IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.BALAKRISHNAN NAIR TUESDAY, THE 7TH OCTOBER 2008 / 15TH ASWINA 1930 WP(C).No. 6535 of 2004(C) ------------------------- PETITIONER(S): --------------- S.K. ABDUL RASHEED, SRAMBIYAKKAL HOUSE, VADANAPPILLY, THRISSUR DISTRICT. BY ADV. SRI.K.RAMAKUMAR (SR.) RESPONDENT(S): --------------- 1. THE STATE OF KERALA, REPRESENTED BY ITS SECRETARY, DEPARTMENT OF INDUSTRIES, GOVERNMENT OF KERALA, THIRUVANANTHAPURAM. 2. THE KERALA STATE INDUSTRIAL DEVELOPMENT CORPORATION, KESTON ROAD, KOWDIAR, THIRUVANANTHAPURAM, REPRESENTED BY ITS MANAGING DIRECTOR. ADV. SRI.M.PATHROSE MATTHAI (SR.) FOR R2 SHRI.P.K.RAVIKRISHNAN, GOVERNMENT PLEADER THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 07/10/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WPC NO.6535/2004 APPENDIX PETITIONER'S EXHIBITS P1 : COPY OF THE REPRESENTATION DATED 05/04/2002 SUBMITTED BY THE PETIITONER BEFORE R1. P2 : COPY OF THE JUDGMENT DATED 13/11/2002 IN OP NO.12454/2002. P3 : COPY OF THE ORDER DATED 28/02/2003 ISSUED BY THE GOVERNMENT. P4 : COPY OF the REPRESENTATION DATED 15/07/2003 SUBMITTED BEFORE THE MINISTER FOR INDUSTRIES. P5 : COPY OF THE ORDER DATED 09/10/2003 ISSUED BY THE GOVERNMENT. P6 : COPY OF THE REPRESENTATION DATED 10/11/2003 SUBMITTED BY THE PETITIONER BEFORE R2. P7 : COPY OF THE COMMUNICATION DATED 01/01/2004 RECEIVED BY THE PETITIONER FROM R2. //TRUE COPY// PA TO JUDGE. jg C.R. K.BALAKRISHNAN NAIR, J. ------------------------- W.P.(C.) No.6535 of 2004 --------------------------------- Dated, this the 7th day of October, 2008 J U D G M E N T The petitioner was the Managing Director of M/s.Star Agro & Wheat Roller Flour Mills Private Limited. The unit was established by availing a loan from the 2nd respondent Kerala State Industrial Development Corporation Limited (KSIDC). The business of the company ended in a loss. So the company could not pay the amount due to the 2nd respondent. The said respondent took over the assets of the Company under Section 29 of the State Financial Corporations Act. The property was sold in public auction for an amount of Rs.1,51,22,222/-. The amount due to the KSIDC was only Rs.1,12,38,205/-. The Federal bank Limited had a second charge on the property and for recovering the amount due to it, the Bank moved the Debt Recovery Tribunal and as per the direction of the DRT, the balance amount was deposited with the said Tribunal. 2. The petitioner, after the sale was over, filed Ext.P1 representation before the Government, claiming that the closure WP(C) No. 6535/2004 -2- of the loan account may be treated as one under the One Time Settlement Scheme and the excess amount received by the KSIDC may be refunded to him. This Court, by Ext.P2 judgment dated 13/11/2002 directed the Government to consider the said representation. The Government after hearing both sides, that is the petitioner and the second respondent, issued Ext.P3 communication. The operative portion of the said communication reads as follows :- “On the basis of above facts, it is directed that KSIDC may take action to apportion 10% of the sale proceeds to the petitioner and settle the issue accordingly.” When the 2nd respondent KSIDC failed to comply with the above direction in Ext.P3, the petitioner submitted Ext.P4 representation before the Government on 15/07/2003. The Government issued Ext.P5 communication to the KSIDC, directing it to reconsider its stand. The petitioner also submitted Ext.P6 representation before the 2nd respondent KSIDC. While so, the petitioner was informed by the KSIDC by Ext.P7 communication dated 01/01/2004 that it cannot agree with his request. In the above WP(C) No. 6535/2004 -3- background, this writ petition was filed, challenging Ext.P7 communication of the 2nd respondent and also praying for a further direction to the said respondent to implement Exts.P3 and P5. The petitioner submits that as long as Ext.P3 remains in force, the 2nd respondent is bound to comply with the directions contained therein. 3. The KSIDC has filed a counter affidavit, resisting the prayers made in the writ petition. According to it, the amount due to it has been recovered, invoking the provisions of Section 29 of the State Financial Corporations Act and the balance amount was deposited with the DRT. The petitioner's company owes an amount of Rs.30 lakhs towards sales tax. Other dues are also payable by the Company to the local Grama Panchayat, KSEB, etc. Those authorities may claim the amount from the 2nd respondent. It is also submitted that petitioner, who is a shareholder, has no special claim over the assets of the company. The Government issued the order without application of mind. So the same cannot be implemented, it is submitted. 4. Heard the learned counsel on both sides. The learned WP(C) No. 6535/2004 -4- Government Pleader supported the claim of the petitioner. But, Mr.Pathrose Mathai, the learned senior counsel, appearing for the 2nd respondent submitted that the amount of loan taken, which is shown as Rs.13 lakhs in Ext.P3, is not correct. It is evident from Ext.P1 representation itself. The Government have no power or authority to issue an order in the nature of Ext.P3. The Government, without properly applying its mind to the facts of the case, have issued such an order. So, the 2nd respondent is not bound to obey the direction, it is submitted. The learned senior counsel submitted that Ext.P3 is only a letter issued by the Secretary to Government and therefore, it cannot be treated as an order of the Government. Reliance is placed on Article 166 of the Constitution of India and it is submitted that as long as the order is not authenticated as per the Rules of business prescribed under Article 166, the letter issued by the Secretary to Government does not have any efficacy and the same will not bind the 2nd respondent. 5. It is not in dispute that the Governor of the State has powers under the Memorandum of Association of the 2nd WP(C) No. 6535/2004 -5- respondent to issue directions to the said company. Since the issuance of directions to the company is an executive function, it is not a function, which should be discharged in the discretion of the Governor. Such orders, directions can be issued by the Government, in view of the decision of the Apex Court in Samsher Singh Vs. State of Panjab, reported in AIR 1974 SC 2192. The word 'Governor' used in the Memorandum of Association is only a synonym for the word 'Government'. The Government functions as per the Rules of business framed by the Governor, allocating various businesses of the Government to different Ministers and officers under them. When an officer is authorised to act under the Rules of business for the Government, his actions are that of the Government. See, the decision of the Apex Court in Sanjeevi Naidu Vs. State of Madras, reported in AIR 1970 SC 1102, wherein it was held as follows :- “11. We think that the above submissions advanced on behalf of the appellants are without force and are based on a misconception of the principles underlying our Constitution. Under our Constitution, the Governor is WP(C) No. 6535/2004 -6- essentially a constitutional head, the administration of State is run by the Council of Ministers. But in the very nature of things, it is impossible for the Council of Ministers to deal with each and every matter that comes before the Government. In order to obviate that difficulty the Constitution has authorised the Governor under sub- article (3) of Article 166 to make rules for the more convenient transaction of business of the Government of the State and for the allocation amongst its Ministers, the business of the Government. All matters excepting those in which Governor is required to act in his discretion have to be allocated to one or the other of the Ministers on the advice of the Chief Minister. Apart from allocating business among the Ministers, the Governor can also make rules on the advice of his Council of Ministers for more convenient transaction of business. He can, not only allocate the various subjects amongst the Ministers but may go further and designate a particular official to discharge any particular function. But this again he can do only on the advice of the Council of Ministers. 12. The cabinet is responsible to the legislature for every action taken in any of the ministries. That is the essence of joint responsibility. That does not mean that each and every decision must be taken by the cabinet. The political responsibility of the Council of Ministers does not and cannot predicate the personal responsibility of the WP(C) No. 6535/2004 -7- Ministers to discharge all or any of the governmental functions. Similarly an individual Minister is responsible to the legislature for every action taken or omitted to be taken in his ministry. This again is a political responsibility and not personal responsibility. Even the most hard- working minister cannot attend to every business in his department. If he attempts to do it, he is bound to make a mess of his department. In every well-planned administration, most of the decisions are taken by the civil servants who are likely to be experts and not subject to political pressure. The Minister is not expected to burden himself with the day to day administration. His primary function is to lay down the policies and programmes of his ministry while the Council of Ministers settle the major policies and programmes of the Government. When a civil servant takes a decision, he does not do it as delegate of his Minister. He does it on behalf of the Government. It is always open to a Minister to call for any file in his ministry and pass orders. He may also issue directions to the officers in his ministry regarding the disposal of Government business either generally or as regards any specific case. Subject to that over all power, the officers designated by the 'Rules' or the standing orders, can take decisions on behalf of the Government. These officers are the limbs of the Government and not its delegates.” The above principle has been further reiterated by the Apex Court in Samsher Singh's case (supra) in the following manner :- WP(C) No. 6535/2004 -8- “48. The President as well as the Governor is the Constitutional or formal head. The President as well as the Governor exercises his powers and functions conferred on him by or under the Constitution on the aid and advice of his Council of Ministers, save in spheres where the Governor is required by or under the Constitution to exercise his functions in his discretion. Wherever the Constitution requires the satisfaction of the President or the Governor for the exercise by the President or the Governor of any power or function, the satisfaction required by the Constitution is not the personal satisfaction of the President or Governor but the satisfaction of the President or Governor in the Constitutional sense in the Cabinet system of Government, that is, satisfaction of his Council of Ministers on whose aid and advice the President or the Governor generally exercises all his powers and functions. The decision of any Minister or officer under rules of business made under any of these two Article 77 (3) and 166(3) is the decision of the President or the Governor respectively. These articles did not provide for any delegation. Therefore, the decision of Minister or officer under the rules of business is the decision of the President or the Governor.” 6. But, as mentioned earlier, the learned senior counsel for the 2nd respondent submitted that since Ext.P3 letter is not WP(C) No. 6535/2004 -9- authenticated in the prescribed manner, the same will not have any validity. The said contention cannot be accepted. The provisions under Article 166(2), that orders and other instruments made and executed in the name of the Governor shall be authenticated as specified in the rules, are only directive in nature. Any infringement of Article 166(1) or (2) will not affect the validity of the order or direction issued by the Governor. Before referring to the decision of the Apex Court on the above point, it is beneficial to quote Article 166 first. The said article reads as follows :- “166. Conduct of business of the Government of a State.- (1) All executive action of the Government of a State shall be expressed to be taken in the name of the Governor. (2) Orders and other instruments made and executed in the name of the Governor shall be authenticated in such manner as may be specified in rules to be made by the Governor, 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 Governor. (3) The Governor shall make rules for the more convenient transaction of the business of the Government of the WP(C) No. 6535/2004 -10- State, and for the allocation among Ministers of the said business in so far as it is not business with respect to which the Governor is by or under this Constitution required to act in his discretion.” The Apex Court has held that the provisions of Article 166(2) are only directive in nature and even if the order is not authenticated in the prescribed manner, it will be valid and binding. If it is authenticated in the prescribed manner, then that order cannot be challenged on the ground that it is not made or executed by the Governor/Government. If it is not authenticated in the prescribed manner, the only effect is that the party challenging the order can contend that it is not made or executed by the Governor/Government. In that event, the files will have to be produced and the respondents will have to satisfy the Court that in fact, there was a decision of the Government in the matter. The point raised by the learned senior counsel is squarely covered against the 2nd respondent by the decision of the Apex Court in Chithralekha Vs. State of Mysore, reported in AIR 1964 SC 1823. The relevant portion of the said judgment reads as follows:- WP(C) No. 6535/2004 -11- “The next contention advanced is that Annexure IV was invalid as it did not conform to the requirements of Art.166 of the Constitution. As the argument turns upon the form of the said Annexure it will be convenient to read the material part thereof. “Sir, Sub. Award of marks for the “interview” of the candidates seeking admission to Engineering Colleges and Technical Institution. With reference to your letter No.AAS.4.ADW/63/2491, dated the 25th June 1963, on the subject mentioned above, I am directed to state that Government have decided that 25% of the maximum marks ......... Yours faithfully, Sd/- S.Narasappa, Under Secretary to Government, Education Department.” Ex facie this letter shows that it was a communication of the order issued by the Government under the signature of the Under Secretary to the Government, Education Department. Under Art.166 of the Constitution all executive action of the Government of a State shall be expressed to be taken in the name of the Governor, and that orders made in the name of the Governor shall be authenticated in such manner as may be specified in rules to be made by the Governor and the validity of an order WP(C) No. 6535/2004 -12- which is so authenticated shall not be called in question on the ground that it is not an order made by the Governor. If the conditions laid down in this Article are complied with, the order cannot be called in question on the ground that it is not an order made by the Governor. It is contended that as the order in question was not issued in the name of the Governor the order was void and no interviews could be held pursuant to that order. The law on the subject is well settled. In Dattatraya Moreshwar Pangurkar V. State of Bombay, 1952 SCR 612 at p.625: (AIR 1952 SC 181 at pp.185-186). Das, J., as he then was, observed: “Strict compliance with the requirements of Article 166 gives an immunity to the order in that it cannot be challenged on the ground that it is not an order made by the Governor. If, therefore, the requirements of that Article are not complied with, the resulting immunity cannot be claimed by the State. This, however, does not vitiate the order itself .................................... ....... ...... ........................................ Article 166 directs all executive action to be expressed and authenticated in the manner therein laid down but an omission to comply with those provisions does not render the executive action a nullity. Therefore, all that the procedure established by law requires is that the appropriate Government must take a decision as WP(C) No. 6535/2004 -13- to whether the detention order should be confirmed or not under section 11(I).” The same view was reiterated by this Court in State of Bombay Vs. Purushottam Jog Naik, 1952 SCR 674 : (AIR 1952 SC 317) where it was pointed out that though the order in question there was defective in form it was open to the State Government to prove by other means that such an order had been validly made. This view has been reaffirmed by this Court in subsequent decisions : see Ghaio Mall and Sons V. State of Delhi, 1959 SCR 1424: (AIR 1959 SC 65) and it is, therefore, settled law that provisions of Art.166 of the Constitution are only directory and not mandatory in character and, if they are not complied with, it can be established as a question of fact that the impugned order was issued in fact by the State Government or the Governor. The judgment of this Court in Bachhittar Singh V. State of Punjab, (1962) Supp 3 SCR 713: (AIR 1963 SC 395) does not help the appellants, for in that case the order signed by the Revenue Minister was not communicated to the party and, therefore, it was held that there was no effective order. (5) In the light of the aforesaid decisions, let us look at the facts of this case. Though Annexure IV does not conform to the provisions of Art.166 of the Constitution, it ex facie says that an order to the effect mentioned therein was issued by the Government and it is not denied that it was communicated to the selection WP(C) No. 6535/2004 -14- committee. In neither of the affidavits filed by the appellants there was any specific averment that no such order was issued by the Government. In the counter affidavit filed by B.R.Verma, Deputy Secretary to the Government of Mysore, Education Department, there is a clear averment that the Government gave the direction contained in Annexure IV and a similar letter was issued to the Selection Committee for admission to Medical Colleges and this averment was not denied by the appellants by filing any affidavit. In the circumstances when there are no allegations at all in the affidavit that the order was not made by the Government, we have no reason to reject the averment made by the Deputy Secretary to the Government that the order was issued by the Government. There are no merits in this contention.” 7. In this case, admittedly, Ext.P3 letter was issued by the Principal Secretary to Government, Industries Department. It was signed on behalf of the Principal Secretary to Government by the Additional Secretary. The Rules of business of the Government authorise the Principal Secretaries, Secretaries and Additional Secretaries to discharge the business of the Government in the ministry concerned. Ext.P3 letter would show that there is a decision of the Principal Secretary to Government WP(C) No. 6535/2004 -15- regarding the payment to be made by the 2nd respondent to the writ petitioner. His decision, being the decision of the officer authorised by the Rules of business, is the decision of the Government in view of the decisions of the Apex Court in “Sanjeevi Naidu” (supra) and “Samsher Singh” (supra). Therefore, the contention of the 2nd respondent cannot be accepted. The 2nd respondent is normally bound to respect the directions issued by the Government, as the one in Ext.P3. But, the learned senior counsel for the 2nd respondent pointed out that the direction contained in Ext.P3 is issued, relying on wrong facts. There is non-application of mind. So, the order is illegal and void, as being one issued beyond the powers of the Government. Therefore, the 2nd respondent company need not obey it, it is contended. 8. If there is something wrong with Ext.P3, with which the 2nd respondent cannot agree, it should seek review of that order or it may avoid that order by challenging it in appropriate proceedings. As long as Ext.P3 order is remaining in force, the KSIDC is bound by it. So, the petitioner is justified in claiming WP(C) No. 6535/2004 -16- that it should be implemented. In view of the above position, I direct the 1st respondent to take further consequential action against the 2nd respondent for implementing the directions contained in Exts.P3 and P5 communications within a period of three months from the date of production of a copy of this judgment. This writ petition is disposed of as above. (K.BALAKRISHNAN NAIR, JUDGE) jg