Amiya Kumar Mookerji, J.
1. Common questions of law and facts are involved in these Rules. All these Rules were heard together. My judgment in C. R. 2529(W) of 1974 shall govern all other Rules.
2. In these Rules the petitioners challenge the validity of the notification dated 18-2-1970 issued by the Central Government under Section 3 of the Commissions of Inquiry Act, 1952, appointing a Commission of Inquiry known as 'Sarkar Commission', in particular, items Nos. 2, 4, 9, 11, 12 and 13 of the Schedule 'C' to the said notification. The main grounds of challenge are that, those items are vague, indefinite and not definite matters of public importance; some of the matters had already been inquired into by the various departments of the Government, measures and actions had already been taken, as such those matters could not form the subject-matter of further inquiry by the said Commission.
3. The petitioner is a public limited company under the Indian Companies Act, 1913. It is one of the largest paper producing concern in India, On May 1, 1967 the Government announced to appoint a committee to go into basic question regarding the functioning of licensing system during the last 10 years. On July 22, 1967 the Government appointed an expert committee headed by Prof. M. S. Thacker to inquire into the working of licensing system during the last 10 years with a view to ascertain whether larger industrial houses have secured undue advantage over the other applicants in the matter of issue of licenses. After resignation of Prof. Thacker, Sri Subimal Dutt became the Chairman of the committee. In July 1967 Sri Chandrasekhar, a member of Parliament, submitted a memorandum to the Prime Minister containing various allegations against Birla companies including the petitioner. Allegations were also made against the petitioner with regard to licence capacity of the paper mill units at Amlai and Brajraj-nagar and relating to the forest lease granted to Amlai Unit. On August 25, 1967 the Central Government sent abstracts of the allegations made in the said memorandum of Sri Chandrasekhar to Dutt committee and requested it to look into the said allegations since they had a bearing on industrial licensing. The Dutt committee was invested with powers under the Commissions of Inquiry Act, 1952. In September and December, 1967, two further memoranda were submitted by Sri Chandrasekhar to the Prime Minister containing allegations against Jute Mills, Paper Factories etc. in Birla group of concerns and also alleging evasion of payment of excise duty in respect of certain quality of paper manufactured by the petitioner. In February, 1969 reports of detailed investigations made by various Ministries about the allegations made to three memoranda of Sri Chandrasekhar were read before Rajya Sabha. the report found : (i) no instance of assessment of kraft paper at lower rate applicable to printing and writing paper and (ii) the other allegations relating to inflating of cost structure etc. were too vague and general. It is stated in paragraph 14 of the petition that on March 5, 1969 the then Dy. Prime Minister Sri Morarji Desai stated in Rajya Sabha that demand for excise duty had been quashed by Delhi High Court and no evidence of any organised evasion of duty or collusion with Central Excise Staff was found. On March 10, 1969 Lata Fakiruddin AH Ahmed, the former Minister of Industrial Development stated in Rajya Sabha that there was no substance on the basis of which the matter could be referred to a Commission of Inquiry. A resolution was moved in Rajya Sabha for the appointment of a Commission of Inquiry but that resolution was lost Thereafter, on April 25, 1969 a similar resolution was moved in Parliament for the appointment of a Commission of Inquiry but that was also lost In July, 1969, the Dutt Committee submitted its report recommending revision of the industrial licensing policy to make it more purposeful and effective, On July 23, 1969, a supplementary report was submitted by Dutt committee dealing with the allegations containing industrial licensing made against Birla group of industries concerning in the memoranda of Sri Chandrasekhar. On August 25, 1969 Sri Fakiruddin Ali Ahmed stated in Rajya Sabha that the Government would take action to appoint a Commission of Inquiry in respect of the cases where the Dutt committee had stated that it was not possible for them to give their views as all the facts were not before them and affected parties were not given opportunity to place their cases. On August 28 1969, the proposal to appoint the Commission of Inquiry was brought before the Central Cabinet and the Cabinet approved the proposal of such appointment at a meeting held on 28th August, 1969. On August 29, 1969 the Government at the highest level decided to appoint a commission of inquiry, announcement of which was made through a statement by the Minister of Industrial Development, Internal Trade and Company Affairs in Rajya Sabha. It was stated by the Minister that in view of certain lapses, improprieties and acts of commission and omission as referred to in the Dutt committee's report which were definite matters of public importance, a fun and comprehensive inquiry was necessary in respect of the above cases, It, was, therefore, decided to set up a commission of inquiry under the Commissions of Inquiry Act, 1952 to go into all these matters. On February 18, 1970 a notification was Issued by the Central Government under Section 3 of the Commissions of Inquiry Act, 1952 hereinafter referred to as 'the Act', appointing a Commission of Inquiry consisting of Sri A. K. Sarkar, Former Chief Justice of India, for a full inquiry into the matters referred to in the said notification and to determine the measures which were necessary to prevent the recurrence of such irregularities, lapses or improprieties, On October 22, 1970, the petitioner wrote a letter to the respondent No. 5 stating that the matters set out in Schedules 'B' and 'C' were vague and indefinite and it was impossible for the petitioner to know the allegations against it Between February, 1971 to April, 1974 various letters were exchanged between the petitioners and the officers of the inquiry commission relating to supply of various informations. On September, 29, 1973 a letter was received by the petitioner from the Joint Director, Inspection stating that it was necessary to examine how land covered by Factory was utilised and the cost incurred for construction of different assets on land. The petitioner was required to furnish information as per pro forma enclosed in the said letter. It was urged before the commission that the allegations in Schedule 'C' into which the inquiry had been directed were vague. It was urged that the vagueness of the matter to be inquired into, made it difficult to commercial houses to collect the necessary evidence to meet the cases against them. On 7th November, 1973 the petitioner sent a letter to the Joint Director, Inspection stating that the allegations under Item No. 4 of the Schedule 'C' to the terms of reference would be Justified when there was some prima facie allegations against the company relating to de-frauding or attempt to defraud the Government of its legitimate revenue and/or any unauthorised retention of foreign exchange abroad by manipulation of invoice on the value of the goods imported or exported during a particular period. There was no such allegation with reference to which the information sought for by the Commission might be considered relevant On 2nd April, 1974, the Additional Director wrote a letter to the Principal Officer of the petitioner company wherein it was stated that in the Commission's opinion Item No. 4 of Schedule 'C' was specific enough to justify the inquiry proposed to be made by the Commission and if, how-ever, the petitioner felt that the view taken by the Commission was not correct, then the only course was for the petitioner to go to Court and have the validity of interpretation of Item No. 4 of Schedule 'C' determined. It was, therefore, decided that if the petitioner did not move the Court within a week, the Commission would be compelled to serve upon the petitioner summons and other processes necessary to get informations and documents required by it. Thereafter, on 8th May, 1974 the petitioner filed the present application under Article 226 of the Constitution and obtained a Rule and a limited order of injunction by which the enquiry with respect to the matters referred to in Schedule 'C' to the notification had been stayed. As a matter of fact the Commission did not conclude its inquiry into the matters referred to in Schedules 'A' and 'B' to the notification.
4. In Schedule 'C' to the notifica-tion dated 18th February 1970 it is stated 'allegations relating to the Birla Group of concerns on which further investigation needs to be made in the public interest'. In the Preamble of the said notification it is also stated 'while a few others art pending further investigation'. Items Nos. 2, 4, 9, 11, 12 and 13 of the Schedule 'C' to the notification are set out herein below:--
2. Whether, and if so the circumstances in which, large salaries have been and are paid to the wives and other relatives of high executives of the Birla Group of concerns without any service or inadequate service being rendered by them in recompense.
4. Whether there was-
(i) any defrauding or attempt to defraud Government of its legitimate revenues (including any case of defrauding, or attempt to defraud, through creation of trusts),
(ii) any unauthorised retention of foreign exchange abroad by manipulation of invoice values of the goods imported or exported during the said period or any other defrauding or at-tempt to defraud Government of foreign exchange. which has either not been detected or, if detected, has been dealt with by the normal departmental authorities responsible for enforcement of the relative tax or foreign exchange laws improperly with a view to snowing undue favour or giving unmerited benefit to the Birla Group of concerns,
9. Whether, and if so the circumstances and manner in which manufacturing concerns included in the Birla Group of concerns have indulged in inflating and manipulating their cost structure against the public interest.
11. Whether the Birla Group of concerns have derived any undue benefit by the employment of senior retired Government servants and whether such employment of retired senior Government servants involved any impropriety.
12. Whether the Birla Group of concerns employ a large number of 'Con-tactmen' and the extent to which these 'Contactmen' have influenced the commission of improprieties.
13. Whether any senior Government servant or well known politician has placed himself under obligation to the Birla Group of concerns by receiving free treatment at the Bombay Hospital run by them.
At the outset Mr. Noni Coomar Chakraborti, appearing on behalf of the respondents raised certain preliminary objections as regards maintainability of the present writ petition. I propose to deal with those points first.
5. It is contended by Mr. Chakraborty that this Court has got no territorial jurisdiction to entertain the petitioner's application under Art 226 of the Constitution as no part of the cause of action has arisen within the jurisdiction of this Court. The Registered Office of the Company is in Orissa, The notification was published in Delhi. The Commission sent the requisitions addressed to Orissa Office of the petitioner company. There is nothing in the petition to show that what part of the cause of action has arisen within the territorial limits of this Court.
6. Mr. Roychowdhury, appearing on behalf of the petitioner contended that it would appear from the cause title of the petition that the respondents 2, 3 and 4 i.e, the Commission has a regional office and it functions within the jurisdiction of this Hon'ble Court, It is further submitted that requisitions have been made from the Calcutta Regional Office to the petitioner at its Calcutta Office and have been answered by the Calcutta Office and sent to the Regional Office of Commission. My attention was drawn to page 142 of the petition. A letter dated 29th September, 1973 written by the Joint Director (Inspection) from Regional Office of the Commission at 15, Ganesh Chandra Avenue, Calcutta-13, to the Principal Officer M/s. Orient Paper Mills Ltd., 9/1, R. N. Mukherji Road, Calcutta-1, Letter dated 2nd April, 1974, was also written from the Regional Office to the Principal Officer of the petitioner company at No. 9/1, R. N. Mukherji Road, Calcutta.
7. It is well settled that where a part of cause of action arises within the jurisdiction of a particular Court, that Court gets the jurisdiction to entertain an application under Article 226 of the Constitution.
8. It is next contended by the respondents that the petitioner's petition does not fall either under Clauses (a), (b) or (c) of Article 226(1) of the Constitution. There has been no violation of the petitioner's fundamental right. No injury or substantial injury has been sustained. It is argued that the object of appointment of the Commission is to inform the Government's own mind regarding some matters of public importance in order to enable the Government to make up its own mind as to what legislative or administrative remedial measures can be adopted. Reference was made to a decision of the Nagpur High Court in M. V. Raj-wade v. Dr. S. M. Hassan (AIR 1954 Nag 71) wherein the Nagpur High Court held that the Commission governed by the Commissions of Inquiry Act. 1952 is appointed by the State Government for the information of its own mind * * * It is, therefore, a fact finding body meant only to instruct the mind of the Government without producing any document of a judicial nature. The Court further observed that there is no accuser, no accused and no specific charges for the trial before the Commission, nor is the Government, under the law required to pronounce one way or the other on the findings of the Commission. Those observations of the Nagpur High Court were approved by the Supreme Court in Brajanandan Sinha v. Jyoti Nara-yan : 1956CriLJ156 of the report the Supreme Court observed that it is, therefore, clear that the power conferred by Parliament on the Central Government to appoint a Commission of Inquiry under Section 3(1) of the Act for the purpose of finding facts in regard to the allegations of corruption, favouritism and nepotism against the said Chief Minister or Minister cannot be held to constitute interference with the executive functions of the State Government.
9. It is stated in the petition that petitioner has suffered substantial injury by reason of being subjected to oppressive requisitions issued by the officers of the Commission.
10. It is not correct to say that there could be injury only if there is trial or punishment. If the entire proceeding is found to be without jurisdiction and the conditions precedent for appointing the Commission under Section 3 of the Act were not fulfilled as alleged by the petitioner, in that case subjecting the petitioner to such a proceeding itself is a substantial injury. In Gulab Kanwar v. Enforcement Officer : AIR1977Cal383 this Court observed:
'It will be unjust to compel the petitioner to appear before the authorities in respect of the proceedings which I have held to be initially void.'
11. If the petitioner can satisfy the court that the subject-matter of the inquiry is not definite matters of public importance, in that case the Commission shall have no power to inquire into the matters with respect to which the requisitions have been sent. So, in my view, the petitioner's writ petition comes under Article 226(1)(b) of the Constitution.
12. It is next argued by Mr. Chakravorty that there has been inordinate delay in moving this Court inasmuch as the notification was issued in February, 1970 and the petitioner came before this Court in May, 1974. No explanation has been offered by the petitioner in the petition the reason for such delay. Reliance was placed upon the decision of the Supreme Court in Rabindra Nath Bose v. Union of India : 2SCR697 .
13. It is contended by Mr. Roy-chowdhury that where a writ of prohibition is asked for, and where there is an inherent lack of jurisdiction, 'delay' is no ground for refusing the relief. The writ of prohibition would go as a matter of course if there is a lack of jurisdiction.
14. Reliance was placed on the decision of the Supreme Court in Sheo Nath Singh v. Appellate Asst. Commr. of Income-tax : 82ITR147(SC) .
15. Rabindra Nath Bose's case : 2SCR697 as referred to by Mr. Chakraborty has got no application to the facts and circumstances of the present case. In that case the petitioner filed a petition under Article 32 of the Constitution in 1969 challenging the seniority list of the Income-tax Officer, Class I Grade II prepared in 1953. Under those circumstances, the Supreme Court observed that it would be unjust to deprive the officers of the rights which have accrued to them. In the instant case there is no question of any third party acquiring any right since 1970.
16. In Sheo Nath Singh's case : 82ITR147(SC) a notice was issued on 5th November, 1954 to the assesses under Section 34 (1) (a) of the Income-tax Act, 1922. Seven years thereafter, in 1961, the assessee filed a petition under Article 226 of the Constitution in this Court. That delay of five years was not considered a bar to get the relief in the writ petition.
17. The petitioner has stated in para. 97 of the petition that earlier it did not move any application in order to avoid unnecessary litigation. When the matter became oppressive, the petitioner had no other alternative but to approach the Court. The Commission itself asked the petitioner to approach the Court to have the issue thrashed out if the petitioner took the view that the Commission had exceeded its jurisdiction and not properly interpreted the scope and the terms of reference. The Commission allowed time to enable the petitioner to approach the Court, It was in that context a letter was written to the Commission wherein it was stated that it was not posssible to move the Court immediately by reason of exodus of counsel during the Easter Vacation and power failure.
18. In my view, the delay of four years is not very fatal and for that reason the petition cannot be thrown out, where the jurisdiction of the Commission to inquire into the matters has been challenged in the present petition. Moreover, the question of delay does not arise where a writ of prohibition is asked for.
19. Lastly it is contended by the respondents that the petitioner has submitted to the jurisdiction of the Commission. Letters and requisitions issued by the Commission have been been complied with by the petitioner from time to time and as such the petitioner is estopped from challenging the jurisdiction of the Commission in the present application inasmuch as it cannot approbate and reprobate,
20. In the instant case the petitioner has challenged the jurisdiction of the Commission. It is well settled that by acquiescence no jurisdiction can be conferred in a case where there is an inherent lack of jurisdiction. If the petitioner can satisfy the Court that the appointment of Commission is without jurisdiction in that case, their acquiescence might not itself be a bar for denying the relief asked for. It does not appear from the conduct of the petitioner that it is approbating and reprobating.
21. All the preliminary objections raised by the respondents fail,
22. It is contended by Mr. Subrata Roy Chowdhury, appearing on behalf of the petitioner that the notificaion dated 18th February 1970 has not been expressed in the name of the President of India as required by Article 77(1) of the Constitution and as such it is void. It is further contended that the said order has not been authenticated in the manner specified in the Rules made under Article 77(2) of the Constitution, No decision to appoint the Commission was taken by the Cabinet with regard to Schedule 'C' to the notification inasmuch as in the speech of the Minister for Industrial Development, Internal Trade and Company Affairs reference was made only to certain lapses, improprieties and acts of commission and omission referred to in Dutt Committee's report. But there was no reference with respect to the allegations of Sri Chandra Sekhar as referred to in Schedule 'C' to the notification. According to Mr. Roychowdhury, the decision of the Cabinet, if any, was only with regard to Schedule 'A' and 'B' to the notification. Although challenge has been thrown that there was no decision by the Cabinet, there was no averment in the affidavit-in-opposition that the Cabinet took decision with regard to Schedule 'C' to the notification.
23. Mr. Chakravorty, appearing on behalf of the respondents contended that Article 77 was almost equivalent to Article 166 of the Constitution. The effect of non-conformity of Clauses (1) and (2) of Article 77 did not render the order a nullity. It was further contended that similar notifications in Dalmia's case : 1SCR279 and Karnataka's case : 2SCR1 were upheld by the Supreme Court.
24. A supplementary affidavit was affirmed on 2nd of March, 1978 by S. C. Marthe, the Secretary, Government of India, Ministry of Industry (Department of Industrial Development) wherein it is stated that the said notification expressly states that the Central Government hereby appoint a Commsision of Inquiry, under Section 3(8) of the General Clauses Act, 1897 the words 'Central Government' in relation to anything done or to be done after the Constitution is expressly taken in the name of the President. Article 77(1) of the Constitution is complied with. The said order dated 18-2-1970 is signed by the Secretary to the Government of India, Department of Industrial Development who is authorised to authenticate under Rule 2 (I) of the Authentication (Order and other Instruments) Rules, 1958. The proposal to appoint a Commission of Inquiry concerned was brought before the Central Cabinet and the Central Cabinet approved the proposal of such appointment at a meeting held on Aug-28, 1969. At a meeting of the Cabinet dated 6th January, 1970, it was decided that urgent steps should be taken to see that the Commission starts functioning early. This was done under the Transaction of Business Rule made by the President under Article 77(3) of the Constitution. 'The document relating to the appointment of the Corn-mission of Inquiry made under the said order/notification dated 18-2-1970 relate to the affairs of the State and I claim privilege for non-production of the same records under Section 123 of the Indian Evidence Act.' Under Article 77 all executive actions of the Government of India shall be expressed to be taken in the name of the President. Article 77(2) provides that orders and other instruments made and executed in the name of the President shall be authenticated in such a manner as may be specified in rules to be made by the President, and the validity of an order or instrument which is so authenticated shall not be called in question on the ground that it is not an order or instrument made or executed by the President, Article 77(3) enables trie President to make Rules for the more convenient transaction of the business of the Government of India, and for the allocation of the said business. It has been held consistently by Courts that the requirements of Article 77(1) and (2) are merely directory and not mandatory. The Government, if necessary, can lead evidence to prove that the proceedings were taken according to the requirements of the Constitution and the Rules. It is stated in the supplementary affidavit that under Rule 2 (1) of the Authentication (Order and Other Instruments) Rules, 1958, the Secretary to the Government of India, Department of Industrial Development is authorised to authenticate and the present notification has been signed by the Secretary to the Government of India, Ministry of Industrial Development, Internal Trade & Company Affairs (Department of Industrial Development). The Courts are entitled to presume that the official acts are done in a proper manner. In State of U. P. v. O. P. Gupta : AIR1970SC679 , the Supreme Court in dealing with an order made by the Government of United Province, signed by the Chief Secretary, held that the provisions of Article 166(1)(2) are directory and substantial compliance with those provisions is sufficient. The Court further held that the impugned order in that case was made in the name of the Slate Government and it was signed by the Chief Secretary and that, therefore, prima facia it is a valid order, and that the Court need not go further. The decision of the Cabinet, however, was not produced before the Court as the privilege was claimed by the Secretary to the Government of India under Section 123 of the Evidence Act as that document relates to the affairs of the State. In State of Punjab v. S. S. Singh : 2SCR371 Gajendragadkar, J. (as he then was) observed : what are the affairs of State under Section 123? In the latter half of 19th Century affairs of State may have had comparatively narrow content. Having regard to the notion about governmental functions and duties which then obtained, affairs of State would have meant matters of political or administrative character relating, for instance, to national defence, public peaca and security and good neighbourly relations, Thus, if the contents of the documents were such that their disclosure would affect either the national defence or public security or good neighbourly relations they could claim the character of a document relating to affairs of State. There may be another class of documents which could claim the same privilege not by reasons of their contents as such, but by reasons of the fact that, if the said documents were disclosed, they would materially affect the freedom and candour of expression of opinion in the determination and execution of public policies.
25. It is well settled that the privilege should not be claimed under Section 123 because it is apprehended that the document if produced would defeat the defence raised by the State. In the supplementary affidavit when privilege is claimed concerning a particular document, the Court has to determine the character or class of the document. If it comes to the conclusion that the document does not relate to the affairs of the State then, it should reject the claim for privilege and direct its production.
26. The first clause of Section 162 of the Evidence Act requires that a witness summoned to produce a document must bring it to the Court and then raise an objection against either its production or its admissibility. An objection to the production or admissibility of evidence specified in Section 162 of the Evidence Act relates to all claims of privilege provided by the relevant sections of Chapter IX of Part HI of the Act, Section 123 is only one of, such privileges. So the jurisdiction! given to the Court to decide the validity of the objections covers not only the objection raised under Section 123 but, to all other objections as well.
27. The affidavit does not indicate that the person making the affidavit is satisfied that its disclosure would lead to public injury. Mr. Charavorty submitted before the Court that although privilege was claimed with respect to the decision of the Cabinet, but for the satisfaction of the Court the said decision would be produced before the Court. But that was not done. So, in the absence of any material, I shall have to rely upon the averments made in the supplementary affidavit that there was a decision of the Cabinet with respect to impugned notification, which obviously includes all the three schedules viz. 'A' 'B' and 'C'. In the petition no specific statement has been made that with respect to schedule 'C' to the notification there was no decision by the Cabinet Under Article 74 of the Constitution, the President is to act in accordance with the advice of the Council of Ministers and under Article 74(2) the question whether any, and if so what, advice was tendered by Ministers to the President shall not be inquired into in any Court. There is no constitutional obligation binding the President to act only in conformity with the ministerial advice. Article 361(1) again expressly provides that the President shall not be answerable to any Court for any act done or purported to be done by him in the performance of the duties of his office. No. member of the Cabinet can disclose Cabinet deliberations to anybody outside the Cabinet, without the Prime Minister's permission.
28. In my opinion, a decision of the Cabinet relates to the affairs of the State as it affects the integrity of the Cabinet in determination and execution of public policies and for non-production of the same privilege can be claimed under Section 123 of the Evidence Act.
29. It is next contended by Mr. Roychowdhury that under Section 3 the power of the Government is discretionary when it acts on its own, whereas it is mandatory to appoint a commission if so directed by a resolution of the House of People. It is argued that the Government could not exercise its discretionary power under Section 3 of the Act contrary to the decision of Parliament itself, when a resolution moved in the both houses of Parliament for appointing a Commission with respect to the allegations of Sri Chandra Sekhar which are the subject matter of Schedule 'C' to the notification were defeated in Rajya Sabha and Lok Sabha on 10th of March, 1969 and 25th April, 1969 respectively. Under Rule 182 of the Rules of Procedure and Conduct of Business in Lok Sabha a resolution on the same matter could not be moved before one year i. e. before 25th of Apra, 1970. The Government which is a creature of Parliament and is responsible to it decided in the aforesaid circumstances to appoint a Commission on 8th of February, 1970. It is contended that the scheme of Section 3 of the Act makes it abundantly clear that concurrent sources for appointing the commission must be simultaneously available at a particular point of time.
30. Rule 182 of the Rules of Procedure and Conduct of Business in Lok Sabha provides that when a resolution has been moved no resolution or amendment raising substantially the same question shall be moved within one year from the date of the moving of the earlier resolution. Provided that when a resolution has been withdrawn with the leave of the house no resolution raising substantially the same question shall be moved during the same session.
31. It is contended by Mr. Chakravorty that under Article 122 of the Constitution the validity of any proceeding in Parliament shall not be called in question on the ground of any alleged irregularity of procedure.
32. Clause (1) of Article 122 provides that Courts will not be entitled to question the validity of any proceeding in Parliament on the ground of irregularity of procedure. There is no question of application of the provisions of Article 122 of the Constitution inasmuch as no irregularities of procedure with respect to a resolution was challenged by the petitioner. The question is whether, a Government who is responsible to Parliament can act contrary to the resolution of Parliament in exercising its discretionary power to appoint a commission under Section 3 of the Act. Section 3 of the Act has got two parts. It confers power upon the Central Government to appoint a commission if there exists definite matter of public importance and forms an opinion that it is necessary so to do The appointment of such commission is discretionary. But in case where there is a resolution either by the House of People or by the Legislative Assembly of the State, it is obligatory upon the appropriate government to appoint a commission of inquiry. Two parts are mutually exclusive. The sources are also different. Obligation on the government to appoint a commission arises only when there is a resolution by the House of People When a resolution to appoint a Commission is lost in Parliament, in that case there is no resolution and accordingly, it is not obligatory upon the Government to appoint a Commission. The discretionary power to appoint a Commission, however, is not fettered when the resolution to appoint a Commission is lost in Parliament My reading of Section 3 of the Act is that, where two sources of powers of appointing the Commission are distinct and different, obviously, it cannot be exercised simultaneously. There is no bar to appoint a Commission by the Government in exercising its discretionary power even when a resolution to appoint a Commission is lost in Parliament inasmuch as it does not attract the other part of Section 3 of the Act.
33. It is next urged by Mr. Roychowdhury, that the matters referred to in Schedule 'C' to the notification are not definite matters of public importance and no opinion was formed by the Government that it was necessary to appoint a Commission of Inquiry. According to Mr. Roychowdhury the conditions precedent for exercising powers under Section 3(1) of the Act did not exist and had not been complied with. The allegations made in the three memoranda of Sri Chandra Sekhar could not constitute any material for formation of any opinion for appointment of a Commission of Inquiry in view of the fact that with respect to most of those allegations thorough investigation by the different agencies of the government had already been made. On investigation it was found that the allegations were baseless. The resolution for appointment of a Commission under the Act with respect to those allegations was put to vote in Rajya Sabha and was lost by a large majority. Similar motion in Lok Sabha also was not carried out. In fact there was nothing pending further investigation as stated in the preamble as well as in Schedule 'c' to the notification.
34. It is contended by Mr. Chakravorty appearing for the respondents, that even assuming in the instant case that the matters referred to in Schedule 'c' are not definite matter of public importance, in respect of various questions put in Parliament from time to time and the statements made by the Ministers thereon, the Commission has jurisdiction not only to hold an inquiry in matters of public importance, but also for the purpose of 'performing such functions' as may be specified in the notification. Reliance was placed upon the observations of the Supreme Court in Dalmia's case : 1SCR279 .
35. At page 544 of the Report, the Supreme Court observe 'that quite conceivably the conduct of an individual person or company or group of individual persons or companies may assume such a dangerous proportion and may so prejudicially affect or threaten to affect the public well being as to make such conduct a definite matter of public importance urgently calling for a full inquiry. Besides, Section 3 authorises the appropriate Government to appoint a Commission of Inquiry not only for the purpose of making an inquiry into a definite matter of public importance but also for the purpose of performing such functions as may be specified in the notification. In Paragraph 13 at page 549 of the Report, the Supreme Court further observed that it would be apparent from its long title that the purpose of the Act is to provide for the appointment of Commission of Inquiry and for vesting such Commission with certain powers. Section 3 empowers the Government, in certain circumstance therein mentioned, to appoint a Commission of Inquiry for the purpose of making an inquiry into definite matter of public importance and performing such functions within such time as may be specified in the notification. It seems clear -- and it has not been controverted -- that on a proper construction of this section, the functions the performance of which is contemplated must be such as are ancillary to and in aid of the inquiry itself and cannot be read as a function independent of or unconnected with such inquiry. That being the position, the question arises as to the scope and ambit of the power which is conferred by it on the appropriate Government. The answer is furnished by the statute itself, for Section 3 indicated that the appropriate Government can appoint a commission of inquiry only for the purpose of making an inquiry into any definite matter of public importance and into no other matter. In other words the subject matter of the inquiry can only be a definite matter of public importance. The appropriate Government, it follows, is not authorised by this section to appoint a Commission for the purpose of holding any inquiry into any other matter.
36. In Dalmia's case : 1SCR279 the Supreme Court held that an inquiry could be directed if there exists matter of public importance. Once there is a definite matter of public importance and the conditions precedent for appointment of the Commission are satisfied, then the Government may require the commission to perform such ancillary or incidental functions as may be specified in the notification. The functions specified in the notification of the Commission can only be those which are in aid of or for the purpose of conducting the inquiry into a definite matter of public importance. Where a Commission has been appointed to inquire into the definite matter of public importance, in that case, the question of its performing such functions as specified in the notification only arises.
37. It is next contended by Mr. Roychowdhury that formation of opinion has to be made on relevant materials which must have nexus with the object sought to be achieved and such an opinion cannot be formed on extraneous or irrelevant consideration. If a challenge is thrown by the aggrieved person questioning the existence and/or formation of such opinion, then it is Incumbent upon the government to disclose to the court the materials on the basis of which such opinion was formed. the Court cannot examine the sufficiency of the materials, but at the same time it is entitled to ascertain whether there are any relevant materials on the basis of which any opinion had been or could be bona fide formed as required under Section 3(1) of the Act It is urged by Mr. Roychowdhury that the principles as laid down by the Supreme Court in Barium Chemicals Ltd. v. Company Law Board : 1SCR898 , Roha-tas Industries Ltd. v. S. D. Agarwal, : 3SCR108 , M, A. Rasheed v. State of Kerala : 2SCR93 would be applicable in construing Section 3 of the Act.
38. It is urged by the respondents that the ratio of the decision of the Supreme Court in Barium Chemicals and Rohatas Industries' cases have no application in a case under Section 3 of the Act. Under Sub-clause (b) of Section 237 of the Companies Act, the authority of the Central Government to set up an investigating agency was circumscribed by three circumstances enumerated therein. In other words if one or more of the circumstances mentioned in Sub-clause (b) of Section 237 did not exist the Central Government could not set up an investigating agency. No such circumstances are prescribed for or limitation imposed upon the Government for setting up a Commission of Inquiry under Section 3 of the Act. The power of the government for setting up a Commission of Inquiry is unfettered as compared to the limitation imposed under Sub-clause (b) of Section 237 of the Companies Act. Reliance was placed by Mr. Chakravorty upon an unreported judgment of Punjab and Haryana High Court in the case of Technological Institute of Textile in Civil Writ Petn. No. 3427 of 1972,
39. In that unreported judgment, the learned single Judge of the Punjab and Haryana High Court observed that the ratio of Barium Chemicals : 1SCR898 and Rohatas Industries' case : 3SCR108 are not applicable for setting up a Commission of Inquiry under Section 3 of the Commissions of Inquiry Act inasmuch as no circumstances as envisaged in Sub-clause (b) of Section 237 of the Companies Act exist for setting up a Commission of Inquiry under Section 3 of the Commissions of Inquiry Act.
40. In Dalmia's casa : 1SCR279 the Supreme Court referred to the condition precedent for exercise of powers under Section 3 of the Act and said that the Government can order an inquiry only into a definite matter of public importance and no other matters. In Karnataka State v. Union of India : 2SCR1 Kailasam, J. observed referring to the decision of the Court in Dalmia's case, 'The Court also held that the Act does not delegate to the Government any arbitrary and/or uncontrolled power and does not offend Article 14 of the Constitution. The Court further observed that the discretion given to the Government to set up a Commission of Inquiry is guided by the policy laid down in the Act and the executive action is to be taken only where there exists a definite matter of public importance into which an inquiry is necessary.'
41. In A. M. Rasheed v. State of Kerala : 2SCR93 the Supreme Court said that in all statutes where such expression as 'opinion,' 'reason to believe,,' 'satisfied' are used, the Court would not readily defer to the conclusiveness of an executive authority's opinion as to the existence of a matter of law or fad upon which the validity of the exercise of the power is predicated. Where a reasonable conduct is expected the criterion of reasonableness is not subjective, but objective. Administrative decisions in exercise of power even if conferred in subjective terms must be made in good faith and on relevant considerations. The Courts would inquire whether a reasonable man could have come to that decision in question, without misdirecting himself on the law and facts. The Courts will find out whether the conditions precedent to the formation of the opinion have a factual basis.
42. In P. V. Jagannath Rao v. State of Orissa, ILR (1968) Cut 482, a Division Bench of the Orissa High Court held that the conditions for arriving at subjective satisfaction may vary in different statutes, but the principle enunciated in Barium Chemical's case : 1SCR898 has full application in a case under the Commissions of Inquiry Act, 1952. The Court observed that the subjective satisfaction would not empower the State Government to appoint a Commission, in the absence of definite matters of public importance. The Court has got the power of judicial review within a very narrow compass as to whether there are materials to prove at least prima facie existence of definite matters of public importance. If a tentative conclusion can be arrived at on the allegations made, it is not open to the Court to go further and quash the Notification on the ground of insufficiency or imporpriety of those materials. When the existence of definite matters of public importance is challenged, mere assertion on the part of the State Government that those matters existed would not be enough. Some clue must be furnished which led to the conclusion as to their existence.
43. With great respect, I am unable to share the view of the learned Judge of the Haryana and Punjab High Court that the principle as laid down by the Supreme Court in Barium Chemicals : 1SCR898 and Rohataa Industries' case : 3SCR108 is not applicable to a case under Section 3 of the Commissions of Inquiry Act, 1952, under Section 237(b) of the Companies Act, discretion has been conferred upon the Central Government. Three, circumstances are set out in Sub-clause (i), (ii) or (iii). The formation of opinion is no doubt subjective but there must exist the circumstances upon which that opinion could be formed. Similarly under Section 3 of the Commissions of Inquiry Act, the formation of opinion of the Government is also subjective but only one condition or circumstance has been prescribed viz. the subject-matter of the inquiry must be definite matter of public importance. So, the exercise of power or formation of opinion under Section 3 of the Act is limited or restricted only to definite matters of public importance. Factual existence of those materials absolutely necessary. Those matters might be spelled out from the face of the order itself or by disclosing matters in the affidavit of the Government when a challenge is thrown by the aggrieved party about the non-existence of definite matter of public importance.
44. There is no bar to appoint a Commission of Inquiry by the Government and refer those particular matters to the Commission for inquiry even if those matters were previously investigated with and inquired into by different agencies of the Government and departmental findings were accepted by the Government provided those matters are definite matters of public importance,
45. In Civil Rule No. 4833 (W) of 1970 (Cal), Universal Industries and Cotton Mills Ltd. v. Union of India, Item No. 5 of Schedule 'C' of the present notification was challenged. In that case it was also urged on behalf of the petitioner that there were no grounds or materials whatsoever for ordering any investigation against the petitioner in the facts and circumstances of that case. The respondent No. 1 in any event had no material whatsoever to form an opinion that any such investigation or inquiry against the petitioner was of any definite matters of public importance. In that case the Court found that there was an opinion of the Additional Solicitor General and the Additional Solicitor General with respect to the petitioner's Company was of opinion that the facts and circumstances did not establish any case against the company or its Directors and it would not be worthwhile to pursue the matter any further. The issue involved was not of much importance. This Court held that in view of the fact that the matter involved in the petitioner's case was not any definite matter of public Importance and moreover, the requisite opinion was not formed by the appropriate Government upon consideration of any relevant materials, the impugned notification referring the petitioner's case to the Commission for Inquiry had been set aside. It appears that Item 5 of Schedule 'C' to the notification has already been quashed by this Court on 10th of December, 1976. No appeal has been preferred against the said decision.
46. In State of Jammu and Kashmir v. Bakshi Gulam Mohammad : AIR1967SC122 , the Supreme Court held that a Court can decide whether the matters to be inquired into are definite matters of public importance. The Court observed that 'Definite' in this connection means something which is not vague, It further held that in most cases the acts were identifiable from the particulars given in the second Schedule in respect of them and that the note drawing attention to the gravamen of the charges does not indicate any indefiniteness.
47. In Krishna Ballavh Sahay v. Commission of Inquiry : 1969CriLJ520 , the Supreme Court considered the charges and found them to be Specific. In paragraph 11 the Court observed 'We have read the charges which are to be investigated. * * * We can only say that each charge refers in detail to events with date, names of persons concerned, particulars of action taken and the conduct which is to be considered. The charges are such that we think that an inquiry can be ordered. If charges were vague or speculative suggesting a fishing expedition we would have paused to consider whether such an inquiry should be allowed to proceed. A perusal of the grounds assures us that the charges are specific and the records rather than oral testimony will be used to establish them. We agree with the High Court that the affidavit-in-opposition makes a specific case for inquiry.
48. The ratio of the above decisions laid down the following principles:--
(a) the courts are competent to decide whether the matters to be inquired into are definite matters of public importance, (b) the power conferred upon the Central Government under Section 3 of the Act is neither unfettered nor uncontrolled and (c) the Central Government can appoint a Commission of Inquiry only when there exists a definite matter of public importance into which an inquiry is necessary.
49. So, the point for consideration in the instant case is, whether the items referred to in Schedule 'C' to the notification are definite matters of public importance.
50. It is contended by the respondents that some of the items referred to in the notification in Dalmia's case (AIR 1958 SC 258) and Jagannath Rao's case (ILR (1968) Cut 482) are similar to some of the items referred to in Schedule 'C' to the present notification. According to Mr. Chakravorty these are definite matters of public importance inasmuch as the public share-holders are very much interested and concerned as they would be deprived of earning dividends on their holdings, if large salaries are paid to the wives and other relatives of the senior executives of Birla group of concerns when the recipients of the salaries do not, work at all nor do they make any contribution to the company. It is urged by Mr. Chakravorty that Items 2, 4 and 9 of the Schedule 'C' to the notification are not vague and indefinite and are definite matters of public importance.
51. The term of reference in Dalmia's case and Jagannath Rao's case are not similar to those in the instant case. In Dalmia's case numerous complaints were made by the shareholders of the companies concerned. The investing public had lost money in large amount in the said concern and the matter was considered to be of public importance by reason of the fact that large amount of public money was involved. Numerous small investors had been affected by the conduct of the five persons as specified in the said notification. Particulars were given that companies were being floated and were taken into voluntary liquidation. The names of the persons who are exercising control, the total amount of subscription obtained from the public, motives of investment, extent of the loss suffered --these are all specific matters. In Dalmia's case an affidavit was also filed by Sri H. M. Patel wherein full facts were given. In Dalmia's case the question of the vagueness of the notification was not Involved. In Jagannath Rao's case also the notification itself specified that the Commission shall inquire into the detailed particulars pertaining to the matters which shall be placed before it by the State Government and such detailed particulars were in fact placed by State Government before the Commission. In the present case there is no such stipulation in the impugned notification.
52. The memoranda of Shri Chandra Sekhar was placed before the Court. In all there are 88 allegations and five sub-allegations. These allegations can be grouped under the following heads (a) Customs and Central Excise (b) Income-tax (c) Foreign Exchange Regulation Act (d) Insurance (e) Capital (f) Favour shown by separate State Governments (g) Employment of relatives and retired high Government officials on large salaries (h) Employment of sons and wives of high executives (i) Manufacture of sub-standard products and high profiteering. Seven items have been referred to the State Government. They related to undue favours shown by the States concerned, (a) With respect to 20 items -- no prima facie case was made out on preliminary enquiry (b) with respect to 11 items, facts alleged were found substantially correct on preliminary inquiry but there was no illegality or impropriety calling for further action, (c) Six items already forwarded to Dutt's Committee and Dutt Committee could not Complete investigation. These are subject matters of Schedule 'B' to the notification, (d) In 16 items prima facie violation of existing law on preliminary enquiry was found and actions have been initiated under the relevant provisions of law. (e) Six items are too vague or so general which do not require further investigation. These are 64 items out of 88 items. Only 24 items remain. Out of them 10 items have already been disposed of in the meantime. Only 14 items remain and these items form the subject matter of Schedule 'C' to the notification.
53. It is urged by the respondents that even if the Government has once decided not to appoint a Commission, it could change its opinion and decide to appoint a Commission on the same material. There is no bar in Section 3(1) of the Act for changing opinion. In support of their contentions, the respondents relied upon the decisions of P. V Jagannath Rao v. State of Orissa : 3SCR789 .
54. In Jagannath Rao's case the decision not to appoint a Commission was taken by the State Government before investigation was made into the charges and any governmental finding was given. The successor State Government reviewed the decision of the earlier Government which had taken a decision not to appoint a Commission to inquire into its own conduct. The decision not to appoint a Commission after investigation was taken only by the Central Government and it did not change its view. No doubt Government can change its subjective opinion to appoint a Commission because it wag not necessary to do so at a particular time even when definite matters of public importance were in existence. But by changing its opinion the Government cannot change an indefinite matter or matter of no importance into a 'definite' matter of public importance where in fact such matters did not exist. If the opinion was changed on subsequent acquisition of such materials which could be regarded as definite matters of public importance, then those new facts must be disclosed. In the present case there is no such disclosure.
55. Moreover, in Jagannath Rao's case : 3SCR789 the Supreme Court found, that the purpose of setting up the Commission of Inquiry in that case was, to promote measures for maintaining purity and integrity in the administration and in the political life of the State and not the character assassination of Biren Mitra and Biju Patnaik Ministries and their group as alleged by the petitioners. In Bakshi Gulam Mohammad's case : AIR1967SC122 the Supreme Court found that the matters referred to the Commission were definite matters of public importance and these were 'definite' as they were not vague.
The Supreme Court observed that public men should be called upon to face the consequences if they fail in their duty. The Commission was concerned with 38 instances dealing with abuse of official position and of the assets of Bakshi Gulam Mohammad. The Supreme Court observed: 'this was necessary for the purpose of ensuring cleanliness of public life.'
56. In Krishna Ballav Sahay's case : 1969CriLJ520 , the Commission of Inquiry was directed against Ex Chief Minister by the succeeding Ministry. The Supreme Court found on perusal of the grounds given in the notification that the charges were specific. The Court further found that the affidavit-in-opposition filed on behalf of the Government had made out a sufficient case for inquiry.
57. The petitioner has prepared an elaborate and comprehensive chart. Perusal of the chart would show that item No. 2 deals with the question of large salaries paid to wives and relatives of high executives of the Birla Group of Concerns without any service or inadequate service being rendered by them in recompense.
58. It is urged by the petitioners that nothing is indicated what is meant by 'large salaries' or by high executive or by relative. It is not indicated as to whether the largeness of salary is dependent upon the mera quantum of the payment or with reference to the service rendered. It may be that the salary of Rs. 1,000/- is not at all high for a qualified executive but may be high in the case of an ordinary employee. Different enactments have different concepts as to largeness of salary. Section 21? (2-A) of Companies Act, 1956 proceeds on the basis that Rs. 3,000/- per month is a high salary whereas Section 40-A of the Income-tax Act, 1961 treats salaries above Rs. 5,000/- as large. Sarkar Commission has adopted its own figure of Rs. 1,000/- per month inclusive of perquisite as a high salary. Therefore, it is contended that the terms of item 2 of Schedule 'C are extremely vague. The names of the executives have not been mentioned. The names of the companies have also not been mentioned. High executive and relatives referred to are too vague and indefinite. The test of inadequate service ii again too vague.
59. With regard to item 4 of Schedule 'C', it relates to allegation of defrauding or attempt to defraud Government of its legitimate revenues, unauthorised retention of foreign exchange abroad by manipulation of invoice values of the goods imported or exported or any other defrauding or attempt to defraud Government of foreign exchange. It is urged that the scope of inquiry cannot at all be ascertained under this item. There are numerous enactments which impose revenue. The indefiniteness of the term of reference could be judged by the fact that it would include and embrace even road tax for vehicles, corporation taxes, octroi, cess, licence fees for different licences under different laws besides income-tax, wealth tax, sales tax, gift tax, estate duty expenditure tax. Central excise etc. It is also not indicated as to what defrauding signifies. The extent of the vagueness or indefiniteness and arbitrariness would be evident from the requisition made by the Commission by which particulars of cost of construction of roads, culverts, drains, paths etc. were asked for without even indicating as to how the same are relevant under the said item.
60. The retention of foreign ex-change abroad by manipulation of invoice values are also utterly vague. Reference was made to a speech of Sri Morarji Desai in Parliament where he said 'Four allegations related to Birla Companies abroad. The first two are too general. They say, they are doing under-invoicing or over-invoicing. Now, how am I to find out anything from there? There is nothing mentioned. They say that they are keeping moneys there. Now nothing can be found out. How am I to find a phantom? As regards the Swiss firm we made inquiries there and nothing could be found and the banks would not help, these banks would not give us any information. If there is anything shown from which we can take wen some clue then something can be found; but there is nothing to be found here.' (Statement made on 5th March, 1969 in Rajya Sabha).
61. Reference was also made to the statement of Late Fakiruddin Ali Ahemed wherein he said 'Action is being taken against the persons responsible for the several infringements wherever there is a prima facie case, The Central Bureau of Investigation has also investigated serious offences and prosecutions are either launched or are being contemplated after further investigation.'
62. Item No. 9 refers to the alleged manipulation of cost structure. Nothing has been specified as to what manipulation was made in respect of which particular goods. In the Ministerial findings dealing with these allegations it was stated as under : 'no reference has been made to any particular company in these allegations nor to any specific case. It is considered that these allegations are too vague and general to be pursued effectively'.
63. Item No. II relates to undue benefit derived by Birla Group of concerns by employing senior government servants and whether there was an impropriety involved by such employment. The finding of the government is as follows :-- It is true that some retired officers and relatives of ministers and Government Officers have taken up employment under Birlas. Where rules regulating the service of Government officers required them to obtain prior permission of Government to take up commercial employment within two years of employment, the rule is being enforced. As regards employment of members of families or dependants of Government servants in private firms there are appropriate provisions in the statutory conduct rules to regulate such matters (vide Ministry of Home Affairs -- Appendix V -- Page 36).
64. Item No. 12 relates to the employment of large number of contact men in the Birla Group of concerns. The finding of the Government is: the revised secret list of contact men contains names of two persons belonging to the Birla Group of Companies. Names are included in the list if contact men came to averse notice specifically during the investigation of any case or inquiry by C. B. I.
65. Item No. 13 deals with free treatment of senior Government servants or well known politicians at the Bombay Hospital run by them. The finding of the Government is 'confidential inquiry was made out No evidence is available to support the allegation that a number of very senior officers and well known politicians have been treated free at hospitals.'
66. The decisions of the Supreme Court relating to Commission appointed under the Act fall into two groups of clauses that is to say (i) relating to a company and (ii) relating to conduct of erstwhile ministers. The Supreme Court emphasised that a Commission of inquiry is necessary to establish cleanliness in public life but must relate to the definite matters of public importance.
67. My attention was drawn by Mr. Roychowdhury to the Ministerial speech made before Parliament. A question may arise how far and to what extent the Minister's speech in Parliament is relevant for determination of definite matters of public importance. The Minister's speech is neither conclusive nor binding on the Courts for determination whether the matters referred to by the Minister before Parliament are definite matters of public importance or not. But those speeches are relevant for the purpose of knowing the mind of the Government and its own opinion on the matters discussed about.
68. Dalmia's case : 1SCR279 relates to the affairs of the company. The dominant purpose of setting up the Commission of Inquiry under the Commission of Inquiry Act is to preserve the purity and integrity of public administration and to take legislative and administrative measures on the recommendation of the) Commission to eradicate the evil found or to implement the beneficial objects. Detailed reference has been made to each and every impugned item of Schedule 'C' to the notification for the purpose of finding out whether those can be regarded as definite matters of public importance and whether those matters required further investigation by Sarkar Commission.
69. What is a matter of 'public importance' has been considered by the Royal Commission on Tribunals of Inquiry, 1966 under the Chairmanship of the Rt. Hon'ble Lord Justice Salmon. In its said report Royal Commission felt that matters which cannot be dealt with by ordinary, civil and criminal processes and/or rare occasions when a nationwide crisis of confidence occurs, the appointment of a Commission of Inquiry is justified. In Paragraph 28 of the said report it was observed as follows :--
'Normally persons cannot be brought before a tribunal and questioned save in civil or criminal proceedings. Such proceedings are hedged around by long standing and effective safeguards to protect the individual. The inquisitorial procedure is alien to the concept of justice generally accepted in the United Kingdom. There are, however, exceptional cases in which such procedures must be used to preserve the purity and integrity of our public life without which a successful democracy is impossible. It is essential that on the very rare occasions when crises of public confidence occur, the evil if it exists, shall be exposed so that it may be rooted out; or if it does not exist, the public shall be satisfied that in reality there is no substance in the prevalent rumours and suspicions by which they have been disturbed. We are satisfied that this would be difficult if not impo