. The Refinery itself was not a person. It was not even legal person. For, it was only a unit of the Indian Oil Corporation. The other units of the Indian Oil Corporalioii were not concerned in the inquiry. The management of the Indian Oil Corporation was also not concerned in the inquiry. Under the Companies Act, 1956, the word 'management' may refer to the Board of Directors, Managing Director and title General Manager of the Indian Oil Corporation. But these persons had nothing to do with the present inquiry which was directed specifically against the Bai-auni Refinery, its management and the staff. The word 'management' used in relation to the Baraum Refinery could not have the meaning given to it by the Companies Act, 1956. For, the Barauni Refinery in itself was not a company. In relation to the Barauni Refinery, thereforee, the words 'management and the staff' meant the superior officers who directed the affairs of the company and the inferior officers who implemented the orders of the superior officers. The General Manager and the petitioners were regarded by the Commission as the top officers of the Management of the Refinery (vide page 100 of the report). The statement for the Refinery must,, thereforee, be regarded as the statement on behalf of the management and the staff of the Refinery. Without the management and the staff, the Refinery was only the site and the factory. We are of the view, thereforee, that hearing was given to the management and the staff of the Reffnery when statement on their behalf was filed before the Commission.

(20) It appears to us that the cost of the defense of the Refinery was borne by the Refinery as an institution. The management including the petitioners and the staff of the Refinery took advantage of this method of defense. Of course, the petitioners were free to engage separate counsel for their own defense or to examine witnesses for their individual defense. The apparently had no need to do so as they were effectively defended by the lawyer of the Refinery. The Commission was, however, concerned in finding out more particularly the responsibility of the petitioners. This was why the Commission served questionnaires on the petitioners which were answered by the petitioners. The purpose of the Commission was served thereby. If, however, the petitioners were not satisfied by the answers given by them in reply to the questionnaires or if they wanted to supplement the answers by giving other evidence in their defense, they could have done so. If they did not do so, they cannot blame the Commission. The opportunity was given by the Commission to the Refinery as a whole from the very beginning to defend its management and the staff. It was not necessary that the Commission should individually address members of the management and the staff of the Refinery to avail themselves of such opportunity. For. by the choice of the Refinery itself the pattern of their defense was that the lawyer of the Refinery defended the management and the staff of the Refinery and no members of the management and the staff made separate arrangements for the individual defense of the officers. We arc of the view, thereforee, that hearing was not denied to the petitioners during the inquiry.

(21) Suppose, the petitioners were not given an adequate hearing during the inquiry before the Commission. What is the effect If the petitioners were to approach the High Court during the pendency of the inquiry, this Court would find it easier to direct the Commission to hear the petitioners (See Vullimavil Animal v. The Commission of Inquiry, Chidambaram, L.L.R. (1968) 2 Mad 188. For, as observed by Prof. S. A. de Smith at page 218 of his book 'Judicial Review of Administrative Action' referred to above, a writ of prohibition would more favorably be considered if a fact-finding inquiry is pending. But if such an inquiry is over, the Court would look askance at ii prayer that the report of the inquiry should be quashed. 'nic proposition that certioi-ari goes against the record and may be issued even after the inquiry body has ceased to exist would more properly apply to the report of a disciplinary inquiry committee. It cannot apply to the report of a fact-finding inquiry. For, such a report is only a piece of information which may be read by the Government or by any one else purely as facts. It has no force of itself. The Government is free to take such view of the facts as it deems fit. The formation of a view or opinion by the Government on the basis of such a report is a subjective process. It is an exercise of administrative discretion by the Government. In no sense is the process of forming such an opinion a judicial function. A certiorari to quash is issued against that record which prejudicially affects some person in the sense that some action is taken against the said person on the basis of the said record. The record of the disciplinary inquiry imposing punishment on a person would be such a record.

(22) It was argued for the petitioners that the only information in the possession of the Government for thinking that a prima fade case for disciplinary inquiry exists against the petitioners is the report and the proceedings of that Commission. Without this material, the Government would have no basis for thinking that a prima facie case for disciplinary inquiry exists against the petitioners. Firstly the Government is not restricted to the report and the proceedings of the Commission in acquainting itself with the responsibility of the Barauni Refinery and the petitioners for the pollution of the Ganga water. It can take into account other reports, for instance, by the Indian Oil Corporation or by other departments of the Government or from other experts. It is only because the Government wants to act completely objectively and also wishes to give a hearing to the persons concerned that a public inquiry is held by the Commission of Inquiry to ascertain the facts. But in addition to the facts ascertained by the Commission, the Government can consider other facts including other expert advice. In taking an administrative decision, the Minister may consider other material not included in a judicial or quasi-judicial inquiry. (B. Johnson & Co. (Builders) Lid. v. Minister of Health, (1947) 2 All. E. R 395 per Lord Greene M.R.) A fortiori he can do so it such an inquiry has been only fact- finding one.

(23) Secondly, even if the Government were relying solely on the report and the proceedings of this Commission to think that a prima facie case for the disciplinary inquiry exists against the petitioners, the decision to direct the Indian Oil Corporation to hold disciplinary proceedings against the petitioners is an independent one. It exists apart from the report of the Commission. The report cannot even G be used as evidence against the petitioners in the disciplinary inquiry [Allen Berry & Co. P. Ltd. v. Vivian Bose & Others, Can this Court quash the decision of the Government Obviously not. Just as this Court cannot compel the Government to hold a disciplinary inquiry against the petitioners similarly this Court cannot compel the Government not to hold such disciplinary inquiry against the petitioners. If this is the legal position, it would be perfectly futile for this Court to quash the report of the Commission. Such quashing only kills the action directly based on the report. It cannot affect action which is not compelled by I he report but which is based on iin independent decision of the Government. This is the crux of the distinction between a fact- finding inquiry and a disciplinary inquiry. The former does not compel any action and does not impose any punishment. The latter necessarily results in action or punishment. thereforee, the former cannot be quashed while the latter can be quashed.

(24) Further, the petitioners are seeking extraordinary remedies which are in the discretion of this Court. In exercising this discretion, we are guided mainly by the considerations of fair-play and justice. We see that in fact the petitioners as a part of the Refinery defended themselves before the Commission right from the beginning. Neither the Refinery nor the petitioners ever complained that adequate hearing was not given to them during the inquiry before the Commission. On the other hand, the lawyer for the Refinery conceded in his written arguments referred to at the beginning of page 96 of the report that the Commission was comoetent to go into the question of the negligence and carelessness of the Refinery management and the staff. At page 99 (at the bottom of column 1) of the report the lawyer for the Refinery contended that the pollution of the water was not the result of any negligence or carelessness on the part of the management of the Refinery but was due to the freak of nature or was an unforseeable event. This would show that there was no complaint by the Refinery or by the petitioners that opportunity to defend them was not adequate. On the contrary, they apparently were satisfied with the opportunity and fully defended themselves. Our conclusion, thereforee. is firstly that we have no power to quash the report of the fact- finding Commission of Inquiry and secondly that even if we had such a power, it would be futile for us to do so and thirdly that even if such quashing may serve some purpose, on the merits of the present case, we would decline to exercise our discretion to do so. Fact-finding inquiries have been held in Britain first by Parliamentary Committees from 1660 onwards and then under the Tribunals of Inquiry (Evidence) Act. 1921 and lastly in India under the Commissions of Inquiry Act. 1952. The working of these inquiries nas been studied by Royal Commission in 1966, by Prof. G. W. Keeton in his book 'trial by Tribunal' (1960) and by Lord Justice Salmon in his Lionel Cohen Lectures (1967). But it has never been suggested that a mere fact-finding inquiry was or should be held to have been vitiated by denial of hearing to persons into whose conduct such inquiry was held. Nor was such a fact-finding inquiry ever quashed. In our view, thereforee, this contention of the petitioners fails.

(25) Bias may be against a person or may be in respect of a question for consideration. The petitioners do not contend that Sarvashri Modak and Bhide had any personal animosity or prejudice against them. But the petitioners sav that Sarvashri Modak and Bhide had approved the scheme Brd 39. the suggestion being that they bad thereby formed a view in favor of the scheme. This is all the bias which is alleged against them. But this contention is utterly untenable. Firstly, the question for consideration before the Commission was not the scheme Brd 39 but the responsibility of the Refinery and the petitioners for the pollution of Ganga water. This issue was never considered by Sarvashri Modak and Bhide betore they sat as Members of the Commission. They had, thereforee, a perfectly open mind on this question. Both of them had the frankness to agree with the other Members of the Commission in giving the report of the Commission that the scheme itself was not free from defects. Shri Modak had also anticipated the danger of pollution even when he originally approved of the scheme. The various decisions relied upon by Shri Ram Panjwani, learned counsel for the petitioner Shri C. D. Ayyar. are distinguishable. Firstly, they related only to the bias for or against a person. In Frome United Breweries Company, Ltd. Keepers of the Peace and. Justices for County Borough (1926) A C 586 the bias was against the applicants for license while in The King v. Justices of Sunderland (1901) 2 K.B. 357 and in The King v. Hendon Rural District Council, (1933) 2 K.B. 696('), the bias was in favor of the applicants. Even in Metropolitan Properties Co. Ltd. v. Lannon (1969) 1 Q.B. 577 the bias of the Chairman of the Rent assessment committee must be said to be against the landlord. For. an assessment of rent favorable to the landlord would have indirectly gone against the father of the Chairman of the Rent assessment committee. This is why Lord Denning M.R. thought at page 599 of the report that a reasonable man would think it likely or probable that the Chairman would act unfairly in dealing with the landlord. Even if the Chairman of the Rent assessment committee could be said to be biased in favor of a view favorable to the tenant, the reason of the bias was that the view would have favored his father. It was not an abstract view, opinion or policy in favor of which the Chairman was biased. Secondly. none of these decisions concerned a fact-finding inquiry.

(26) It is only when a person committs his mind unchangeably to an opinion, view or policy that he becomes unable to appreciate a contrary opinion, view or policy. The Committee on Ministers' Powers (Donoughmore Committee) reporting in April 1932 referred at page 78 of the Report to such a bias based on strong and sincere conviction as to public policy as being a more serious disqualification than pecuniary interest. Such an official or departmental bias may not disqualify a Minister from administrative action [Franklin v. Minister of Town and Country Planning (1948) AC 87 but it would disqualify a judge or a quasi-judicial tribunal. No such commitment to any particular opinion, view or policy could be alleged against Sarvashri Modak and Bhide. No reasonable person could. thereforee, think that Sarvashri Modak and Bhide would not be fair in dealing with the Refinery and the petitioners.

(27) Secondly, the petitioners did not object to the participation to Sarvashri Modak and Bhide in the inquiry when the Commission was holding the inquiry. Objection against Shri Modak is raised for the first time before us. Obection against Shri Bhide was raised before the Commission after the arguments of the other parties were over and only the argument of the Refinery was being heard. This conduct of the petitioners amounted to a waiver of their right, if any, to challenge the participation of Sarvashri Modak and Bhide in the inquiry by the Commission [Mandak Lal v. Dr. Prein Chand (1957) Scr 575(18). Even if it is assumed for the sake of argument- that Sarvashri Modak and Bhide were disqualified by then' bias. the other two Members were not so disqualified. The report would still, thereforee. be valid as the report of the other two Members. Even if we go further and assume that the whole of the report is vitiated still this Court would not exercise its discretion in quashing the report. The reasons would be the same which we have stated above in coming to the conclusion that we would not exercise our discretion in quashing the report even if we were to hold that adequate hearing had not been granted to the petitioners during the inquiry by the Commission.

(28) The Indian Oil Corporation is a Government company. The Central Government is defined in section 3(8)(b) of the General Clauses Act, 1897, as the President in relation to anything done after the commencement of the Constitution. The power given to the President under Article 144 of the Articles of Association to give directions to the Indian Oil Corporation is, thereforee, the power of the Central Government. It is because the Commission of Inquiry was appointed by the Central Government and its report was perused by the Central Government that it was the Central Government who became aware of the facts relating to the contamination of the Ganga water by the discharge of the effluent from the Barauni Refinery. As it was the Government which was of the opinion that a prima fade case existed for making a departmental inquiry against the petitioners, a directive'was issued by the President to the Indian Oil Corporation lo have such inquiry held. The language of Article 144 of the Articles of Association of the Indian Oil Corporation is very wide. The directive by the President can be issued in regard to the 'conduct of business and affairs of the Company. The discharge of effluent of the Barauni Refinery into the Ganga water was a part of the conduct of the business and the affairs of the Barauni Refinery- Whether the petitioners have been negligent in discharging their duties in this respect was also, thereforee, a part of the conduct of business and the affairs of the company. The President had, thereforee, the power to issue the directive in this respect. This contention also, thereforee, fails.

(29) It may be pointed out that in view of Article 361(1) of the Constitution, the President is not answerable to any court for the exercise and performance of his office and duties or for any act done ill the exercise and performance of those powers and duties. The issue of the directive was made by the President in the exercise and the performance of the powers and duties of his office in his official capacity. He is not, thereforee, answerable for it to any court of law. In fact, the Union of India is already a party as Respondent No. 1 and the petitioners were ill-advised in making the President of India a party to the writ petitions. The respondents have applied that the name of the President should be deleted from these writ petitions. In view of Article 361(1) of the Constitution we are of the view that the President cannot be made a party to these proceedings. We order that his name be deleted from the writ petitions. 5. In the rejoinder in Civil Writ 1353 of 1970 Shri C. D. Ayyar has referred to the disciplinary rules of the Indian Oil Corporation under which the competent authority could appoint an officer to hold the disciplinary inquiry against the petitioners. He contends that the word 'officer' in this context could mean only an officer of the Indian Oil Corporation. An oulsider like Shri S. K. Rangaiiathan could not, thereforee, hold the disciplinary inquiries against the petitioners. Apart from the fact that this contention had not been raised in the petition and, thereforee, the respondents had no opportunity of replying to it, we are not impressed by it. Firstly, the officer holding the disciplinary inquiry must be completely impartial and free from bias. The Barauni Refinery has been a party to the Commission of Inquiry. An officer of the Refinery would, thereforee, be a partisan tribunal to hold such an inquiry and would be disqualified to do so due to his bias in favor of the Refinery. An officer of the Indian Oil Corporation but not of the Barauni Refinery may not perhaps be so biased. But there is a second reason why we cannot interfere in the appointment of an Inquiry Officer by the Indian Oil Corporation. For, the appointment of the Inquiry Officer is made by the Corporation by way of a purely administrative decision under the administrative rules of conduct and discipline made by the Corporation. The Corporation is a company registered under the Companies Act. It is well-established that a writ cannot be issued to a company which is not statutory or which is not under a public duty or responsibility imposed by a statute. Nor can a declaration of illegality of its action be made by the Court when the action is purely administrative. [See Pragu Toots Corporation v. C. V. lmanual, : (1969)IILLJ479SC ]. We suggest, however, that the Corporation should amend its own administrative rules to enable itself to appoint a person who is not an official of the Corporation to hold disciplinary inquiries into the conduct of its own employees. This would enable them to obtain the services of an impartial inquiry officer.

(30) The petitioners have delayed the disciplinary proceedings against them without any justification by filing these writ petitions. We hope the disciplinary proceedings will now be proceeded with expeditiously and finished early in public interest. Both the writ petitions, namely. Civil Writs 1042 and 1353 of 1970, are dismissed with costs. Only one set of counsel's fee Rs. 300.00.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //