Case: The State Of Maharashtra &amp; Anr Vs. B. K. Takkamore &amp; Ors

In July, 1962 the term of office of the present councilors commenced. On July 21, 1965, the Government of Maharashtra issued a notice to respondent No. 1, the Mayor of the Nagpur Municipal Corporation, asking him to show cause why the corporation should not be superseded. On August 1, 1965, respondent No. 1 filed his reply to the show-cause notice. On September 29, 1965, the State Government passed the impugned order superseding the corporation under Ss. 408 and 409 ofthe City of Nagpur Corporation Act, 1948 (C. P. and Berar Act II of 1950). On September 30, 1965, respondent No. 1 filed a writ petition challenging the show-cause notice and the order of super-session. The High Court held that the State Government exercised its power under S. 408 on grounds which were not reasonably related to its legitimate exercise and the finding upon which the order was passed was rationally impossible on the materials before the State Government. The State of Maharashtra now appeals to this court on a certificate granted by the High Court.

Reasoning:
The point whether the order under S. 408 is quasi-judicial or administrative act is not very material, for it is common ground that the present case was not one of emergency and the State Government was bound to give opportunity to the corporation to show cause why the order should not be made7. From this order it appears that there were two grounds on which the State Government formed the opinion that the corporation was not competent to perform the duties imposed on it by or under the Nagpur Municipal Corporation Act, 19489. The opinion of the State Government so far as it is based on the first ground cannot be supported. The show-cause notice did not mention the charge that the councillors planned the expenditure on the basis of uncertain receipts or that they did not exercise proper controls provided by or under the Act. No opportunity was given to the Corporation to explain the charge. Without giving such an opportunity, the State Government could not lawfully find that the charge was proved. The cash balances the corporation vary from day to day. No reasonable person could possibly come to the conclusion that the financial position of the corporation had deteriorated from the fact that the cash balances were Rs. 5,81,000 in March 1962 and Rs. 53,000 on July 12, 1965. The statement that the corporation had no funds to disburse the salaries of its officers and servants had no factual basis. As a matter of fact, the corporation paid the salaries. The dearness allowance was not paid because the bills were not scrutinized. The resolution dated September 4, 1965 referred to in the order was passed long after the show-cause notice was issued, and the corporation was not given an opportunity to explain it. The resolution did not say that the corporation had no funds even to disburse the salaries of its officers and servants. The corporation resolved to raise a loan of Rs. 15 lacs from the State Government, but the loan was not raised. The High Court also pointed out that many of the statements in the statement "A" referred to in the show-cause notice were factually incorrect. The opinion of the State Government based on the first ground cannot be sustained, firstly because the corporation had no opportunity to show-cause against the charge, and secondly, because no reasonable person on the materials before the State Government could possibly form the opinion that the charge was provedIn this background, the State Government could reasonably hold that the passing of the resolution excluding the office note amounted to virtual rejection the conditions mentioned in the note. The High Court was in error in accepting the first contention14. The High Court was also in error in holding that the Government passed the order of September 29, 1965 without considering that universal meterisation posed a formidable problem which could not be overcome without a loan of Rs. 52 lacs in addition to the loan of Rs. 70 lacs. The resolution of July 12, 1965 did not state that the corporation wanted an additional loan of Rs. 52 lacs for meeting the cost of universal meterisation. Even in the answer to the show-cause notice, the corporation did not say that it wanted to raise an additional loan of Rs. 52 lacs. The answer stated that the raising of this sum for the present was an impossibility. There is nothing to show that the State Government would not have guaranteed repayment of this additional loan or that it was not possible to raise the loan backed by a Government guarantee. In the writ petition respondent No. 1 gave a summary of the reply to the show-cause notice. But there was no specific averment in the petition supported by affidavit that Rs. 52 lacs was necessary for the meterisation and that the raising of this sum was an impossibility. That is why the point was not dealt with in the return to the writ petition. Even assuming that the meterisation would cost Rs. 52 lacs, there is nothing to show that the government would not have guaranteed the loan for this sum or that the corporation could not have raised the loan with this guarantee. Moreover, if the government was right in assuming that the corporation had refused to entertain the proposal of meterisation, the question of raising funds for the meterisation would not arise and would be irrelevant. The government passed the order after taking into consideration the reply to the show-cause notice. There were materials before the State Government upon which it could find that the corporation had neglected to undertake an improvement of water supply and to provide a sufficient supply of water for private and public purposes. On the basis of this finding, the State government could form the opinion that the corporation was not competent to perform the duties imposed on it by or under the ActThe principle underlying these decisions appears to be this. An administrative or quasi-judicial order based on several grounds, all taken together, cannot be sustained if it be found that some of the grounds are non-existent or irrelevant, and there is nothing to show that the authority would have passed the order on the basis of the other relevant and existing grounds some of which are found to be non-existent or irrelevant, can be sustained would have passed the order on the basis of the other relevant and existing grounds, and the exclusion of the irrelevant or non-existent grounds could not have affected the ultimate opinion or decision16. Now the opinion of the State Government that the corporation was not competent to perform the duties imposed on it by or under the Act, was based on two grounds one of which is relevant and the other irrelevantThe order dated September 29, 1965, read with the notice dated July 21, 1963 shows that in the opinion of the State Government the second ground above was serious enough to warrant action under S. 408 (1) and was sufficient to establish that the corporation was not competent to perform its duties under the Act.The fact that the first ground mentioned in the order is now found not to exist and is irrelevant, does not affect the order. We are reasonably certain that the State Government would have passed the order on the basis of the second ground alone. The order is, therefore, valid and cannot be set aside3. The consequence of supersession of the corporation under S. 408 is that all its members vacate their office, all powers and duties of the corporation, the Standing Committee and the chief executive officer may be exercised by the administrator of the city appointed by the State Government, and all property vested in the corporation vests in the administrator (S. 408).