Hon'ble Raghvendra Kumar, J.
(Per Krishna Murari, J.) Petitioner, an elected Chairman of the Nagar Panchayat, Shohratgarh, District Siddharth Nagar, has approached this Court challenging the show cause notice issued by respondent no. 1 dated 15.10.2015 in exercise of the powers conferred by Section 48 (2) of the U.P. Municipalities Act, 1967 (hereinafter referred to as the 'Act') as to why she may not be removed from the elected post. The financial and administrative powers were also ceased during the pendency of the proceedings for removal.
We have heard Shri Manish Goyal, learned counsel for the petitioner and Shri Ashok Kumar Pandey, learned Additional Advocate General assisted by S/Shri Y.K. Srivastava and R.N. Pandey for the State respondents.
With the consent of learned counsel for the parties, we have proceeded to hear the petition on merits and decide the same at this stage.
Undisputed facts are as follows.
Certain complaints were made against the petitioner alleging irregularities in grant of contractual work by Nagar Panchayat resulting into financial loss, which were inquired into through a committee consisting of Sub Divisional Magistrate, Naugarh and Executive Engineer, Provincial Division, P.W.D., Siddharth Nagar, which submitted a report dated 07.02.2015, whereupon the District Magistrate forwarded the same to the State Government. An explanation was called from the petitioner vide notice dated 23.03.2015. After the petitioner submitted her explanation dated 16.04.2015, respondent no. 1 issued a notice dated 15.10.2015 requiring her to show cause within a period of 15 days as to why she should not be removed from the post of Chairman, Nagar Panchayat. The financial and administrative powers during the pendency of the proceedings were ceased.
Learned counsel for the petitioner contends that there has been total non-application of mind by the State Government to the explanation dated 16.04.2015 submitted by the petitioner, inasmuch as the show cause notice does not record any reason as to why the explanation submitted by the petitioner was not found to be satisfactory. Total non-application of mind and non-consideration of the explanation submitted by the petitioner vitiates the order ceasing financial and administrative powers. It is further submitted that no opportunity of hearing was provided to the petitioner after she submitted her explanation and, thus, cessation of financial and administrative power is in gross violation of principles of natural justice.
In reply, learned Additional Advocate General submits that an enquiry was instituted into the charges levelled against the petitioner, which was conducted by a committee constituted by Sub Divisional Magistrate and the Executive Engineer, Provincial Division, P.W.D., who submitted their report dated 07.02.2015. The copy of the enquiry report was duly supplied to the petitioner along with the notice calling upon her to submit her explanation. The entire matter was forwarded to the State Government, after being satisfied that the petitioner was prima facie guilty of the charges levelled, issued a show cause notice calling for her explanation as to why she should not be removed from the elected post and since the charges were serious and grave in nature, her financial and administrative power shall remain ceased during the pendency of the proceedings.
The State Government is empowered to remove an elected President of a municipality in exercise of powers conferred by Section 48 (2) of the Act. The said section reads as under.
"48. Removal of President.- (1) ...... [omitted] (2) Where the State Government has, at any time, reason to believe that -
(a) there has been a failure on the part of the President in performing his duties, or
(b) the President has-
(i) incurred any of the disqualifications mentioned in Sections 12-D and 43-AA; or
(ii) within the meaning of Section 82 knowingly acquired or continued to have, directly or indirectly or by a partner, any share or interest, whether pecuniary or of any other nature, in any contract or employment with, by or on behalf of the Municipality; or
(iii) knowingly acted as a President or as a member in a matter other than a matter referred to in Clauses (a) to (g) of sub-section (2) of Section 82, in which he has, directly or indirectly, or by a partner, any share or interest whether pecuniary or of any other nature, or in which he was professionally interested on behalf of a client, principal or other person; or
(iv) being a legal practitioner acted or appeared in any suit or other proceeding on behalf of any person against the Municipality or against the State Government in respect of nazul land entrusted to the management of the Municipality or acted or appeared for or on behalf of any person against whom a criminal proceeding has been instituted by or on behalf of the Municipality; or
(v) abandoned his ordinary place of residence in the municipal area concerned; or
(vi) been guilty of misconduct in the discharge of his duties; or
(vii) during the current or the last preceding term of the Municipality, acting as President or as Chairman of a Committee, or as member or in any other capacity whatsoever, whether before or after the commencement of the Uttar Pradesh Urban Local Self-Government Laws (Amendment) Act, 1976, so flagrantly abused his position, or so willfully contravened any of the provisions of this Act or any rule, regulation or bye-laws, or caused such loss or damage to the fund or property of the Municipality as to render him unfit to continue to be President; or
(viii) been guilty of any other misconduct whether committed before or after the commencement of the Uttar Pradesh Urban Local Self-Government Laws (Amendment) Act, 1976 whether as President or as member; or
(ix) caused loss or damage to any property of the Municipality; or
(x) misappropriated or misused Municipal fund; or
(xi) acted against the interest of the Municipality; or
(xii) contravened the provisions of this Act or the rules made thereunder; or
(xiii) created an obstacle in a meeting of the Municipality in such manner that it becomes impossible for the Municipality to conduct its business in the meeting or instigated someone to do so; or
(xiv) willfully contravened any order or direction of the State Government given under this Act; or
(xv) misbehaved without any lawful justification with the officers or employees of the Municipality; or (xvi) disposed of any property belonging to the Municipality at a price less than its market value; or (xvii) encroached, or assisted or instigated any other person to encroach upon the land, building or any other immovable property of the Municipality;
it may call upon him to show cause within the time to be specified in the notice why he should not be removed from office.
Provided that where the State Government has reason to believe that the allegations do not appear to be groundless and the President is prima facie guilty on any of the grounds of this sub-section resulting in the issuance of the show-cause notice and proceedings under this sub-section he shall, from the date of issuance of the show-cause notice containing charges, cease to exercise, perform and discharge the financial and administrative powers, functions and duties of the President until he is exonerated of the charges mentioned in the show-cause notice issued to him under this sub-section and finalization of the proceedings under sub-section (2-A) and the said powers, functions and duties of the President during the period of such ceasing, shall be exercised, performed and discharged by the District Magistrate or an officer nominated by him not below the rank of Deputy Collector."
A perusal of the aforesaid provision goes to show that State Government is empowered to issue a show cause notice to the elected President of a municipality to explain why he should not be removed from the office in a case where it has reason to believe that any of the provisions of clause (a) or (b) are attracted. In other words, the reason to believe is referable to clause (a) or sub clauses (i) to (xvii) of clause (b). In other words, if the State Government has reason to believe that any of the stipulation mentioned therein is attracted, it can call upon the elected President to show cause why he should not be removed from the office.
Proviso to Section 48 (2) provides that where the allegations levelled against the elected President do not appear to be groundless and he is prima facie guilty of any of the grounds enumerated in the sub-section, which has resulted in issuance of a show cause notice to him for removal and during the pendency of such proceedings, until he is exonerated by the charges levelled against him, he shall cease to exercise, perform and discharge the financial and administrative powers, functions and duties of the elected President.
The issue for adjudication raised before us involves interpretation of proviso to Section 48 (2) of the U.P. Municipalities Act, 1916 and petitioner's rights before the financial and administrative powers can be ceased.
The issue is no longer res integra. A Division Bench noticing that the views expressed by two Division Benches of this Court in the cases of Imran Masood Vs. State of U.P. & Ors., 2007 (1) ADJ 350 (DB) and Rekha (Kinner) Vs. State of U.P. & Ors., 2008 (3) ADJ 315 (DB), are in conflict with the observation made by another Division Bench in the case of Smt. Vimla Vs. State of U.P. & Ors., 2008 (1) ADJ 128 (DB) (LB), referred the following three questions for adjudication by a larger Bench.
"(i) Whether the State Government in proceedings initiated for removal under section 48(2) of the UP Municipalities Act, 1916 is required to give any opportunity at the stage of invoking the powers in the first proviso before restraining the president from exercising his financial and administrative powers and as to whether any such preliminary inquiry is permissible to be read the aforesaid proviso?
(ii)Whether the State Government has to record a subjective satisfaction separately for invoking the said powers even if the material for the issuance of the show cause notice and the invoking of such powers is the same?
(iii)Whether the views expressed by this Court in the decisions of Imran Masood vs. State of UP and others, 2007 (1) ADJ 350 (DB), and in the case of Rekha (Kinner) vs. State of UP and others, 2008 (3) ADJ 315 (DB), require reconsideration in the light of the observations as contained in Smt. Vimla vs. State of UP and others, 2008 (1) ADJ 128 (DB) (LB), for an authoritative pronouncement on issue number-1 and 2?"
A Full Bench of this Court in the case of Hafiz Ataullah Ansari Vs. State of U.P. & Ors., 2011 (3) ADJ 502 (FB), of which one of us (Krishna Murari, J.) was a member, after analysing the provisions of Section 48 (2) of the Act held that the financial and administrative power does not cease merely on the issue of notice under Section 48 (2) of the Act, unless the conditions mentioned in the proviso to Section 48 (2) are also satisfied. It may be relevant to quote the following paragraphs from the Full Bench judgment of Hafiz Ataullah Ansari (supra).
"53. The proviso to section 48(2) provides cessation of financial and administrative powers under specified conditions mentioned therein. These are discussed, while deciding points-5 to 7. Suffice to say, right to exercise financial and administrative powers does not cease merely on issue of notice under section 48(2) of the Act unless the conditions mentioned in the proviso to section 48(2) are also satisfied.
54. The intention of the legislature is clear from the language of the provision. It envisages two kinds of proceedings under section 48(2) of the Municipalities Act:
One, simpliciter where financial and administrative powers of the president do not cease;
The other, where his financial and administrative powers cease. This can happen only if the conditions under proviso to section 48(2) are satisfied.
55. The proviso to section 48(2) is meant to apply in the serious situation where it is expedient to cease the financial and administrative powers of the president. It is not to apply in every case. It is for this reason that extra precautions have been provided in the proviso to section 48(2) of the Municipalities Act.
56. In case, the charges are not such so as to warrant cessation of financial and administrative powers during the enquiry for removal, then the action may be taken only under section 48(2) of the Municipalities Act without resorting to the proviso. In such a case the proceeding will go on and opportunity will be given and ultimately the final order may be passed.
57. Even in a case, where at the beginning it was not necessary to cease the financial and administrative powers but at the later stage if it appears to the State government that it is necessary to do so, then it may be done by complying with the conditions mentioned in the proviso to section 48(2) of the Municipalities Act."
Analysing the power of the State Government for cessation of financial and administrative power of the elected Preside of the municipality contained in the proviso to Section 48 (2) of the Act, the Full Bench in paragraphs 73 and 74 observed as under.
"73. The proviso to section 48(2) of the Municipalities Act prescribes conditions that have to be fulfilled before the right of a president to exercise financial and administrative powers can cease. It states that:
(i)The State Government should have reasons to believe that:
The allegations do not appear to be groundless; and The president is prima facie guilty of any of the grounds mentioned in section 48(2) of the Municipalities Act.
(ii)The State government should also issue show cause notice for removal under section 48(2) of the Municipalities Act and it must contain charges.
74. The phrase 'reasons to believe' is often used in statutes and has been repeatedly held by the courts (for citation of the rulings see below)4 to mean that reasons for the formation of the belief must have a rational connection or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material and formation of the belief."
While considering the application of principles of natural justice, the Full Bench observed that the cessation of exercise of financial and administrative power is a step towards finalization of removal proceedings, but this does not mean that principles of natural justice would not apply and depending upon the circumstances, the order in a step to finalization may apply at intermediate stage depending upon the consequences.
It has further been held by the Full Bench that where a head of a local body is deprived of exercise of financial and administrative power and ultimately the proceedings for removal are dropped, then in such an event, his loss can never be compensated and a post decisional hearing cannot cure the harm and damage done to him.
The Full bench while considering the question, to what extent do the principles of natural justice apply, opined that getting explanation or version of a head of a local body regarding charges and considering them before issuance of show cause notice not only eliminates arbitrary exercise of power, but also brings fairness in procedure.
In paragraphs 124 to 126, after noticing that the main inquiry is for removal of a head of a local body, which is yet to be conducted and concluded where reasonable opportunity is to be given and, in case, a full length opportunity is afforded at the stage of issue of a notice, then it is totally a futile exercise. However, after noticing the reasons for depriving a President from exercising a financial and administrative function as contained in Statements of Objects and Reasons of U.P. Act No. 6 of 2004 by which Section 48 (2) was introduced, held as under.
"124. Considering the object and reason, there is no justification to involve the heads of the local bodies at every step of collection of material or in the preliminary enquiry. The principles of natural justice or the yardstick of fairness would be met if the explanation of the effected head of the local body or his point of view or version is considered before recording the satisfaction or finding of prima facie guilt before issuing notice and passing order for ceasing financial and administrative powers.
125. Affording opportunity to submit explanation of the head or considering it, is not to be as detailed as in the regular inquiry or to the extent of permitting cross-examination of any witness, who might be examined in the preliminary enquiry. It is in the sense of getting his point of view or version to the charges before being so satisfied. But what is the point in affording the opportunity if the explanation is not considered. It has to be considered too: there has to be application of mind.
126. In our opinion, getting explanation or point of view or version of a head of a local body regarding charges and considering them before issuing show cause notice under relevant provisos, not only strikes at the arbitrary exercise of power but brings about fairness in the procedure; in the circumstances, it is also sufficient compliance of the principles of natural justice."
The conclusions arrived by the Full Bench are as under.
"133. Our conclusions are as follows:
(a)There can be proceeding for removal of president under section 48(2) of the Municipalities Act without ceasing his financial and administrative power under its proviso;
(b)The following conditions must be satisfied before cessation of financial and administrative powers of a president of a Municipality can take place:
(i) The explanation or point of view or the version of the affected president should be obtained regarding charges and should be considered before recording satisfaction and issuing notice/ order under proviso to section 48(2) of the Municipalities Act;
(ii) The State government should be objectively satisfied on the basis of relevant material that:
The allegations do not appear to be groundless; and The president is prima facie guilty of any of the grounds under section 48(2) of the Municipalities Act.
(iii) The show cause notice must contain the charges against the president;
(iv) The show cause notice should also indicate the material on which the objective satisfaction for reason to believe is based as well as the evidence by which charges against the president are to be proved. Though in most of the cases they may be the same;
(c) It is not necessary to pass separate order under proviso to section 48(2) of the Municipalities Act. It could be included in the notice satisfying the other conditions under proviso to section 48(2). In fact it is not even necessary. It comes into operation by the Statute itself on issuance of a valid notice under proviso to Section 48(2) of the Municipalities Act.
(d) In case a notice/ order ceasing financial and administrative powers is held to be invalid on any ground then this does not mean that the proceeding of removal are also invalid. They have to continue and taken to their logical end. The proceeding to remove can come to an end only if the charges on the their face or even taken to be proved do not make out a case for removal under section 48(2) of the Municipalities Act.
(e) It is not necessary to involve the president with the process of collecting material or give president the copies of the material before asking his explanation or point of view or version of the president to the charges."
Another Division Bench finding itself unable to accept the law laid down by the Full Bench in the case of Hafiz Ataullah Ansari (supra), in Writ Petition No. 8179 of 2015, Paras Jain Vs. State of U.P. & Ors., [2016 (1) ADJ 1 (FB)], vide order dated 10.02.2015 referred the following questions to be answered by a larger Bench.
"(a) Whether the Full Bench judgment in the case of Hafiz Ataullah Ansari Vs. State of U.P. (supra) lays down the correct law;
(b) Whether in view of the language of the proviso to Section 48(2) of the U P Municipalities Act, there can be any proceedings for removal of the President without his financial and administrative powers ceasing, under the proviso;
(c) Whether cessation of financial and administrative powers of the President follows automatically with the issuance of a show cause notice under Section 48 (2) calling upon him to show cause as to why he may not be removed;
(d) Whether any separate order for cessation of financial and administrative powers of the President is required to be made while issuing a notice under the proviso to Section 48(2) or such cessation follows automatically; and
(e) Whether in view of the specific language of Section 48(2), the question of opportunity of hearing before cessation of the financial and administrative powers of the President stands excluded."
A larger Bench of five Judges, after analysing the Full Bench judgment in the case of Hafiz Ataullah Ansari (supra) and the provisions of Section 48 of the Act as well as the legislative history and the various decisions of the Hon'ble Apex Court on the applicability of the principles of natural justice observed as under.
"The cessation of financial and administrative powers of an elected head of a municipality is a matter of significance and is replete with serious consequences. The effect of the financial and administrative powers, functions and duties being ceased, has a direct impact upon the authority of the elected head. It erodes authority and impacts upon the ability of the President to effectively discharge the functions of the office by preventing the discharge of financial and administrative authority. Bereft of financial and administrative powers, functions and duties, the office of the President of a municipality is reduced to a cipher. In fact, the proviso envisages that upon the powers being ceased, they shall be exercised by the District Magistrate or an officer nominated, not below the rank of a Deputy Collector. This consequence is serious enough to warrant the Court to read a compliance with the principles of natural justice into the provision so as to ensure a fair procedure and safeguard against an unfair recourse to its power by the State Government. The principles of natural justice, as we have noted above, are required to be observed as a matter of first principle when a decision - administrative, quas-judicial or judicial - adversely affects the rights of parties. The principle of reading into the statutory provision a requirement of complying with the principles of natural justice is a mandate of Article 14 because it would be an anathema to a fair procedure for the State Government to issue dictats that abrogate the financial and administrative powers of an elected head of a local self-governing institution without complying with the principles of natural justice. The requirement of observing the principles of natural justice, as a matter of first principle, must be weighed in together with the additional factors present in the proviso to Section 48(2) that lead to the conclusion that a decision to cease financial and administrative powers must be preceded by adherence to a fair procedure. The first of the three indicia in the proviso is the existence of a reason to believe on the part of the State that the allegations do not appear to be groundless. The second indicia is the requirement of the formation of the reason to believe that the President of a municipality is prima facie guilty on any of the grounds mentioned in the sub-section, resulting in the notice to show cause. Arriving at a determination in regard to the prima facie guilt of a person, as the statute mandates, must be upon due observance of the principles of natural justice. The third indicia is that the notice to show cause has to contain the charges against the person. Hence, even though the proviso to sub-section (2) of Section 48 does not contain an explicit requirement of observing the principles of natural justice, nonetheless such a requirement must necessarily be read into the provision.
The rules of natural justice require that the person against whom action is proposed, must be made aware of the grounds of the proposed action and must have an opportunity to respond to the action proposed, by setting forth an explanation. Undoubtedly, the formation of the reason to believe under the proviso to sub-section (2) is not final having due regard to the fact that the enquiry is still to be concluded and the cessation of financial and administrative powers is to enure during the period when the proceedings in pursuance of the notice to show cause are still to be concluded. A personal hearing is not a necessary ingredient of complying with the principles of natural justice at every stage. The minimum requirement of the principle is that the President of a municipality should be made aware of the grounds on which the action against him is proposed in the formulation of the charges which are issued to him, as mandated by the proviso. The person who is sought to be proceeded against must be informed of the basis on which the State Government proposes to entertain a reason to believe that the allegations do not appear to be groundless and that he or she is prima facie guilty on any of the grounds of sub-section (2) resulting in the issuance of the notice to show cause and the proceedings in the sub-section. The period which is allowed to the elected head to explain must be reasonable: what is a reasonable period being dependent upon the facts and circumstances of each case. In a case involving an element of urgency where there is a need for the State to take an expeditious decision, the period during which an explanation can be submitted, can be suitably tailored to meet the exigencies of the situation. No absolute rule can be laid down in the abstract on what constitutes a reasonable period to show cause. But the minimum requirements of fair procedure must be fulfilled. An opportunity has to be granted. Otherwise, the provision would be capable of grave misuse to derogate from the authority of an elected head on arbitrary and whimsical grounds."
The larger Bench answered the question referred for adjudication as under.
"We accordingly proceed to answer the reference in the following terms:
(I) Re Question (a): The decision of the Full Bench in Hafiz Ataullah Ansari Vs State of U P (supra) lays down the correct position in law.
(II) Re Questions (b) & (c): The cessation of financial and administrative powers of the President does not necessarily follow merely upon the issuance of a notice to show cause under the substantive part of Section 48(2). The financial and administrative powers of the President shall stand ceased if the State Government has reason to believe that (i) the allegations do not appear to be groundless; and (ii) the President is prima facie guilty on any of the grounds of sub-section (2) resulting in the issuance of the notice to show cause and proceedings thereunder. The President of the municipality will, in that event, cease to exercise, perform and discharge financial and administrative powers, functions and duties from the date of the issuance of the notice to show cause containing the charges. For a cessation of financial and administrative powers to take effect, the requirements of the proviso to Section 48(2) must be fulfilled. Hence, proceedings for removal of a President of a municipality under Section 48(2) may take place in a given situation though the financial and administrative powers have not ceased under the terms of the proviso.
(III) Re Question (d): There is no requirement under the statute that a separate order has to be passed under the proviso to Section 48(2) when the financial and administrative powers of the President of a municipality cease. Such a consequence would come into being upon the requirements specified in the proviso to Section 48(2) being fulfilled.
(IV) Re Question (e): An opportunity of being heard, consistent with the principles of natural justice, before there is a cessation of the financial and administrative powers of the President does not stand excluded by the provisions of Section 48(2). As a matter of textual interpretation, the requirement of complying with the principles of natural justice is an integral element of the proviso to Section 48(2). The requirements of natural justice would warrant the grant of an opportunity to the elected head of a municipality to respond to the notice issued by the State indicating the basis for the formation of a reason to believe that the charges do not appear to be groundless and that the President is prima facie guilty on any of the grounds mentioned in sub-section (2) of Section 48. The period of notice can be suitably molded to deal with the exigencies of the situation."
The legal position being settled by the aforesaid two pronouncements, we now proceed to test the facts of the case in the light of the same.
As already noticed above, the State Government issued a notice dated 23.03.2015 calling upon the petitioner to submit her explanation. Petitioner submitted her explanation on 16.04.2015. Notice dated 15.10.2015 was issued to her to show cause why she should not be removed from the post of Chairman, Nagar Panchayat. Her administrative and financial powers during the pendency of the proceedings were ceased. In so far as substantive provision of Section 48 (2) of the Act is concerned, since a show cause notice has been issued, to which the petitioner has already submitted her reply, the same stands complied.
However, since the financial and administrative power has also been ceased during the pendency of the proceedings of removal, the issue arising for consideration is whether the exercise of power conferred by proviso, stand the test laid down by judicial pronouncements in the case of Hafiz Ataullah Ansari (supra) and Paras Jain (supra).
A bare reading of proviso goes to show that where the conditions mentioned therein are satisfied, the president of the municipality shall cease to perform and discharge financial and administrative powers until he is exonerated of charges mentioned in the notice till the finalization of the proceedings. In order to attract the proviso, the conditions required to be fulfilled are:-
(i) State Government must have reason to believe that allegations do not appear to be groundless.
(ii) State Government must have reason to believe that president is prima facie guilty of any of the grounds contained in the sub-section which has resulted into the proceedings for removal.
(iii) Notice to show cause must contain the charges.
It is relevant to note that proviso does not stipulate automatic cessation of financial and administrative power of an elected president on issuance of show cause notice under substantive part of Section 48 (2). It is only after fulfilment of above mentioned three conditions, the financial and administrative power can be ceased.
The use of words "reason to believe" by the legislature in the proviso postulates an objective satisfaction on application of mind to the material and relevant circumstances which is quite distinct and distinguishable from purely subjective satisfaction.
Hon'ble Supreme Court in the case of Barium Chemicals Ltd. & Anr. Vs. Company Law Board & Ors., AIR 1967 SC 295, observed that explanation "has reason to believe" or "is satisfied" or "is of the opinion" are indicative of objective satisfaction. In paragraph 63 of the reports, it has been observed as under.
"63......... Therefore, the words, "reason to believe" or "in the opinion of" do not always lead to the construction that the process of entertaining "reason to believe" or "the opinion" is an altogether subjective process not lending itself even to a limited scrutiny by the court that such "a reason to be believe" or "opinion" was not formed on relevant facts or within the limits or as Lord Radcliffe and Lord Reid called the restraints of the statute as an alternative safeguard to rules of nature justice where the function is administrative."
Again in the case of Bhikhubhai Vithlabhai Patel & Ors. Vs. State of Gujarat & Anr., (2008) 4 SCC 144, the Hon'ble Apex Court has held in paragraph 33 as under.
"33. The court is entitled to examine whether there has been any material available with the State Government and the reasons recorded, if any, in the formation of opinion and whether they have any rational connection with or relevant bearing on the formation of the opinion. The court is entitled particularly, in the event, when the formation of the opinion is challenged to determine whether the formation of opinion is arbitrary, capricious or whimsical. It is always open to the court to examine the question whether reasons for formation of opinion have rational connection or relevant bearing to the formation of such opinion and are not extraneous to the purposes of the statute."
Requirement of giving reasons in the decision taken is an integral part of the natural justice. Recording reasons is a safeguard against arbitrariness on the part of the decision making authority and minimises the chances of irrelevant or extraneous consideration from entering the decisional process and also minimises the chances of unfairness in conclusions. The recording of reasons ensures that the authority applies its mind to the facts and the reasons which impelled him to take the decision in question germane to the content and scope of the power vested in the authority. Reasons recorded in an administrative order also strengthens the judicial review of the administrative action.
Supreme Court with regard to recording reasons, in the case of Prasad Vs. State of Karnataka, AIR 2009 SC 1911, has observed as under.
"Reasons introduce clarity in an order. Even in respect of administrative orders, Lord Denning M.R. in Breen Vs. Amalgamated Engg. Union observed: "The giving of reasons is one of the fundamentals of good administration." In Alexander Machinery (Dudley) Ltd. Vs. Crabtree it was observed: 'Failure to give reasons amounts to denial of justice. Reasons are live links between the mind of the decision-taker to the controversy in question and the decision or conclusion arrived at.' Reasons substitute subjectivity by objectivity. The emphasis on recording reasons is that if the decision reveals the 'inscrutable face of the sphinx', it can, by its silence, render it virtually impossible for the courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reasons is an indispensable part of a sound judicial system, reasons at least sufficient to indicate an application of mind to the matter before the court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made, in other words, a speaking-out. The "inscrutable face of sphinx' is ordinarily incongruous with a judicial or quasi-judicial performance."
In Rani Lakshmi Bai Kshetriya Gramin Bank Vs. Jagdish Sharan Varshney, (2009) 4 SCC 240, the Hon'ble Apex Court in paragraph 8 of the report has held as under.
"The purpose of disclosure of reasons, as held by a Constitution Bench of this Court in S.N. Mukherjee Vs. Union of India, is that people must have confidence in the judicial or quasi-judicial authorities. Unless reasons are disclosed, how can a person know whether the authority has applied its mind or not? Also, giving of reasons minimises the chances of arbitrariness. Hence, it is an essential requirement of the rule of law that some reasons, at least in brief, must be disclosed in a judicial or quasi-judicial order, even if it is an order of affirmation."
Thus, the principles of natural justice is a foundational basis of administrative law and is essential part of fair procedure guaranteed by Article 14 of the Constitution. The same necessarily implies not only giving a notice and opportunity to show cause, but also considering the explanation, if any, submitted to the show cause notice, which should reflect from the order, failing which the action cannot pass the test of the natural justice.
In the case of Ravi Yashwant Bhoir Vs. Collector, 2012(4) SCC 407, the Hon'ble Apex Court in the case of removal of president, has reiterated that proceedings are quasi-judicial in nature and has emphasized on recording of reasons as follows.
"43. In Krishna Swami v. Union of India & Ors., this Court observed that the rule of law requires that any action or decision of a statutory or public authority must be founded on the reason stated in the order or borne-out from the record. The Court further observed.
" 47.... Reasons are the links between the material, the foundation for their erection and the actual conclusions. They would also demonstrate how the mind of the maker was activated and actuated and their rational nexus and synthesis with the facts considered and the conclusions reached. Lest it would be arbitrary, unfair and unjust, violating Article 14 or unfair procedure offending Article 21."
44. This Court while deciding the issue in Sant Lal Gupta. v. Modern Co-operative Group Housing Society Ltd. & Ors., (2010) 13 SCC 336, placing reliance on its various earlier judgement held as under:
"27. It is a settled legal proposition that not only administrative but also judicial order must be supported by reasons, recorded in it. Thus, while deciding an issue, the Court is bound to give reasons for its conclusion. It is the duty and obligation on the part of the Court to record reasons while disposing of the case. The hallmark of order and exercise of judicial power by a judicial forum is for the forum to disclose its reasons by itself and giving of reasons has always been insisted upon as one of the fundamentals of sound administration of the justice delivery system, to make it known that there had been proper and due application of mind to the issue before the Court and also as an essential requisite of the principles of natural justice.
3. "The giving of reasons for a decision is an essential attribute of Judicial and judicious disposal of a matter before Courts, and which is the only indication to know about the manner and quality of exercise undertaken, as also the fact that the Court concerned had really applied its mind."
The reason is the heartbeat of every conclusion. It introduces clarity in an order and without the same, the order becomes lifeless. Reasons substitute subjectivity with objectivity. The absence of reasons renders an order indefensible/unsustainable particularly when the order is subject to further challenge before a higher forum. Recording of reasons is principle of natural justice and every judicial order must be supported by reasons recorded in writing. It ensures transparency and fairness in decision making. The person who is adversely affected must know why his application has been rejected."
45. In Institute of Chartered Accountants of India v. L.K. Ratna & Ors.,AIR 1987 SC 71, this Court held that on charge of misconduct the authority holding the inquiry must record reasons for reaching its conclusion and record clear findings. The Court further held:
"30. In fairness and justice, the member is entitled to know why he has been found guilty. The case can be so serious that it can attract the harsh penalties provided by the Act. Moreover, the member has been given a right of appeal to the High Court under S. 22 A of the Act. The exercise his right of appeal effectively he must know the basis on which the Council has found him guilty. We have already pointed out that a finding by the Council is the first determinative finding on the guilt of the member. It is a finding by a Tribunal of first instance. The conclusion of the Disciplinary Committee does not enjoy the status of a "finding". Moreover, the reasons contained in the report by the Disciplinary Committee for its conclusion may or may not constitute the basis of the finding rendered by the Council. The Council must, therefore, state the reasons for its finding".
46. The emphasis on recording reason is that if the decision reveals the `inscrutable face of the sphinx', it can be its silence, render it virtually impossible for the courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system, reasons at least sufficient to indicate an application of mind of the authority before the court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made. In other words, a speaking out, the inscrutable face of the sphinx is ordinarily incongruous with a judicial or quasi-judicial performance."
It is on these settled principles of law, it is to be examined in the light of the facts of the case in hand as to whether the power exercised by the State Government ceasing financial and administrative power of the petitioner is a rightful exercise of authority or is just mechanical and the procedure followed complies with the rule of fair play or, in other words, the natural justice.
The facts of this case clearly indicate that the State Government on receipt of the report dated 07.02.2015 forwarded by the District Magistrate, sought an explanation from the petitioner vide notice dated 23.03.2015. Petitioner submitted her explanation dated 16.04.2015 denying the charges, categorically stating that all the contract work in respect of which charges have been levelled against her, were executed in pursuance to the resolution of the Panchayat board after publication of tender notice in news papers and accepting the minimum bid offered and the payment was made after certification of quality and bills by the concerned engineer. After the petitioner submitted her reply to the State Government, it was incumbent upon it to have recorded its satisfaction as to how reply submitted by the petitioner was not satisfactory and there was prima facie material to proceed against her. From the impugned show cause notice, it appears that reply submitted by the petitioner was forwarded to the District Magistrate, who submitted his report dated 24.07.2015. Petitioner has categorically alleged that before submitting report, neither any opportunity of hearing was given to her by the District Magistrate nor she was ever confronted with the technical report, which find mention in the report dated 24.07.2015.
Once the State Government required the District Magistrate to verify the facts mentioned in the reply submitted by the petitioner, then the rule of fair play and principles of natural justice required that copy of the report of the District Magistrate ought to have been supplied to her before placing reliance on the same. Report of the District Magistrate dated 24.07.2015 has been made the foundation and basis of recording satisfaction that State Government has reason to believe that there has been failure on the part of the president in performing duties and she is guilty of serious irregularities in discharge of her duties, leading to ceasing of her financial and administrative powers. Further, it is not reflected from the show cause notice dated 15th October, 2015 that there has been even any consideration of the reply submitted by the petitioner, much less objective consideration of the same. Though an elaborate reply to the alleged charges was submitted by her, but without even referring to the contents of the reply submitted by the petitioner, it has simply been mentioned that the District Magistrate, Siddharth Nagar has submitted his report to the reply submitted by the petitioner on the basis of which the charges against her are found proved. The order does not disclose the manner in which the reply submitted by the petitioner was examined nor why the same did not find favour with the State Government.
The impugned notice dated 15th October, 2015 ceasing financial and administrative power of the petitioner is sans any reason. In other words, it is totally devoid of any reason. In view of the settled proposition of law quoted hereinabove, it was incumbent upon the State Government to have pass a reasoned and speaking order and, thus, it is arbitrary, unfair and unjust violating Article 14 of the Constitution and the procedure adopted is also unfair offending Article 21.
Reasons are links between the material, the foundation of their erection and actual conclusion. They would also demonstrate how the mind of the decision maker was activated and actuated of the rational nexus and synthesis with the facts considered and the conclusion reached. Lest it would be arbitrary, unfair and unjust violating Article 14 of the Constitution or unfair procedure offending Article 21.
This view finds support from the following observations of the Hon'ble Apex Court in the case of Krishna Swami Vs. Union of India & Ors., AIR 1993 SC 1407 "that the Rule of law requires that an action or decision of a statutory or public authority must be founded on the reason stated in the order or borne-out from the record."
Part IX A of the Constitution contains provisions in relation to municipalities introduced by 74th Amendment to the Constitution. Municipalities are local self- government having a constitutional status having well defined powers, duties and responsibilities. They are institutions of self-governance having been conferred with the degree of autonomy. They are not merely administrative agency of the State and, thus, the control which the agencies of the State exercise over institutions of local self-government must conform to the constitutional standards. In Ravi Yashwant Bhoir (supra), the Hon'ble Apex Court while emphasising the importance of Part IX and IX A of the Constitution in respect of position of the elected head of a local self-governing institution, observed as follows.
"Amendment in the Constitution by adding Parts IX and IX-A confers upon the local self-government a complete autonomy on the basic democratic unit unshackled from official control. Thus, exercise of any power having effect of destroying the Constitutional institution besides being outrageous is dangerous to the democratic set-up of this country. Therefore, an elected official cannot be permitted to be removed unceremoniously without following the procedure prescribed by law, in violation of the provisions of Article 21 of the Constitution, by the State by adopting a casual approach and resorting to manipulations to achieve ulterior purpose. The Court being the custodian of law cannot tolerate any attempt to thwart the institution."
Dealing with the aspect of observing the principles of natural justice, the Supreme Court held that:
"There can also be no quarrel with the settled legal proposition that removal of a duly elected member on the basis of proved misconduct is a quasi-judicial proceeding in nature. [Vide: Indian National Congress (I) v. Institute of Social Welfare11]. This view stands further fortified by the Constitution Bench judgments of this Court in Bachhitar Singh v. State of Punjab12 and Union of India v. H. C. Goel13. Therefore, the principles of natural justice are required to be given full play and strict compliance should be ensured, even in the absence of any provision providing for the same. Principles of natural justice require a fair opportunity of defence to such an elected office bearer."14 (emphasis supplied) "
In a democracy governed by a Rule of law, a person elected to an office in a democratic institution is entitled to hold the office for the term for which he has been elected, unless the same is set aside by the procedure prescribed by law. An elected candidate is entitled to own and enjoy the office and discharge the duties related therewith during the specific term, he has been elected by the relevant enactment. It is not only a valuable statutory right vested in him, but also of the constituency which he leads and removal from such office, is a serious matter. Thus, any provisions which curtail the elected term or causes hindrance in exercise of his duties as an elected representative is to be construed in a strict manner, inasmuch as the office is occupied on the basis of an election and the deprivation from the office is by an administrative order in which there is no participation of the electorate, who elected him.
In such view of the matter, not only in case of removal, but even in the matter of temporary deprivation of the office, the same principles as have applied in case of removal from the elected office, shall be applicable. The proceedings for temporary deprivation of office, thus, not only has to comply with the strict observance of the principles of natural justice, but the decision so taken has to reflect and indicate that the authority has duly applied its mind to the entire facts and circumstances before taking the decision.
What is the point in affording opportunity if the explanation is not considered, and consideration necessarily implies application of mind. The impugned action of the State Government ceasing financial and administrative power of the petitioner, when tested on the above parameters of the legal principles, completely fails as it does not record any reason, worth the namesake.
In the conclusion; there is no consideration at all of the reply submitted by the petitioner; the satisfaction that State Government has reasons to believe that allegations do not appear to be groundless and she is prima facie guilty of the charges levelled is not its own, but is based on the report of the District Magistrate, which was obtained behind the back of the petitioner without her participation and without supplying copy of the same. In view of this, not only the decision making process in absence of the reasons cannot be said to be free, fair and transparent, but it also contravenes and violates the principles of natural justice as the order has been passed in a mechanical manner without any application of mind.
In view of above facts and discussions, we are of the considered opinion that the impugned order of the State Government dated 15th October, 2015 is not liable to be sustained and is hereby quashed.
Writ petition stands allowed.
The financial and administrative power of the petitioner be restored back forthwith. However, this order shall not stand in the way of the State Government concluding the proceedings against the petitioner in pursuance to the notice dated 15.10.2015 in accordance with law. It shall also be open to the State Government to pass fresh orders in respect of financial and administrative power to be exercised by the petitioner during the pendency of the proceedings in accordance with the law and the procedure.
Needless to say that since the petitioner holds an elected office, which is for a fixed term provided by the Statute, the State Government shall bring the proceedings to a logical end within a period of two months from the date of receipt of a certified copy of this order.
24.02.2016 VKS