IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH C.W.P. No. 6038 OF 2002 Date of Decision: April 25, 2008 Bakshi Ram Arora and others ...Petitioners Versus State of Punjab and others …Respondents CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE T.P.S. MANN Present: Mr. M.L. Sarin, Senior Advocate, with Mr. Hemant Sarin, Advocate, Mr. P.S. Dhaliwal, Advocate, Mr. Dheeraj Jain, Advocate, for the petitioner(s). Ms. Charu Tuli, Sr. DAG, Punjab, Mr. Vishal Sodhi, Advocate, for Mr. Arun Walia, Advocate, for the respondent(s). M.M.KUMAR, J. This order shall dispose of C.W.P. Nos. 6038, 6039, 6252, 6253, 6254, 6255, 6289, 6318 and 6320 of 2002. However, facts are being referred from C.W.P. No. 6038 of 2002, which has been filed by the then Chairman and the Trustees of Improvement Trust, Amritsar. These petitions filed by the Chairmen and/or Trustees of various Improvement Trusts of the State of Punjab are C.W.P. No. 6038 of 2002 directed against dissolution of trusts in pursuance to power of the respondent State under Section 103 of the Punjab Town Improvement Act, 1922 (for brevity, ‘the Trust Act’). The petitioners have claimed that since they owe allegiance to the Bharatiya Janta Party (BJP) or Shiromani Akali Dal (Badal), they have been victimised by the Congress Government and the dissolution of trusts after capturing power in the State of Punjab by the Congress is malicious. It is important to notice that the Trust Act postulates improvement and expansion of towns in Punjab and in that regard the respondent State has constituted Improvement Trusts for various towns to ensure proper and planned development. The Improvement Trust, Amritsar, was constituted under the provisions of Section 3 of the Trust Act. As per Section 4(1) of the Trust Act, a trust consists of a Chairman and 9 other Trustees. Three officers serving under the State Government are appointed as Trustees, which include Town Planner, an Engineer not below the rank of Executive Engineer from the Building and Road Branch or Public Health of Public Works Department of the State Government and another officer not below the rank of Extra Assistant Commissioner. Three members of the Municipal Committee or the Corporation as the case may be are required to be the Trustees and then there is provision for three other persons. The Chairman and the Trustees as per Section 4(1) of the Trust Act are required to be appointed by the State Government by notification. Under Section 5 of the Trust Act, the term of the office of the Chairman of the Trust is to be fixed by the State Government but it must not exceed four years. Under Section 6 of the Trust Act, 2 C.W.P. No. 6038 of 2002 the term of every Trustee elected under clause (b) of Section 4(1) of the Trust Act is two years or until he ceases to be a member of the Municipal Committee or Corporation, whichever is less. The term of office of other Trustees appointed under clause (c) of Section 4(1) of the Trust Act is two years and the term of other trustees appointed under clause (a) of Section 4(1) of the Trust Act shall expire when such Trustees cease to hold office by virtue of which they were appointed. Petitioner No. 1 being elected Councilor of Municipal Corporation, Amritsar, was appointed as the Chairman of the Trust for a period of two years, vide notification dated 24.4.2000 (P-1). His term was extended on 6.12.2001 (P-2) for a further period of two years with effect from the expiry of his earlier term of two years. It is claimed that petitioner No. 1 was to continue as Chairman of the Trust till 23.4.2004. Likewise, claim has been made in respect of other Trustees. A further claim by the petitioners has been made that the trust has the largest budget amongst all the Improvement Trusts in the State of Punjab and that the Trusts did not receive any grant or financial aid from the State Government, which are self-sustaining institutions and generate income by development, sale or leasing out of vacant and built up properties. Petitioner No. 1 has claimed that at the time of taking over as Chairman of the trust, its financial condition was deplorable as loans of principal amount of Rs. 44 crores were due to be repaid, which after adding interest had swelled up to Rs. 67 crores. The petitioners have got executed many 3 C.W.P. No. 6038 of 2002 profitable development schemes resulting in increase of income of the trust, which has risen to Rs. 27 crores in 1996-97 and to Rs. 56 crores in 2001-02. The projected income of the trust for 2002-03 has been estimated at Rs. 50.73 crores. The trust has approximately Rs.13.5 crores in FDRs and over Rs.2 crores in its current account besides paying the principal loan amount of Rs.44 crores. The petitioners have made endeavour to provide best amenities to the residents of Amritsar and a record number of open auctions were held with complete transparency. A reference has been made to various other auctions, execution of schemes and other profitable ventures in paras 10, 11 and 12. A reference has also been made to multi-storey parking lot on Lawrance Road, Amritsar at the approximate cost of Rs. 6 crores. On 4.4.2002, the respondent State issued a notification under Section 103(1) of the Trust Act declaring that the trust stood dissolved (P-8). Similar notifications were simultaneously issued dissolving all the Improvement Trusts in the State of Punjab. On the same day the Deputy Commissioner of the district was appointed as Administrator of the trust (P-9). In the written statement filed by respondent Nos. 1 and 2 the stand taken is that dissolution of the trust does not cause any stigma nor it leads to any penal consequences. The Chairman and the trustees are governed by the doctrine of pleasure. It is in this context that a distinction has been made by the respondents in Section 72-F of the Trust Act, which envisages issuance of a show cause notice, and Section 103 of the Trust Act, which does not provide for any such 4 C.W.P. No. 6038 of 2002 show cause notice, reply and hearing. It is claimed that no one has any vested right to continue as the Chairman or the Trustee or compelling the State to continue the working of the trust. In that regard, reliance has been placed on the judgment of Hon’ble the Supreme Court in the case of State of Punjab v. Tehal Singh, (2002) 2 SCC 7. It has also been asserted that the legislature deliberately did not provide for compliance of principles of natural justice when Section 103 of the Trust Act is invoked because wherever the intention of the legislature was to provide for such procedure it has expressly been provided as in Section 72-F of the Trust Act. On merit, the respondents have taken the stand that the petitioners are taking illegitimate credit for the efforts made by their predecessor who had made viable development schemes. The fruits of those schemes started pouring in during the tenure of the petitioners. In that regard reference has been made to repayment of loan pointing out that the loan taken from HUDCO in January 1998 was to be repaid in 28 instalments by June 2005. It was on account of unwise act of the petitioners that the loan has been paid by October 2001. It has been alleged that the petitioners abdicated their duties to bring about imperative core area improvements and carry out vital development works concerning ongoing schemes, which was their primary task. There are further allegations made in paras 9, 10, 11, 12 and 14. The respondents have further taken the stand that an in- depth investigation by the Deputy Commissioner showed that petitioner No. 1 has been found prima facie guilty of very serious irregularity while making the recruitments. The report has been 5 C.W.P. No. 6038 of 2002 quoted indicting the Chairman, which reads as follows:- 6 C.W.P. No. 6038 of 2002 “I have carefully considered the facts as brought out on the file, and perused the replies of the concerned persons. It is clear that the whole recruitment process was carried out in unseemly haste, keeping in view the expectation that the elections can be announced at any time. The advertisement in the newspaper (DDLB, Amritsar has mentioned that the advt. was placed only in the Dainik Tribune dated 7.01.2001, whereas Executive Officer has mentioned that it was placed in 3 newspapers though he has not specified which newspapers) was made on 7.12.2001, and the date of the Interview was fixed for 18.12.2001, i.e., only 11 days. Hence, it is not clear as to why 11 days were given. Normally, at least, 15 days time should be given so that the necessary preparations on the part of the candidates may be made. Then the interview was held on 18.12.2001, by a Sub-committee, in which an Accountant-rank official took the place of Deputy Controller (F&A). The Chairman, Improvement Trust, in his reply (Flag-B) dated 2.2.02 has mentioned that “After the exhaustive test and interview, the Sub- committee recommended the name of the persons”. There is nothing on the record or in the report of DDLB, Amritsar to show what was the criterion on the so called exhaustive test and interview, and what were the marks scored by each of the candidates. The appointment letters were then issued on 26.12.2001. 7 C.W.P. No. 6038 of 2002 It is mentioned that the model code of conduct, due to the announcement of the schedule of the elections, came into force on 26.12.2001. In the normal course, the appointment letters were to be sent to the home addresses of the candidates. It is mentioned that the selected candidates, Smt. Meenakshi belongs to Tehsil Dera Baba Nanak (Gurdaspur), and the other 2 to Amritsar. The appointment letters were issued at their home addresses vide No. AIT/DC/9955, 9957, 9959, dated 26.12.2001. Very significantly, a copy of the appointment letters were also endorsed to Civil Surgeon, Amritsar, with a request that whenever these candidates approach him for medical, he may do so. In violation of the Code of Conduct, and without seeking medical examination report of the Civil Surgeon, the said 3 candidates were shown as having joined service and submitting Attendance Report on 26.12.2001 itself. It is apparent that undue favor was shown to them and the Improvement Trust authorities went well out of their way to favor the selected candidates by allowing them to join without medical examination even in clear violation of the Government rules. Moreover, no mention is there whether any sort of preliminary typing test was carried out, as the power to allow further time to pass the typing test is there only in case the candidate has appeared in a test and failed, due to which he may be given another 8 C.W.P. No. 6038 of 2002 chance within a fixed time frame. I feel it is amply clear that the Chairmen, Improvement Trust, Amritsar, has violated the model code of conduct by taking shelter behind the fact that all the necessary was done on 26.12.2001, whereas from the above conspectus it is clear that undue favor for whatever reasons has been shown in the unseemly hasty manner in which the recruitment has taken place. ….” The respondents have then taken the stand that on 25.3.2002 the Government issued direction to the Director, Local Government to supply the latest and upto date information regarding the status of the services being rendered by the improvement trusts so as to take a considered view as to how to proceed to accomplish the object of reversing the tide of urban decay in Punjab. It was further directed that data concerning development expenditure be carefully analyzed from the budget documents of various trusts. Thereafter the Director, Local Government obtained information, which was analyzed by the Director, Local government. It was after due application of mind with a free, fair and bona fide disposition that the respondents concluded that it was not expedient to continue the improvement trusts to exist. It was found that the trusts miserably failed to discharge their duties diligently. They virtually made no worthwhile and desirable efforts to promote the development despite having required funds at their disposal. As a result of the aforementioned factual position the respondents passed identical orders dissolving all trusts in the State of Punjab (P-8), which reads 9 C.W.P. No. 6038 of 2002 as follows:- “ Government of Punjab Department of Local Government (Local Government Branch-II) Notification The 4th April, 2002 No. 4/29/2002-4LGII/3448.- Whereas in the opinion of the State Government, it is expedient that the Amritsar Improvement Trust shall cease to exist; Now, therefore, in exercise of the powers conferred by sub-section (1) of Section 103 of the Punjab Town Improvement Act, 1922 (Punjab Act 4 of 1922), and all other powers enabling him in this behalf, the Governor of Punjab is pleased to declare that the Amritsar Improvement Trust shall stand dissolved on and with effect from the date of publication of this notification in the official gazette. SARVESH KAUSHAL, I.A.S. Secretary to Government, Punjab, Department of Local Government.” A separate written statement has been filed by respondent No. 3 in which similar stand has been taken stating that the Administrator had taken over the trust w.e.f. 5.4.2002. Sarv Shri M.L. Sarin, Hemant Sarin, P.S. Dhaliwal and Dheeraj Jain, learned counsel for the petitioners have argued that Section 103 of the Trust Act is liable to be declared as ultra vires of 10 C.W.P. No. 6038 of 2002 Article 14 of the Constitution because it confer on the State Government unbridled and arbitrary power to dissolve an Improvement Trust. They have argued that the notifications dissolving the trust, issued on 4.4.2002 (P-8) and appointing the Deputy Commissioner as Administrator (P-9), are also vitiated because there is gross violation of principles of natural justice and the rule of audi alteram partem. It has then been contended that Section 72-F of the Trust Act contemplates issuance of show cause notice before suspension and supersession of trusts and no such safeguards are provided when the trust is to be dissolved under Section 103 of the Trust Act. According to the learned counsel, in the public perception supersession or dissolution of trusts has one and the same meaning. According to the learned counsel the order is otherwise stigmatic because general perception of the masses for dissolution of Trusts is that the petitioners are incompetent to perform their duties imposed by the Trust Act or that they had abused their powers. They have maintained that once this is the consequence then a stigma would attach to them and principles of natural justice requiring affording of opportunity of hearing must be read into the power exercisable under Section 103 of the Trust Act. They have argued that in fact power should be deemed to be exercised under Section 72-F of the Trust Act as individual remarks against integrity and honesty have been made in the written statement. In support of their submissions they have placed reliance on a Division Bench judgment of this Court in the case of Surjit Singh Sud, Chairman, Improvement Trust, Jullundur v. State of Punjab, 1974 PLR 624, 11 C.W.P. No. 6038 of 2002 and argued that Section 5 as it stood at the relevant time was held to have conferred on the State Government an unbridled, uncanalised and arbitrary power to remove a Chairman of the Trust because no guidelines were provided in accordance with the principles of Article 14 of the Constitution. The petitioners have also placed reliance on a judgment of Hon’ble the Supreme Court in the case of S.L. Kapoor v. Jagmohan, AIR 1981 SC 136, where principles of natural justice were held to be applicable when the Municipal Committee was superseded and a Constitution Bench judgment of Hon’ble the Supreme Court in the case of Delhi Transport Corporation v. D.T.C. Mazdoor Congress, AIR 1991 SC 101, and have argued that principles of natural justice must be read into any provision unless they are expressly excluded. The petitioners have also placed reliance on the judgment of Hon’ble the Supreme Court in Tehal Singh’s case (supra). It has been submitted that the power exercised by the respondent State cannot be regarded as legislative power because Section 103 of the Trust Act does not make a provision for legislative activity or making of legislative instrument or promulgation of general rule of conduct etc. It has then been submitted that there is mala fide exercise of power because the Congress Government on assuming of office had publically declared that all the Chairmen and Trustees of the Improvement Trusts appointed by the previous Akali Dal/BJP Government headed by Sardar Parkash Singh Badal would be removed. Even the statement made by the Minister for Local Bodies, who has been impleaded as respondent in some of the petitions has 12 C.W.P. No. 6038 of 2002 been referred. It has been pointed out that exercise of power in this manner suffers from legal malice because it proceeds on ulterior motive. Learned counsel for the petitioners have made a reference to a judgment of Hon’ble the Supreme Court in the case of Krishna v. State of Maharashtra, (2001) 2 SCC 441, and have pointed out that the expression ‘at any time’ has not been used either in Section 72- E/72-F nor in Section 103 of the Trust Act and same would exclude the pleasure doctrine. It has also been contended that after dissolution of the trusts under Section 103 of the Trust Act, even new Chairman and Trustees were appointed. In that regard our attention has been drawn by Shri Dheeraj Jain, Advocate, to the averments made in Amended C.W.P. No. 6254 of 2002, wherein the order appointing new Chairman and the Trustees have also been challenged. Ms. Charu Tuli, learned State counsel has pointed out that Section 103 of the Trust Act contemplates issuance of a notification, which necessarily involve exercise of legislative power. According to the learned counsel once exercise of power is considered as legislative then no principles of natural justice would apply, as has been held by Hon’ble the Supreme Court in Tehal Singh’s case (supra). She has also submitted that the constitutional validity of Section 103 of the Trust Act, was challenged before this Court and the same stands upheld in the case of Joginder Singh v. State of Haryana, 1972 ILR 232 (P&H). She has further argued that once a trust has been dissolved, the Chairman or the Trustees have no right to continue. She has also placed reliance on a Division 13 C.W.P. No. 6038 of 2002 Bench judgment of this Court in the case of Avjinder Singh Sibia v. S. Parkash Singh Badal and others (C.W.P. No. 10900 of 2007, decided on 29.10.2007), upholding dissolution of the Market Committee by issuance of an Ordinance, which was later on enacted as Punjab Act No. 5 of 2007. In the light of the provisions of the Trust Act, facts of these cases and rival contentions raised by all the learned counsel for the parties, we are of the view that following questions of law have emerged for determination of this Court:- (A) Whether Section 103 of the Trust Act is violative of Article 14 of the Constitution for the reason that it confers unbridled, unguided and arbitrary power on the Government to dissolve Trusts? (B) Whether the nature of power exercised in issuing impugned notifications under Section 103 of the Trust Act is legislative or administrative? (C) Whether the impugned notifications dated 4.4.2002 could be considered to have been issued under Section 72-F of the Trust Act? RE: QUESTION (A): The only argument raised by the learned counsel for the petitioners is that Section 103 of the Trust Act confers unbridled, unguided and arbitrary power on the State Government to dissolve an Improvement Trust or to supersede it. However, nothing has been pointed out as to how the power conferred on the State Government is unbridled, arbitrary or without guidance. It is well settled that all 14 C.W.P. No. 6038 of 2002 official acts are presumed to be valid and consistent with Constitution unless shown otherwise. The heavy burden on the shoulders of the petitioners has not been discharged. A perusal of Section 103 of the Trust Act shows that after assessing over the whole situation the State Government is to form an opinion as to whether it is expedient that the Trust shall cease to exist. Firstly, it is for the State Government to decide the question of expediency or that the continued existence of the Trust was unnecessary. It cannot be concluded that the language of the Section is such which may be misused or it may be regarded as arbitrary. There are sufficient guidelines disclosed in Section 103(1) of the Trust Act. The State Government has formed its opinion that the continued existence of the Trust was unnecessary or it is not expedient that the Trust shall continue. There is ample material on record to show that the opinion formed by the State Government was based on the aforementioned considerations and the report has been obtained by the Government from the Director, Local Government. Moreover, the question has already been considered by this Court in Joginder Singh’s case (supra). In para 5, learned Single Judge while rejecting a similar contention has held as under:- “ (5) The last contention of Mr. Wasu is that setion 103 of the Act is ultra vires of the Constitution inasmuch as it gives wide, unbridled and despotic power capable of abuse by the State Government in the matter of abolition of a trust. It is thus urged that the power so given can be abused and exercised for extraneous reasons and that section 103 must, therefore, be struck down as 15 C.W.P. No. 6038 of 2002 unconstitutional. I am satisfied that there is no substance in the contention raised by the learned counsel. The creation of a trust or abolition thereof is purely an administrative act requiring no judicial approach. The Act is concerned with the preparation and execution of schemes for the improvement of a town and the State Government in exercise of its executive power, is alone the best judge to decide whether a trust be created or allowed to continue. It is not for this Court to sit in judgment over a decision of the State Government in this regard and direct that a trust be not abolished because it will entail removal of a Chairman or a member from his office. No legal right of a citizen is involved in the matter of creation, continuance or abolition of a trust and the question of abuse of authority by the State Government thereby prejudicially affecting any such right does not, therefore, arise. The judge of “expendiency” is the State Government alone. In the instant case, we find, as stated by the petitioner himself, that several schemes had been prepared and none executed. The State, in its return, has made an averment that there were complaints against the working of the Trust. The mere fact that schemes are made and not executed is by itself sufficient for the State Government to abolish a trust. When a trust is abolished, the functions of the trust and the Chairman are taken over by 16 C.W.P. No. 6038 of 2002 the municipal committee and its President as envisaged in section 103(2)(c) of the Act. It is for the State Government thus to decide whether development of a town should be left to a municipal committee alone or an improvement trust be created.” The argument of the learned counsel for the petitioners that exercise of power is mala fide and is colourable, has also not impressed us because once the exercise of power is regarded as legislative in character as would be evident from the discussion under Question