JUDGMENT <NAME>, Ag. C.J.

1. The petitioner, <NAME>, who describes himself as a Government Contractor, takes exception to the following order made by the respondent <ORG>:

"Sub:-- <ORG> -- Irregularities in <ORG> contract -- tenderers blacklisted.

It has been revealed that <NAME>, Karakad House. Erattupetta and Sri <NAME>, Valanjathil. Kottayam have committed irregularities in connection with the tender for working down timber from Udumbanchola Block I, with the result that Government had to sustain loss to a considerable extent. Government therefore order that these two persons are blacklisted and debarred from taking any Government work for the next ten years.

The Chief Conservator of Forests is informed that Sri. <NAME> will however be permitted to do the work as per orders contained in Government Memorandum No. 12319/F1/65 Agri. dated 7-4-1965.

Sd/--T. <NAME>, Joint Secretary.

To <NAME>."

2. The petitioner's grievance is that he was not heard before the order was made and he wants this Court to Quash the order and restrain the respondent from giving effect to it. His case is that the order is violative of the principles of natural justice and of Articles 14, 16 (1) and 19 (1) of the Constitution.

3. As we understand it, the impugned order is in no sense an order against the petitioner -- it was not communicated to him and how he came by it is not disclosed -- and involves no civil consequences so far as he is concerned. It poses no threat to any legal right of his, (using the word, "right" in its widest possible sense) fundamental or otherwise, Whether the reason it gives, namely, that the petitioner had committed irregularities' resulting in loss to the <ORG>, be true or not. No doubt it means that he will not be given any <ORG> Work on contract for the next 10 years, but, as we shall presently show, he has no claim, as of right, to be given such work.

4. The impugned order, it seems to us, is no more than a direction by the <ORG> to its subordinates not to give any contracts to the petitioner, and it is, we apprehend, the use of vivid expressions like, "blacklist", and, "debar" in such orders, savouring as they do of punishment and of deprivation of legal rights, and the reference to such orders as decisions suggestive of an element of adjudication which, in fact, there is not, that give rise to contentions like the present, in our view unfounded, invoking the principles of natural justice and the fundamental rights in Articles 14, 16 and 19 of the Constitution. Subject to any limitations that might be imposed by statute -- and in this case no such limitation is pleaded -- the law does not deny to the <ORG> the freedom of contract (carrying with it the freedom not to enter into a contract) it vouchsafes to every person. And, subject to any such limitations, <ORG> like any private party is free to treat with whom it pleases. It is free, if it so pleases, not to treat with any particular person for any or for no reason whatsoever.

This much we think is clear from the decision of <ORG> in <CITATION> , AIR 1959 SC 490. There, their Lordships held that a refusal by the <ORG> to do business with a particular person, whether or not such refusal amounted to a breach of contract, involved no breach of any fundamental right of the person concerned -- Articles 14, 16 (1), 19 (1) (g) and 31 were the provisions of the Constitution pressed into service in that case -- and furnished no ground for judicial interference under Article 32 or Article 226 of the Constitution. And their Lordships observed as follows :--

"8. The gist of the present matter is the breach, if any, of the contract said to have been given to the petitioner which has been cancelled either for good or for bad reasons. There is no discrimination because it is perfectly open to the <ORG>, even as it is to a private party, to choose a person to their liking, to fulfil contracts which they wish to be performed. When one person is chosen rather than another, the aggrieved party cannot claim the protection of Article 14 because the choice of the person to fulfil a particular contract must be left to the <ORG>. Similarly a contract which is held from <ORG> stands on no different footing from a contract held from a private party. The breach of the contract, if any, may entitle the person aggrieved to sue for damages or in appropriate cases, even specific performance, but he cannot complain that there has been a deprivation of the right to practise any profession or to carry on any occupation, trade or business, such as is contemplated by Article 19 (1) (g). Nor has it been shown how Article 31 of the Constitution may be invoked to prevent cancellation of a contract in exercise of powers conferred by one of the terms of the contract itself.

9. The main contention of the petitioner before us was thus under Article 16 (1) of the Constitution, and he claimed equal opportunity of employment under the <ORG>. To begin with, a contract for the supply of goods is not a contract of employment in the sense in which that word has been used in the Article. The petitioner was not to be employed as a servant to fetch milk on behalf of the institution, but was a contractor for supplying the Articles on payment of prices. He claimed to have been given a contract for supply of milk, and did not claim to be an employee of the <ORG>. Article 16 (1) of the Constitution, both in its terms and in the collocation of the words, indicates that it is confined to "employment" by the <ORG>, and has reference to employment in service rather than as contractors. Of course there may be cases in which the contract may include within itself an element of service. In the present case, however, such a consideration does not arise, and it is therefore not necessary for us to examine whether those cases are covered by the said Article. But it is clear that every person whose offer to perform a contract of supply is refused or whose contract for such supply is breached cannot be said to have been denied equal opportunity of employment, and it is to this matter that this case is confined.

10. Looking to the facts of the case, it is manifest that the petitioner was supplying, or, in other words, selling milk and other articles, of diet to the <ORG> for the use of hospitals and similar institutions. He was in no sense a servant, and no question of employment qua servant arose. In these circumstances, it is plain that Article 16 (1) of the Constitution is not attracted to the facts.

11. In our opinion, the petition under Article 32 of the Constitution is wholly misconceived. No fundamental right is involved. At best, it is a right to take the matter to <ORG>, if so advised, and to claim damages for breach of contract, if any."

5. Reference may also be made to <CITATION> , 1958 Ker LT 334=(AIR 1958 Ker 333), <CITATION> , AIR 1955 Mad 365 and <NAME> v. Dist. Forest Officer Vellore, AIR 1958 Mad 572. The first, a decision of a division bench of this <ORG> was a case of blacklisting like the present and of a consequent refusal to deal with the person blacklisted, It is directly in point, and, although with great respect, it seems to us that some of the observations there made regarding the scope of Article 14 and of the principles of natural justice in relation to a mere executive order might require reconsideration in view of subsequent pronouncements by this <ORG> and the Supreme <ORG>, the conclusion reached, namely, that no right fundamental or otherwise, of the petitioner therein was involved and that the refusal was not justiciable seems to us correct The latter two emphasize that, although every citizen has a fundamental right to carry on a trade or business, he has no right fundamental or otherwise to insist upon the <ORG>, any more than a private individual, doing business with him. The <ORG>, like any private individual, has got the right to enter or not into a contract with a particular person. The last mentioned case no doubt went on to point out that a public auction would cease to be a public auction it persons were arbitrarily or capriciously excluded from participating therein. That might be a relevant consideration where there is an obligation to conduct a public auction or transact the business in a particular way. But here there is no such thing.

6. The position might be different if, as in the cases considered in <CITATION> , AIR 1953 SC 309, <CITATION> , AIR 1954 SC 592 and <CITATION> , (1964) 1 SCJ 42 there were a law regulating the conduct of its business by the <ORG>. (Even so as pointed out in <NAME> v. <ORG>, (1939) 310 US 113 the law might be something solely between the <ORG> and its subordinates or agents, in no wise affecting third parties so as to give them a cause of action to complain against its breach). Such a law might imply a right in others to insist on their transactions with the <ORG> being dealt with in accordance with the law, and, consequently, a right to complain against a breach of the law. For example, if such a law required that a sale by the <ORG> should be by public auction, that might invest the members of the public with the corresponding right of participating in the auction, and the exclusion of a person from the auction or the rejection of his bid otherwise than in accordance with the law, might be an invasion of his civil rights and therefore justiciable. But, even in cases where such exclusion or rejection in accordance with the provisions of the law involves an expression of opinion against the person concerned, as, for example, against his character or conduct, we are by no means certain that the principle of audi alteram partem is attracted and that he must be heard before the opinion is formed.

It is noteworthy that the interference in 1964-1 SCJ 42 was not on the ground of any violation of the principles of natural justice, but on the ground that the opinion had not been formed on any relevant material, or on its own appreciation of the materials by the authority concerned, and that, therefore, the rejection of the highest bid at the auction was in breach of the relevant statutory provisions. And it seems to us that the discussion as to the mode of preparation of the "special list" was for the purpose of showing that the list was not evidence rather than for making put a breach of the rules of natural justice.

7. In the present case, there is no question of the exercise of "legal authority to determine questions affecting the rights of subjects," or as it is sometimes put, "to adjudicate upon matters involving civil consequences to individuals". That is essential to bring a case within the horizons of natural justice wider though they be, once again after <NAME> v. <NAME>, (1963) 2 All ER 66 and the decisions of <ORG> recognising this wider sweep, notably <CITATION> , AIR 1967 SC 1269 which seems to go the farthest. In both the named cases, there was a finding against the person concerned on which an order of discharge from service was based, which order, if the finding were wrong, would amount to a breach of a statutory, not merely a contractual right to remain in office since the statute concerned required that something must be established against the man to warrant his discharge, But, here, there has been no determination of any question, and, as we have said more than once, no interference or threatened interference with the petitioner's civil rights. Surely, the term, "civil consequences" means something more than consequences which the person concerned does not like. There must be at least the possibility of an invasion of some civil right of his before it can be said that anything done in respect of him has civil consequences. A mere refusal to afford a man the prospect of doing profitable or unprofitable business with the <ORG>, of entering into advantageous relationships with the <ORG> as it has been put entails no civil consequences however serious a blow that might be to the person concerned. If a man's principal business is taking up <ORG> contracts such a refusal might have the consequence of depriving him of that particular mode of earning a living. But so might a like refusal by a private party. It is not difficult to conceive of a company or other private party having a monopoly of a particular kind of business in a particular area, and the refusal of such a private party to do business with a particular person engaged in that particular line might have the effect of depriving that person of that particular means of earning a living. But no one would say that any principle of natural justice can be invoked in such a case. Why then should it be invoked when the party refusing to do business is the <ORG> unless Article 14 be attracted? And how can Article 14 be attracted, or any complaint by a person provoke judicial interference, unless some legal right of his is affected?

8. Decisions such as <CITATION> , 1967 Ker LT 1041 dealing with the exercise by an authority of a power conferred by statute, a power conditional on a factual determination and exercised in that particular case so as to involve the serious civil consequence of preventing a man from pursuing a legal remedy, can have little bearing on a matter like the present which is purely an exercise of executive discretion unregulated by law.

9. It is said that the impugned order casts a stigma on the petitioner. Assuming that it does, does that by itself attract the principle of natural justice? We think not. The question whether an impugned act involves a stigma or not is relevant only for the purpose of determining whether the act sounds only in the region of contract or involves a punishment attracting the rules of natural justice or statutory provisions such as Article 311 of the Constitution embodying such rules.

10. It is said that the reason given in the order for blacklisting the petitioner, namely, that he had committed irregularities in connection with some tender with resultant loss to the <ORG>, is defamatory. It is difficult to understand how such a communication by the <ORG> to one of its subordinates for the purpose of protecting its own interests can amount to defamation. But even if it does, it is quite obvious that the petitioner's remedy does not lie in Article 226 of the Constitution. Moreover, what the petitioner seeks to set aside is the debarment and not the reasons given therefor, and if the debarment cannot in any circumstances affect his civil rights, he can make no complaint against it on the ground that the reasons were not reached by the judicial process.

It is but proper that even a purely administrative order, involving not the least element of adjudication, should be reasonable and judicious. But that is not to say that the reasons must be reached by the judicial process, and it is wrong to assume that only the judicial process can face the clear light of day and that all other means of reaching a conclusion are necessarily benighted. Supposing the impugned order gave no reason at all, could the petitioner's complaint be entertained unless some civil right of his were threatened? Why should he be in a better position because the order gives reasons, reasons which, according to him, affect his reputation? Supposing a police officer were to give as a reason for arresting a person that the man was drunk and disorderly. Surely the statement that he was drunk and disorderly would affect his reputation, and, what is more, unlike as in the present case, the arrest would clearly involve civil consequences. But could the arrest be denounced as unlawful and could the police officer be exposed to action civil or criminal merely because he had reached the conclusion that the man was drunk and disorderly without observing the rule of audi alteram partem?

11. To accept the contention of the petitioner would so widen the scope of the principle of audi alteram partem and therefore the scope for judicial interference as to seriously hamper the administration. It would mean, for example, that before Government refuses to deal with a person because he is not solvent or declines to employ a person because he is medically unfit or otherwise unqualified, or abolishes a post with the result that somebody is thrown out of office, or instructs its subordinates or agents not to buy goods from a particular source because previous supplies by that source were unsatisfactory, it would have to give the person concerned a hearing.

In this connection reference may profitably be made to the decision in (1939) 310 U. S. 113 where <ORG> of the United States declined to interfere although the breach of a statute regulating the conduct of its business by the <ORG> was alleged. The following observations of the <ORG> are pertinent:

"Like private individuals and businesses, the Government enjoys the unrestricted power to produce its own supplies, to determine those with whom it will deal, and to fix the terms and conditions upon which it will make needed purchases.

X X X X X "Judicial restraint of those who administer the Government's purchasing would constitute a break with settled judicial practice and a departure into fields hitherto wisely and happily apportioned by the genius of our polity to the administration of another branch of Government, x x x x x "The case before us makes it fitting to remember that the interference of the Courts with the performance of the ordinary duties of the executive departments of the Government, would be productive of nothing but mischief; and we are quite satisfied that such a power was never intended to be given to them." 12. In our view this petition has to be dismissed. <NAME>, J. I regret my inability to agree with my learned brethren. The Petitioner Mr. <NAME> seeks to quash a memorandum passed by <ORG> dated 12-4-1965 by the issue of an appropriate writ or order. The memorandum reads:

"It has been revealed that <NAME>, <ORG>, Erattupetta and <NAME>, Valanjathil, Kottayam, have committed irregularities in connection with the tender for working down timber from Udumbanchola Block I. with the result that <ORG> had to sustain loss to a considerable extent. <ORG> therefore order that these two persons are blacklisted and debarred from taking any <ORG> work for the next ten years.

The Chief Conservator of Forests is Informed that <NAME> will however be permitted to do the work as per orders contained in <ORG> memorandum No. 12319/F1/65/Agri. dated 7-4-1965."

The memorandum came to be passed under the following circumstances. The Divisional Forest Officer of Malayattoor issued a notice inviting tenders for working down timber from the coupes in Udumbanchola Blocks I and II, subject to the terms and conditions contained in the notice. The petitioner submitted a tender in pursuance of the notice for working down the timber in Block No. 1. There were other tenders for the same work. When the tenders were opened, it was found that the lowest tender was that of one <NAME> and the next higher tender that of the petitioner. As soon as the tenders were opened and the rates offered became known, <NAME> withdrew his tender in writing. Consequently, the rate offered by the petitioner became the lowest and on the recommendation of the Divisional Forest Officer, <ORG> accepted the tender. The petitioner executed an agreement and carried out the work within the extended time allowed by <ORG>. When the petitioner approached <ORG> with a view to take up fresh contract work he was told that the <ORG> had passed Ext. P-1 memorandum putting him in black-list and debarring him from taking any <ORG> work for the next ten years.

13. The petitioner submits that he has not committed any irregularity in connection with the tender, that the memorandum has been passed without notice and an opportunity of being heard, that he has got the liberty like any other citizen in this country to offer tenders for <ORG> work and take the chance of their being accepted by <ORG> if they happen to be the lowest ones, and that since the memorandum is attended with serious civil consequences to him, it should have been passed only after notice to him and an opportunity of being heard.

14. Government has right like any private citizen to enter into contracts with any person it chooses and no person has a right fundamental or otherwise to insist that Government must enter into a contractual relation with him. See 1958 Ker LT 334=(AIR 1958 Ker 333). In AIR 1959 SC 490 <ORG> observed;

"There is no discrimination, because it is perfectly open to the <ORG>, even as it is to a private party, to choose a person to their liking to fulfil contracts which they wish to be performed." In that case, there was no question of the legality of putting a person's name in black-list. The only question was whether for breach of a contract by <ORG>, the remedy of the petitioner there, was to approach <ORG> under Article 32 of the Constitution. A citizen, I think, has the right "to earn his livelihood by any lawful calling; to pursue any livelihood or avocation; and for that purpose to enter into all contracts which may be proper, necessary, and essential to his carrying out to a successful conclusion the purposes above mentioned ......... In the privilege of pursuing an ordinary calling or trade, and of acquiring, holding and selling property, must be embraced the right to make all proper contracts in relation thereto". (See <NAME> v. State of Louisiana. (1897) 165 US 578, 589, 591).

15. A contractual relationship presupposes a consensus of two minds. If <ORG> is not willing to enter into contract with a person, I do not think that <ORG> can be forced to do so. It is one thing to say that <ORG>, like any other private citizen, can enter into contract with any person it pleases, but a totally different thing to say that government can unreasonably put a person's name in a black-list and debar him from entering into any contractual relationship with the government for years to come. In the former case, it might be said that <ORG> is exercising its right like any other private citizen, 'but no, democratic government should with impunity pass a proceeding which will have civil consequences to a citizen without notice and an opportunity of being heard. The reason why the proceeding for blacklisting the petitioner and debarring him from taking government work for ten years was passed, is that he committed irregularities in connection with the tender of the contract work. In the counter-affidavit on behalf of the <ORG> it is stated that the petitioner was found to be "dishonest and undependable" because of the irregularities and so his name was put in the black-list. The question whether he committed irregularities in connection with the tender is a question of fact. An ex parte adverse adjudication that the petitioner committed irregularities in connection with the tender for working down timber from Udumbandhola Block No. 1 by <ORG> on the report of some petty officer without notice and an opportunity of being heard to the petitioner and putting his name in the black-list and debarring him from 'taking any government work for ten years' by way of punishment, appear to me to be against all notions of fairness in a democratic country.

"That a conclusion satisfies one's private conscience does not attest its reliability. The validity and moral authority of a conclusion largely depend on the mode by which it was reached. Secrecy is not congenial to truth-seeking and self-righteousness gives too slender an assurance of lightness. No better instrument has been devised for arriving at truth than to give a person in jeopardy of serious loss, notice of the case against him and opportunity to meet it. Nor has a better way been found for generating the feeling, so important to a popular Government, that justice has been done." (See <NAME>. J., in <ORG> v. <NAME>, (1951) 341 U.S. 123, 171, 172).

Apart from the material damage involved in the loss of the prospect of entering into advantageous relationship with <ORG> for a period of ten years, a verdict that the petitioner has been guilty of irregularities in connection with the tender, coming as it does from <ORG> has civil consequences, as it touches his reputation and standing in the business world.

See the valuable article of <NAME> under the title The Requirement of a Trial-Type Hearing in <ORG> Vol. 70 page 193 at p. 225. The following passages are particularly apposite in this connection:

"The plain fact is that the <ORG> often give legal protection to what they persist in calling 'privileges'. In doing so they commonly rely upon one or more of three ideas or on a fourth method which involves the lack of an idea. The three ideas are: (1) that constitutional principles of substantive and procedural fairness apply even when only a privilege is at stake and even when the privilege itself is not directly entitled to legal protection; (2) that privileges as well as rights are entitled to legal protection; and (3) that when a privilege is combined with another interest the combination may be a right and accordingly entitled to legal protection. The remaining method is (4) to cast logic to the winds in discussing right and privilege or to provide legal protection to a privilege without mentioning the problem of privilege.

(1) the essence of the first idea is that the government is still the government even when it is dispensing bounties, gratuities, or privileges, that we want the government to be fair no matter what its activities may be, and that often the best way to assure governmental fairness is by relying upon judicial enforcement of the usual concepts of fairness. Therefore, the basic constitutional Limitations having to do with fairness often apply even though the privileges as such are not entitled to legal protection.

But if a right is an interest which is legally protected, and if a <ORG> gives legal protection to a privilege, does not the <ORG> turn the privilege into a right? Even if the answer to this question is yes, the proposition still be perfectly sound that one who lacks a 'right' to a <ORG> gratuity may nevertheless have a 'right' to fair treatment in the distribution of the gratuity. In tort law, the accident victim has no right to be helped by the passer-by who volunteers to help. Like the passer-by, the <ORG> may refuse altogether to help applicants for gratuities, but it cannot provide the help improperly; it cannot grant or withhold on the basis of racial or religious discrimination. The federal <ORG> could deny altogether the admission of Oklahoma to the union, but it could not admit Oklahoma improperly, that is with a condition that its capital must be at a particular place. A <ORG> can deny altogether a permit to a foreign corporation to do local business, but it cannot grant the privilege improperly, that is, on condition that suits against the corporation shall not be removed to a federal <ORG>."

"Similarly, one who has no 'right' to sell liquor, in the sense that the <ORG> may prohibit the sale of liquor altogether, may nevertheless have a right to fair treatment when <ORG> officers grant, deny, suspend, or revoke liquor licences, The <ORG> need not grant any such licences, but if it does so, it must do so fairly -- without racial or religious discrimination, and without unfair procedure,"

"The fundamental proposition, stated abstractly, is that some kinds of unfairness are deemed deserving of judicial relief even when they appear in a context of privileges or gratuities. This proposition appears frequently in judicial opinions."

"Even though one may have no right to a <ORG> gratuity one may have a right to be free from damage to reputation or position that may result from withholding of a <ORG> gratuity in some circumstances."

16. An analogy from a different field of the law seems helpful in the context. If <ORG> were to terminate the services of a temporary <ORG> servant for a reason which casts a stigma upon his reputation, it is well settled that he should be given an opportunity of being heard. A temporary <ORG> servant has no right to continue in service. From whence then arises his right to notice and opportunity of being heard? Certainly not from the infringement of any right in connection with the service. The right of being heard arises from the stigma involved in the termination of the services for a reason which savours of punishment. It is no doubt true that Article 311 has been interpreted to require that the termination of the services even of a temporary servant by way of punishment should be preceded by an opportunity of being heard. But the reason for applying Article 311 to the case of a person holding a post with no right to it is that the termination for a reason which casts a stigma on his reputation is a punishment. I would add, the fact that one may not have a legal right to enter into contractual relation with <ORG> does not mean that he can be adjudged ineligible to take up any <ORG> work illegally. No man shall be condemned without being heard. <CITATION> , (1968) 1 SCWR 419= (AIR 1968 SC 445) <NAME>, J., on behalf of the Court said:

"Under our jurisprudence no one can be penalised without a proper enquiry. Penalising a person without an enquiry is abhorrent to our sense of justice. It is a violation of the principles of natural justice, which we value so much."

17. Reputation can be viewed both as an interest of personality and as an Interest of substance, viz., as an asset.

"It may be granted that reputation in many respects differs from other forma of property and connotes certain ideas Involved in the notion of 'person' or 'personality', for ......... it is certainly a very special and strictly personal type of asset: it has some analogies, no doubt, to the right of the individual to his life his limbs, or his liberty, which are all only 'property' in a somewhat metaphorical sense. ......... In so far, however, as

individual honour, dignity, character, and reputation are recognised by the law as proper subjects of its protection and as being such that any injury thereto entitles the aggrieved party to the same forms of legal redresses as the invasion of property strictly so called, it is permissible to consider these rights as assets, though assets of a somewhat peculiar description," (Code of Act ionable Defamation 275-276 by <NAME>.) <NAME> says:

"On the one hand there is the claim of the individual to be secured in his dignity and honour as part of his personality in a world in which one must live in society among his fellow men. On the other hand there is the claim to be secured in his reputation as a part of his substance, in that in a world in which credit plays so large a part the confidence and esteem of one's fellow-men may be a valuable asset. ('Interest of Personality' -- 28 <ORG> pages 445, 447.) At one stage of the argument it was said that as there was no publication of the memorandum to the outside world, it was not defamatory even if it contained imputations against the petitioner. But that was not persisted in, probably realising that in law publication to any person other than the person (subject, of course, to the well-known exception of husband and wife) against whom the imputation is made would be defamation. But it was submitted by the learned Advocate-General that communication by <ORG> to one of its subordinates for the purpose of protecting its own interest would not amount to defamation. I understand the submission to mean that even though the imputation is defamatory, no action for defamation would lie, because the <ORG> has absolute or qualified privilege. I am not in this case concerned with the question whether the <ORG> would have a valid plea, in a suit for damages for defamation. The plea of privilege is really a plea of confession and avoidance. The plea has no relevance when the question is whether the <ORG> can pass a proceeding casting a stigma upon the petitioner, without notice and an opportunity of being heard. Nor do I think that when a defamatory imputation is made by <ORG> in a proceeding, the only remedy of the party affected is to sue for damages.

These questions were considered by <ORG> in the Important case of (1951) 341 U.S. 123, already referred to. There the Attorney-

General of the United States claiming authority under the President's Executive Order No. 9835 included three organisations ostensibly of a charitable nature in a list of groups designated by him as communists. This was done without notice or hearing to the organisations concerned. This list was transmitted to <ORG> and disseminated by the <ORG> to Government departments. The organisations concerned sued the Attorney-General for declaratory and injunctive reliefs. The Government's motions to dismiss the actions were granted by <ORG> on ground of want of cause of action and standing. In certiorari, by a majority of five Judges <ORG> reversed the decision, holding that notice and opportunity of being heard were necessary before designating the organisations as communists and putting them in the list. It is important to bear in mind that the actions were not for damages for defamation.

Justice <NAME> said that the effect of the designation by the Attorney-General as communist was "to cripple the functioning and damage the reputation of those organizations in their respective communities and in the nation" and so violated "complaining organisations common law right to be free from defamation". Justice <NAME> observed:

"Petitioners have standing to sue for the reason among others that they have a right to conduct their admittedly legitimate political, charitable and business operations free from unjustified Governmental defamation. Otherwise, executive officers could act lawlessly with impunity."

<NAME>, J., said that although the Injuries asserted in the cases do not fall into any familiar category.

"the novelty of the injuries described in these petitions does not alter the fact that they present the characteristics which have in the past led this Court to recognize justiciability. They are unlike claims which the <ORG> have hitherto found incompatible with the judicial process. No lack of finality can be urged. Designation works an immediate substantial harm to the reputations of petitioners". He further said:

"Here, on the other hand, petitioners seek to challenge governmental action stigmatizing them individually".

<NAME>, observed:

"This is a government of laws not of men. The powers being used are the powers of Government over the reputations and fortunes of citizens. In situations far less severe or important than these a party is told the nature of the charge against him."

It is strange that if a plea of official privilege either absolute or qualified were available in the case, why it was not set up by Counsel or dealt with by the Judges? The list was communicated by the Attorney-General to <ORG> and disseminated by the <ORG> only to the Government departments and agencies and still it was held to be defamatory of the organisations concerned.

18. As the memorandum in question casts a stigma on the reputation of the petitioner, which is both an interest of personality and an interest of substance, and as it is attended with civil consequences to the petitioner, and as It operates as a punishment for an alleged irregularity, I think, the memorandum should have been proceeded by notice and an opportunity of being heard. If anybody were to say that Ext. P-1 is an administrative proceeding and so no notice or opportunity of being heard was required and that no interference under Article 226 is possible, I would answer him in the high and powerful words of Mr. <NAME>, "you have mistaken the hour of the night: it is already morning". The language of <ORG> in AIR 1967 SC 1269, 1272 is plain:

"It is true that the order is administrative in character, but even an administrative order which involves civil consequences, as already stated, must be made consistently with the rules of natural justice after informing the first respondent of the case of the <ORG>, the evidence in support thereof and after giving an opportunity to the first respondent of being heard and meeting and explaining the evidence."

In the case of 1967 Ker LT 1041 decided by this <ORG>, <NAME>, C. J., after a survey of the recent English cases said that the ultimate question in the language of <ORG> Vol. 41 page 129 is, "Whether an exercise of the power would have a 'serious' effect on the applicant, and whether an exercise of the power was conditional on some factual determination or evaluation rather than being a completely open discretion based on policy."

That the exercise of the power here, has serious effect on the petitioner and is attended with civil consequences cannot be denied by anyone making a realistic approach to the situation, and I think the exercise of the power was also conditional on the determination of a question of fact, namely whether the petitioner committed any irregularity in connection with the tender, a question which cannot be decided by discretion based on policy.

19. It is said that the petitioner has no right to enter into contract with the <ORG>, and therefore a proceeding debarring him from entering into contractual relationship with the <ORG> for a period of ten years involved no civil consequences. In other words it was submitted that opportunity to enter into advantageous relationship with <ORG> is nothing but a privilege, and a denial of a privilege for any reason whatsoever, cannot be attended with civil consequences.

"Not only does the privilege concept often enter in the judicial motivations, but all agree that sometimes it should. For instance, if the President discharges a cabinet officer for singing the wrong tune on foreign policy, the officer clearly lacks a "right" to continue in his position, and therefore he is not entitled to a hearing even if he denies the facts the President sets forth in discharging him. Similarly, if a Governor states facts in denying a pardon to a convict, no informed lawyer would be likely even to argue that due process entitles the convict to cross-examine those from whom the Governor obtained his facts, for a pardon is too clearly an act of grace and in no sense a legal right". (See the article "The Requirement of a Trial-Type Hearing" by <NAME>.) The concept of privilege, gratuity, or grace is useful; we probably would invent it if our legal system were without it. Like an individual, the <ORG> may make generous gifts, perform compassionate acts of grace, and legally recognise as privileges such interests as deserve to be something less than legal rights. A donee ought not to be allowed to compel the <ORG> to make a gift. Nor should a supplicant for an act of grace be permitted to coerce officers to make a favourable determination in the exercise of discretionary power. Even so, the <ORG> is not and should not be as free as an individual in selecting the recipients for largess. Whatever its activity the <ORG> is still the <ORG> and will be subject to restraints, inherent in its position in a democratic society. A democratic <ORG> cannot lay down arbitrary and capricious standards for the choice of persons with whom alone it will deal.

"A 'privilege' is not something to be dealt with lightly. Much of modern life, it may be said, depends on the continued enjoyment of a 'privilege'." (See 'Summary of Colloquy on Administrative law' by <NAME> in "The Journal of the Society of Public Teachers of Law". June 1961, page 70 at 72).

I have already referred to the decision of <ORG> where it was held that a citizen has the undoubted privilege to earn his livelihood by pursuing any lawful avocation and for that purpose to enter into contracts. In AIR 1958 Mad 572 It was held that exclusion of an individual from public auction would have the effect of preventing him from purchasing goods and doing business in a lawful trade and in discriminating against him in favour of other persons. Can a modern society happily allow a decision to be made which affects a person's privilege to follow a lawful avocation in terms that are unchallengeable? I think not.

20. In the decision of <ORG> in 1964-1 SCJ 42 the question that fell for consideration was whether a person can complain of exclusion from a public auction of a lease of a ferry. The statute under consideration there, provided that lease of the right to conduct the ferry must be by public auction and that the officer conducting the auction has liberty to reject any bid for reasons recorded by him in writing. On the ground that the name of the appellant before <ORG> was included in a 'special list', he was excluded from participating in the auction. <ORG> held that the Officer was wrong in relying upon the 'special list' for excluding him from participating in the auction as there was nothing in evidence to show how the 'special list' was prepared. The following observations of <NAME>, throw some light upon the point in controversy.

"He (the officer) found his name in the 'special list' and straightway rejected his bid. Now, the question is whether on this material an order rejecting the highest bid could be made under Rule 19. It is not and cannot be argued that the 'special list' is a document falling within Section 35 of the Evidence Act. It is said to be a confidential document. It does not appear on what information. It is prepared or from what sources the information is received. Nor is anything disclosed as to the procedure adopted by the <ORG> officers in preparing the list. While such lists might serve a purpose in guiding <ORG> it will be unsafe to rely solely on them for deciding civil rights of persons. If the 'special list' is thus ruled out as not material on which an opinion could be formed, then there was nothing else on which the conducting officer could have rejected the offer of the highest bidder under Rule 19."

The implication of the ruling, as I understand it, is that a 'special list' prepared without following a fair procedure cannot be relied on for deciding civil rights. <ORG> said that the 'special list' should not have been relied upon by the officer for the reason that there was nothing to show that it was prepared in accordance with the rules of natural justice; and I presume that the Court would have held that the officer would have been justified in relying upon it had it been prepared after notice and an opportunity for hearing. By parity of reasoning, I would say that if any department were to rely solely upon Ext. P-1 and exclude the petitioner from taking up any government work, it would be a grievous wrong to him. It was said, there was statutory obligation on the officer to lease the ferry in public auction, and that that makes all the difference between that case and this. We are here considering the question whether the <ORG> when it calls for tenders from all persons can exclude the petitioner arbitrarily by a proceeding behind his back. The principle governing a public auction must apply here also. The question whether there is statutory obligation to hold a public auction is irrelevant.

That is clear from the ruling in AIR 1958 Mad 572. That was a case where a Forest Officer excluded a person from participating in a public auction for sale of forest produce. There was no statutory obligation to hold a public auction. Nevertheless the learned Judges <NAME>, <NAME> and <NAME>, J., held that the Officer had no right to exclude him from participating in the public auction, as that would affect the public revenue, and would be discriminatory. The following observations of <NAME>, J., are apposite:

"It is clear that the matter can be looked at from two points of view: (1) exclusion of a member of the public from bidding at the public auction would undoubtedly be detrimental to the public revenue as it not merely prevents the particular individual from making his offer but also leaves the other bidders without a rival bidder, who by his participation in the auction would stimulate higher bids. The interests of public revenue therefore require that there should ordinarily be no such exclusion of bidders and (2) in regard to the individual excluded the exclusion would have the effect of preventing him from purchasing and doing a lawful trade in the goods and in discriminating against him in favour of other people. No person can have the fundamental or inherent right to bid at any public auction. But the essence of a public auction is that it should be open to the public and if unlimited power of exclusion of individuals from such an auction is recognised the auction would cease to be a public one, It would, however, be open to the authorities to impose reasonable conditions regarding the receipt and acceptance of bids and the qualifications of the bidders While we agree with <NAME>, that it is open to the <ORG> to enter into contracts with whomsoever they please and subject to whatever conditions they may impose we are unable to hold that that rule can be applied to the case of a public auction held by the <ORG>. In such cases the interests of the public revenue and of the public re-quire that there should be no exclusion of bidders."

By parity of reasoning, I would say that when Government calls for tenders for execution of a work, there can be no arbitrary exclusion of a person from submitting his tender which might possibly be the lowest one, as that would affect the public revenue in the same manner as the exclusion of a person from public auction would affect it, by excluding the possibility of a higher bid.

21. It is said that Ext. P-1 is not an order but only a communication to the department concerned If the memorandum embodies a decision by Government and was intended to be acted upon by the department concerned, it would be highly technical to found a distinction upon the characterisation of that decision as a memorandum and deny the petitioner the relief which he would have got had the Government labelled the decision as an order and communicated it to him. I think, the adverse civil consequence to the petitioner is the same whether Government called it tweedledee instead of tweedledum. It might be remembered that in (1951) 341 U.S. 123, the Attorney-General communicated the list to <ORG> and the <ORG> only disseminated the list to the various departments and agencies. There was no order communicated to the organisations concerned. <NAME>, J., said that, "It is unrealistic to contend that because the respondent gave no orders directly to the petitioners to change their codes of conduct relief cannot be granted against what the respondents actually I would, therefore, quash Ext. P-1 and allow the writ petition, but in the circumstances, without any order as to costs.

BY COURT.

22. Petition dismissed No costs.


PETITIONER: UNION OF INDIA & ORS. Vs. RESPONDENT: LT. GEN. <NAME> & <NAME>. DATE OF JUDGMENT: 28/07/2000 BENCH: CJI., <NAME>, <NAME> & <NAME>, <NAME> JUDGMENT:

<NAME> J. :

The dispute in this case is in regard to the appointment to the post of <ORG> Commander. When Lt.Gen. <NAME> [hereinafter referred to as respondent No.2] was appointed or promoted as the <ORG> Commander, <ORG>, the same was challenged by Lt. Gen. <NAME> [hereinafter referred to as respondent No.1] by way of a writ petition (Civil Writ No. 1527 of 1998) in <ORG> principally on the ground that he is the senior-most eligible officer to be appointed to that post; that he was seeking the aid of the court to prevent unnecessary and avoidable aberration with regard to appointment/promotion of senior officers in the <ORG> and keeping in view the long term interest of the <ORG> and the country so as to avoid politicalisation of the crucial posts in the <ORG>; that he had won various meritorious awards; that he commanded a company in Nagaland and was awarded Vishist Seva Medal (VSM) on January 26, 1990 and as a Major General he commanded <ORG>, <ORG> rifles and <ORG> (BSF) and he was successfully able to bring cease fire in 1997 which is still holding; that he was awarded Ati Vishist Seva Medal (AVSM) on February 26, 1998 for his operational success and outstanding achievement; that he commanded a company in the Bangaladesh war; that his contribution in Operation Black Thunder was awarded The Chief of <ORG> Staffs Commendation in 1985; that he has the requisite staff experience and has served on the staff of <ORG> and <ORG> in Operational appointments; that he from the rank of Lt. Colonel onwards has attained all his select promotions in the first chance through unanimous decisions; since 1997 he has been in command of the oldest and the most prestigious strike <ORG> of the <ORG>; that the appointments and promotions to the post of <ORG> Commander/Vice Chief of the <ORG> Staff (VCOAS) are governed by the instructions as contained in the <ORG> letter dated October 20, 1986; that the said letter came into effect from January 1, 1989; that he became eligible to be promoted as <ORG> Commander as and when vacancy arose and instructions issued by the <ORG> were amended on November 18, 1996 which prescribe an additional criteria for appointment to the post of <ORG> Commander, namely, that the officer should have commanded a <ORG> for at least one year so as to become eligible for appointment as <ORG> Commander/VCOAS and no waiver in this stipulation is allowed without prior concurrence of the <ORG>; that the order dated November 18, 1996 has come into effect only to affect respondent No.1; that even otherwise in relation to such stipulation he had been granted a waiver by the <ORG> as prescribed by letter dated November 18, 1996 as per the <ORG> order dated March 16, 1998; that he was fit in all respects for appointment to the post of <ORG> Commander; that the second appellant had recorded in Annual Confidential Reports (ACRs) in respect of respondent No.1 that on or after February 27, 1998 he was fit in all respects; and, that having found respondent No.1 fit in all respects on or after February 27, 1998 and he being the senior most Lt. General in the Indian <ORG> ought to have been appointed as <ORG> Commander.

Respondent No.1 claimed that when he was posted as Attache in Paris he was considered for the post of Major General on April 24/25, 1992 wherein he was approved for being promoted as Major General and the said decision was communicated to him on July 7, 1992. However, he was promoted to the post of Major General on September 1, 1995 after respondent No.1 was repatriated from Paris. <ORG> for selecting Lt. General met on October 21, 1994, the decision of which was communicated to respondent No.1 on February 21, 1995. The case of respondent No.1 was deferred on the ground that the criteria appointment was lacking. Again on April 21/22, 1995 his appointment as Lt. General was deferred on the ground not adequately exercised in criteria appointment. Similarly, his case was again deferred on October 11/13, 1995 and on April 24/25, 1996. On October 31, 1996 his case was recommended to be promoted as Lt. General. It was contended before <ORG> that for certain irrelevant consideration and mala fide reasons the case of respondent No.1 was deferred by <ORG> to accommodate Major General <NAME> who was made a Lt. General; that such deferment of the case of respondent No.1 by <ORG> was unprecedented in the history of <ORG>. Respondent No.1 sought for review of the <ORG> decision regarding change of his grading from approved to deferred by an application made on March 8, 1997. On April 10, 1997 respondent No.1 was again considered by <ORG> to the post of Lt. General.

The decision thereto was conveyed to him on July 8, 1997. It is at this stage that the Chief of the <ORG> Staff had issued letters/instructions stipulating that henceforth an officer to be eligible to become <ORG> Commander/VCOAS should have commanded a <ORG> for at least one year. That is the first time such a stipulation had been introduced in the <ORG> and made applicable with immediate effect. On a representation made by respondent No.1 waiver was granted for a period of six months for his consideration for promotion to the rank of <ORG> Commander/VCOAS. It was contended on behalf of respondent No.1 that 2/3 days after respondent No.1 was recommended for promotion by respondent No. 2 (Appellant No. 2 herein) on March 2, 1998 a proposal was mooted for appointment of the <ORG> Commander, <ORG> for filling up the vacancy that arose on March 1, 1998 when respondent No.2 was recommended for promotion/appointment to the post of <ORG> Commander, <ORG>. On respondent No.1 approaching <ORG> on March 27, 1998, while directing notice it was made clear that if any appointment is made to the post of <ORG> Commander, <ORG>, the same shall be subject to the result of the writ petition. It was contended before <ORG> that for the first time more than one officer was considered at the time of making the recommendations for appointment or promotion to the post of <ORG> Commander in the Indian <ORG>; that in the past only name of senior most officer was forwarded and recommended for appointment/ promotion as <ORG> Commander; that respondent No.1 was recommended for appointment as <ORG> Commander; that when the statutory complaint was filed by respondent No.1, appellant No. 2 had recommended to appellant No. 1 the name of respondent No. 2 and, therefore, the impugned decision dated March 25, 1998 with the recommendation was sent to <ORG> the name of respondent No. 4 for promotion/appointment as <ORG> Commander, <ORG> in supersession of respondent No.1 is bad in law.

<ORG> first dealt with contention that stay of respondent No.1 in Paris should not come in his way for purpose of selection to a higher post. After going through the entire files it was noted that had respondent No.1s promotion not been deferred, he would have become Lt. General in 1996 itself although Major General <NAME> was promoted as Lt. General in spite of grading unfit to him by <ORG>. Surprisingly on November 23, 1996 the Defence Secretary recommended that Major General <NAME>s grading may be changed from Grade D to Grade B and in the case of the petition his grading from fit was recommended to be deferred and the Defence Secretary relied upon the fact that respondent No.1 has not completed the laid down adequately exercised period of 18 months. <ORG> commented on the manner of dealing with the files as rather strange and observed that there is inconsistency in the arguments advanced on behalf of the appellants inasmuch as only seniority of an officer is important; that the words senior most officer who is otherwise fit should be understood as that an officer whose name has been recommended by the <ORG> is also fit in all respects. On perusal of files, <ORG> came to the conclusion that the second respondent could never be deemed to be senior most officer who was otherwise fit and could not be compared with respondent No.1; that recommendation is in total disregard of the past practice and procedure; that the cases referred to are those of senior general officers, namely, Lt. General <NAME>, <NAME> and <NAME>, who missed promotion to the rank of <ORG> Commander on comparative merit and weak profile; that the note of the Joint Secretary admitted that in these cases there was no recommendation for promotion on account of their C.Rs. However, <ORG> proposed to consider their cases separately. <ORG> further concluded that from the records made available to the court it was evident that in the past only the senior most Lt. General was considered for promotion to the rank of <ORG> Commander in the vacancy arising as happened due to the retirement of Lt. General <NAME>; that the cases of Lt. General <NAME> and Lt. General <NAME> were recommended for promotion/appointment as GOC-In-C, <ORG>; that the reason for not appointing Lt. General <NAME> was that he was placed in low medical category.

<ORG> found force in the argument that comparative merit was not the requirement to be applied by the appellants; that the general officers meeting the requirement of <ORG> letter dated October 20, 1996 were promoted as <ORG> Commanders on the basis of the seniority; that fitness in every respect coupled with seniority is the criteria of appointment to the post of <ORG> Commander, and it noticed that the appellants could not go into the question of comparative merit to the post of <ORG> Commander when respondent No.1 carrier profile, experience, positive recommendation in the A.C.R. makes him fully fit for holding the post of <ORG> Commander, any other consideration which has gone into the process of denying that right is not justifiable if respondent No.1 was eligible in terms of policy of the appellants dated October 20, 1986 particularly when the appellants have considered his case for waiver which was granted by six months and when respondent No.1 stayed in Paris for a duration longer period and that the same cannot be utilised against him.

<ORG> also noticed that he had given his willingness certificate is not correct from the perusal of the records and he should have been repatriated on completion of three years which was not done. <ORG> also took into consideration the statutory complaint made by respondent No.1. It was noticed that on February 27, 1998 when the Chief of the <ORG> Staff had found respondent No.1 fit in every way to hold his present rank as well as found him fit for promotion to the next higher rank/appointment, how the name of respondent No. 4 could have been recommended on March 2, 1998. Therefore, <ORG> critically analysed the Cabinet Secretarys notice and found that respondent No.1 fulfilled the necessary criteria mentioned for promotion to the post of <ORG> Commander. <ORG> laid emphasis on the criteria seniority-cum-fitness rather than seniority-cum-merit and what is obligatory is that the promotion is automatic. Finally, <ORG> noticed that the only question before it whether the post of <ORG> Commander which became available on March 1, 1998 on the retirement of Lt. General <NAME> when the cases of respondent No. 1 and respondent No. 2 were considered whether the appointment of respondent No. 2 as <ORG> Commander in spite of respondent No. 1 being admittedly senior to respondent No. 2 was justified. <ORG> noticed that the argument advanced on behalf of the appellants that the Circular dated October 16, 1992 was complementary to the Circular dated October 20, 1986 does not inspire any confidence and it is not one of those orders issued in terms of Article 73 of the Constitution. The whole rationale, therefore, was of the principle of seniority-cum-fitness and thus considered, the senior person unless unfit should get the promotion automatically and, therefore, seniority ought to have been given preponderating weight. Further, It noted that the appointment of <ORG> commander is a selection grade appointment to be filled from eligible <ORG> Commander. Prior to 1986 <ORG> Commanders subject to having positive recommendation in their A.C.Rs. became <ORG> commanders In 1986 a criteria of two years residual service was introduced for their becoming <ORG> Commanders subject to their being fit in every respect. General Officers meeting the said criteria was promoted in the order of their seniority. One year command of a <ORG> was added to the criteria prescribed in 1986 by letter dated November 1996 which also provided for a waiver by the competent authority. The note of the Cabinet Secretary in which he has comparatively discussed the A.C.Rs. of 1971 of respondent No.1 amounts to importing a non- existent criteria after respondent No.1 was found fit in all respects in the A.C.R. on the basis of which he was promoted to next higher rank. The minimum tenure of one year as <ORG> commander had also been met by respondent No.1 on account of grant of waiver by the Government. The deferment made in the grading in October 1996 of <ORG> had adversely affected respondent No.1 and it is only thereafter stipulated that an officer to become eligible to be an <ORG> Commander should have commanded a <ORG> for at least one year. In this background, <ORG> quashed the appointment of respondent No. 2 as <ORG> Commander, <ORG> and allowed the writ petition.

Challenging this order of the learned Single Judge of <ORG> a Letters Patent Petition (L.P.A No. 568/98) was filed before <ORG> of <ORG>. By a very short order <ORG> of <ORG> disposed of the Letters Patent Petition stating that the comparative merit of officers was neither the requirement nor it is permissible and the appellants should not have treated the post of <ORG> Commander as a selection post. <ORG> is in agreement with the opinion of the learned Single Judge that in the past only a single person was considered and if he is not fit, then alone the next person in seniority was considered. Reliance placed by the <ORG> on Circular dated October 16, 1992 is not correct and was rightly rejected by the learned Single Judge inasmuch it is a non- statutory document. This is not the case of seniority-cum-merit but it is only seniority-cum-fitness subject to rejection on the basis of being unfit. Seniority alone governed the matter. On that basis <ORG> dismissed the appeal. Hence the present appeals - one filed by <ORG> and its officers (Civil Appeals Nos. 359-360 of 1999) and the other (Civil Appeals Nos. 361-362 of 1999) by Lt. Gen. <NAME>, respondent No. 2 in Civil Appeals Nos. 359-360 of 1999.

In this Court, the learned Attorney General contended on behalf of <ORG> that <ORG> had erred in quashing the appointment of respondent No. 2 as <ORG> Commander, <ORG>; that the entire consideration of the matter is mis-placed; that <ORG> had given undue importance to A.C.Rs. in the matter of promotion and when security of the country is of paramount consideration, mistakes cannot be allowed and gaining necessary field experience is absolutely essential; mere emphasis on the A.C.Rs. will not change the ground realities and, therefore, whatever may be the circumstances in which the appellant could not gain the necessary experience; that <ORG> could not have interfered with the impugned action. <ORG> has indulged in nit picking by making a censorious approach in examining the dossiers and files as also the note of the Cabinet Secretary; that the comparative merit is not prohibited in making the selection, which was quite often resorted to in making appointments to the post of <ORG> Commander. <NAME>, learned Senior Advocate appearing for respondent No. 2 and appellant in connected matter, supported the contentions of the learned Attorney General and supplemented the same on factual aspects.

<NAME>, learned senior advocate for respondent No.1, submitted, at the very outset, that decision in this case is of great momentous nature to the army inasmuch as the principles relating to the promotion to the post of <ORG> Commander, that is, in the highest echelons of service are in issue. Indeed he submitted that up to the stage of appointment as Lt. General, rigorous tests have to be undergone by the concerned officers before they are promoted and such processes have been undergone having reached a particular level. Further tests are held almost automatically unless there is something adverse as to their fitness. He stated that in these cases it is only seniority that governs and that when it was ignored the matter was taken to <ORG> and <ORG> has given relief in this case and, therefore, this <ORG> should not interfere in the order made by it. Respondent No.1 has always been senior to respondent No.2 by as many as 40 places although they belonged to the same batch having been commissioned on 10.6.1962. Respondent No.1 had a distinguished career and participated in the operations of 1971 Indo-Pak war and also has extensive counter insurgency experience. The battalion in which respondent No.1 was working during the war was engaged in fighting the enemy from Agartala to Dhaka and reached Dhaka on December 16, 1971 i.e. the date of cease-fire and surrender of the Pakistan <ORG>. In terms of letter dated November 18, 1996, the officer should have commanded <ORG> for at least one year so as to become eligible for appointment as <ORG> Commander unless waived with the prior concurrence of the <ORG>. As respondent No.1 was the only person to be affected by this new criterion which was sought to be enforced without any lead time, contrary to the earlier practice, in his statutory complaint dated 5.10.1997, he made an alternative request that this stipulation may be waived in his case as the delay in his promotions have been caused entirely in the interest of service and he specifically mentioned that the vacancy was due to occur on March 1, 1998 and he should be considered for the same. On 6.1.998, the Chief of the <ORG> Staff recommended the waiver by months for consideration for promotion to the appointment of <ORG> Commander for a vacancy occurring on March 1, 1998. <ORG> accepted the recommendation of the Chief of the <ORG> Staff. The case of respondent No.1 would have been considered for appointment for the <ORG> Commander in normal circumstances had he not been inordinately delayed in being placed on present criteria appointment. The delay was caused due to circumstances well beyond the control of respondent No.1 and was primarily due to administrative constraints of the organisation. New clause of tenure of one year as a <ORG> Commander affected only respondent No.1 and this aspect was borne in mind by the Chief of the <ORG> Staff while making the recommendation. On 10.4.1997, respondent No.1 was selected for the post of Lt. General by <ORG> and on 8.7.1997, he was intimated of the fact of selection and approval by the <ORG>. In another case filed by Major General <NAME>, the Delhi High <ORG> passed a stay order in July, 1997. On 23.8.1997, respondent No.1 was put in-charge of GOI-1 <ORG> and started gaining experience of commanding the <ORG> and continues to command the same even now. Thus <NAME> submits that in terms of letter dated November 18, 1996, it is enough if the officer has commanded a <ORG> for one year by the date of appointment to the post of <ORG> Commander in the absence of waiver or including the period of waiver. The appointment to the post of <ORG> Commander having been made by an order dated 20.4.1998, as on that date respondent No.1 had actually commanded <ORG> 1 for a period of seven months and 26 days; adding the period of waiver of six months, it comes to a total of one year, one month and 26 days. In other words, he fulfilled the requirement of commanding a <ORG> for at least one year by February 22, 1998. Therefore, he was eligible for consideration for the post in question and that he was rightly treated as eligible both by the Chief of the <ORG> Staff as well as by the <ORG> of India. He relies on the decision of this <ORG> in <CITATION> , 2000 (1) SCC

128. The criterion that the officer should be fit in every respect for such appointment stipulated in the <ORG> letter dated October 20, 1986 clearly indicates that the post of <ORG> Commander is a non-selection post. In contrast, the nature of selection posts in the <ORG> should be gathered from the selection system.

The hierarchy in the <ORG> and the method of selection and promotion to various posts starting from the post of Lieutenant and going up to the post of the Chief of the <ORG> Staff will clearly indicate that the posts of Lieutenant, Captain and Major are automatic promotion posts on passing the promotion examination irrespective of inter se merit, whereas the posts from Major to Lt. Colonel, Lt. Colonel to Colonel, Colonel to Brigadier, Brigadier to Major General and Major General to Lt. General are all selection posts filled up by promotion on the basis of relative merit assessed by the designated selection boards. From Lt. General [Corps Commander] to <ORG> Commander is a non-selection post to which promotion is made subject to fitness. It is promotion subject to fitness in all respects, although the rank remains the same. From the post of <ORG> Commander to that of the Chief of the <ORG> Staff, it is by promotion for which no specific criteria have been laid down. There have been precedents where the senior-most <ORG> Commanders have not been appointed as the Chief of the <ORG> Staff. Selection implies the right of rejection depending upon the criteria prescribed. Selection for promotion is based on different criteria depending upon the nature of the post and requirements of the service. Such criteria fall into three categories, namely,

1. Seniority cum fitness,

2. Seniority cum merit,

3. Merit cum suitability with due regard to seniority.

Wherever fitness is stipulated as the basis of selection, it is regarded as a non-selection post to be filled on the basis of seniority subject to rejection of the unfit. Fitness means fitness in all respects. Seniority cum merit postulates the requirement of certain minimum merit or satisfying a benchmark previously fixed. Subject to fulfilling this requirement the promotion is based on seniority. There is no requirement of assessment of comparative merit both in the case of seniority cum fitness and seniority cum merit. Merit cum suitability with due regard to seniority as prescribed in the case of promotion to <ORG> necessarily involves assessment of comparative merit of all eligible candidates, and selecting the best out of them.

<NAME> insisted that the letter dated October 20, 1986 containing the criteria for selection laid down by the President for the <ORG> Commander does not prescribe any minimum merit. In fact the word merit is conspicuously absent from the entire letter and the criteria do not postulate the comparative assessment of merit for appointment as <ORG> Commander or Lt. Generals in the same rank.

<NAME> further contended that the use of the word selection in a rule or administrative instruction does not necessarily make the post concerned a selection as has been contended by the appellant. Nor the expression selection grade used by respondent No.1 here and there makes the post in question a selection post to be filled in by promotion on the basis of comparative assessment of merit. In addition to the absence of merit being one of the criteria for selection and promotion to the post of <ORG> Commander, the past practice as recorded by the Defence Minister and concurrently found by the courts below shows that the senior-most Lt. General who is found fit in all respects for promotion according to the C.Rs. has always been promoted.

<NAME> also submitted that circular dated 28/16.10.1992 of <ORG> to the extent it applies to the appointment of <ORG> Commanders and is at variance with the letter dated October 20, 1986 setting out the criteria laid down by the President for appointment of <ORG> Commanders cannot be acted upon. In so far as the said circular provides for appointment of Corps Commander as the caption of the circular indicates, there will be no conflict with the criteria laid down by the President for appointment to the post of <ORG> Commander. The absence of the word seniority in the letter of <ORG> dated October 20, 1986 does not exclude the right to prior consideration flowing from being the senior-most officer entitled to the considered in terms of Articles 14 and 16 of the Constitution. The expression fitness in all respects or merit or suitability is not synonymous. It was submitted on behalf of respondent No.1 that an <ORG> Commander having experience of operations during war and extensive counter insurgency may be more suitable for commanding the <ORG> rather than for an equivalent staff post at the <ORG> and vice versa and that even the highest post in any organisation need not be a selection post to be filled on the basis of comparative assessment of merit of eligible officers.

<NAME> further elaborated that the post of <ORG> Commander, even if it is assumed, is selection post to be filled up on the basis of comparative assessment of relative merit of officers, the field of choice cannot be restricted to two persons only and there were as many as nine Lt. Generals eligible for consideration having had a residual service of two years and put in at least one year as <ORG> Commander including respondent No.1 and respondent No.2. Admittedly seven out of nine officers were not considered. The criteria adopted by the appellants are not that of selection or assessment of relative suitability of officers. According to <NAME>, the expression relative suitability of the officer does not mean the comparative assessment of merit. It means suitability for the particular command or the particular staff appointment as the case may be and that suitability is related to the command in question or the staff appointment in question and there is no mention of any comparative assessment of merit even in that circular. Even that circular does not itself lay down the two senior eligible officers should be considered for each <ORG> Commanders vacancy. In refers to a pre- existing <ORG> requirement without mentioning any <ORG> letter or circular. No such document containing this requirement has been produced so far. The so-called assessment of merit of respondent Nos.1 and 2 in the instant case does not reveal all the facts or take into consideration all the necessary facts that are required to be taken note of. There are several factors available on record such as Annexures 1, 2 and 3 of his representation to the Attorney General and Annexure C to the written submissions which will clearly indicate that the <ORG> has not taken note of all the factors in making the appointment in question. <NAME> submitted that advisory remarks are not adverse remarks and they cannot be relied upon for denying the promotion to an officer declared fit for promotion in all respects for that very post and that the reports which are too stale and remote cannot be dug up to change the settled inter se merit of officers assessed by as many as five selection boards for successive promotions from the ranks of Major to the rank of Lt. General all of which are selection posts. Advisory remarks of the Reviewing Officer in the CR of respondent No.1 for 1971 were never communicated to respondent No.1 and, therefore, the same could not be relied upon against him. Another submission that has been made by <NAME> is that consent to go on deputation cannot take away the right to be considered for promotion and if selected for promotion and that the policy regarding willingness certificate cannot in any event hold good beyond the normal tenure of three years of officers sent on foreign assignments in public interest and if the post of <ORG> Commander is a non-selection post to which appointment has to be made on the basis of seniority subject to fitness in all respects and fulfillment of both these criteria having already been held in his favour by the Chief of the <ORG> Staff, <ORG> was justified in issuing the writ.

The matter put before this Court in the light of the arguments advanced on behalf of the parties and the pleadings raised or the findings recorded by <ORG>, we have to consider the same from five facets of the case:

[i] Whether the Army Commander holds a selection post or one which is based on seniority but the officer should be fit in every respect for such appointment and should have a minimum of two years before retirement from the date of appointment as Army Commander/VCOAS?

[ii] Whether the instructions given on October 16, 1992 are executive instructions not supportable in law which stipulate that an officer to be eligible to the post of Corps Commander should either be eligible to become an Army Commander or should have a minimum of four years residual service on the date he is promoted to the rank of Lt. General and should have commanded a Corps for at least one year?

[iii] What is the effect of the ACRs recorded by the Chief of the Army Staff?

[iv] What is the effect of waiver granted to Lt. General R.S. Kadyan when he was a Brigadier serving in the Embassy of France?

[v] Whether the Cabinet Secretary is justified in taking into consideration the service profiles of Lt. General <NAME> and Lt. General <NAME> in making his recommendations?

Several decisions have been cited before us on either side by the learned counsel appearing in this case but we are not adverting to the same since we are not in any way detracting from the principles stated therein nor are we enunciating any new principle. Moreover, we are deciding on the special features arising in this case.

On October 20, 1986 criteria of appointment of Army Commander was issued purported to be under the orders of the President of India and such criteria is as follows :-

(a) The officer should be fit in every respect for appointment; and

(b) The officer should have a minimum of two years left before the retirement age from the date of appointment as <ORG> Commander/VCOAS.

(c) This will be applicable w.e.f. 1.1.1988

(d) As a one time exception, the pay but not the status of an <ORG> Commander will be given to those General officers, presently holding the rank of Lt. Gen., who are otherwise found fit to hold the appointment but are not selected because of the revision in the criteria.

(e) The officer should have commanded a <ORG> for at least one year so as to become eligible for appointment as <ORG> Commander/VCOAS. No waiver in this stipulation will be allowed without prior concurrence of the Government. [added on November 18, 1996 pursuant to letter No. 19(24)/96/D(MS) issued by <ORG>, <ORG>.] (Emphasis supplied) On the basis of this letter the argument advanced before us is that the appointment to the post of <ORG> Commander is of selection and not a mere promotion on the basis of seniority. It is urged on behalf of <ORG> and Lt. General <NAME> is that the post of <ORG> Commander is a selection post and not a post merely based on seniority. While <NAME>, learned senior Advocate for the contesting respondents, submitted that what is required in this letter is only that a concerned officer should be fit in every respect and should have fulfilled the other requirements. Though diametrically opposite views are stated, on a careful reading of this letter it becomes clear that an officer should be fit in every respect for such appointment will not merely mean that he must be physically fit or mentally fit but in every other respect. In addition, in clause (d) above in the letter while making certain exceptions what was in the mind of the authority is made clear that an officer holding the rank of Lt. General who is otherwise fit but not selected because of the revision of criteria will be a clear indication that it is a selection and not a mere promotion on the basis of seniority. Further, the expression fit has been brought to our notice as legally meaning fit to be chosen by elaborating the expression eligible in Strouds Judicial Dictionary, 5th Edn. However, the expression fit, which has different shades of meanings, also means a person to be appointed shall be legally eligible and eligible has already been explained by us to mean fit to be chosen. Again, the expression select means chosen or picked up. Therefore, we are of the view that to the post of <ORG> Commander, selection has to take place. Of course, considering the nature of rigorous standards adopted in the matter of selection of officers from the stage of Lt. Colonel onwards upto the stage of Lt. General in the usual course it may be that the senior most officer is selected as the <ORG> Commander. But that does not debar the Chief of the <ORG> Staff or <ORG> in making the selection of any other person for good reasons who fulfills the necessary criteria. Therefore, we are of the opinion that it was improper on the part of <ORG> to have concluded that the post of <ORG> Commander is a non-selection post. Further, the conclusion reached by <ORG> that appointment to the post of <ORG> Commander has to be made on the basis of seniority alone cannot be accepted.

The next question, which we have to consider, is what is the nature of the executive instructions that have been given. Even if we accept the view taken by <ORG> that <ORG> communication in this regard merely amounted to an executive instruction and not supported by any orders made by the President of India or <ORG>, the learned Attorney General submitted that the other parameters that are clearly laid down in the letters of <ORG> should be strictly followed, that is, all officers who are likely to be eligible for an <ORG> Commander appointment in terms of two years residual service will have to be given command of a <ORG> and unless such officer has commanded the <ORG> for at least one year he cannot be considered for promotion. In the present case, respondent No.1 became a <ORG> Commander on September 24, 1997 and the vacancy in the post of <ORG> Commander arose on March 1, 1998 and thus he had not completed one year of experience as a <ORG> Commander and he had put in 5 months and 7 days experience and to this if we add the waiver granted by the Government in terms of 6 months, it will only be 11 months and 7 days experience. Even so, he falls outside the zone of consideration for being appointed as an <ORG> Commander. However, much argument was addressed on the effect of the recommendation made by the Chief of the <ORG> Staff and the order made by <ORG> in that regard. On November 6, 1998 the Chief of the <ORG> Staff recorded a note in the following terms :- In view of the above, I recommend that redress be granted to tbe Gen officer by way of granting 6 months AE waiver to him for consideration for promotion to the appointment of <ORG> Cdr/VCOAS for a vacancy occurring on 01 Mar 98.

The argument addressed is that the waiver granted by the Government is identical with the consideration of his case for appointment as <ORG> Commander inasmuch as waiver has been granted for the purpose of considering his case to the post of <ORG> Commander it is contended that his case should have been considered. We fail to appreciate this line of argument. The basis upon which <ORG> proceeded is that having taken all the issues into consideration the respondents have taken a stand totally contrary to the recommendations of the Chief of the <ORG> Staff as well as <ORG>. The absence of the concerned officer from India on an assignment in the Embassy of France, the waiver granted only for a period of six months and other various factors taken into account are also set out in the following terms :-

In view of the above detailed examination of the case, <ORG> is of the view that Lt. Gen <NAME>, VSM, be granted waiver of six months in tenure of <ORG> and considered for the appointment of <ORG> as the Gen Offr is not completing AE criteria due to :-

(a) Delayed repatriation from France resulting in -

(b) Delayed placement on criteria appointment in the rank of Maj Gen.

(c) Delayed consideration for promotion to the rank of Lt Gen and

(d) Revision of FIT grading to Deferred, which resulted in

(e) Further delay in consideration, approval and placement as <ORG>, and

(f) Application of new clause vide MOD letter of 18 Nov. 96, the provisions of which only exclude him in 1962 batch vis-à-vis his batchmates.

All the above events were beyond the control of the complainant and were basically caused by the administrative constraints of the organisation. Hence, the Gen Offr deserves the benefit of grant of waiver in terms of natural justice and equal rights, clause of the law.

But whatever may be the circumstances or the period for which he fell short the waiver granted is only for a period of 6 months. If that is so, respondent No.1 cannot be said to have completed the period of one year of experience as Corps Commander. Further, Lt. General <NAME> was considered by <ORG> and found fit on April 10, 1997 but he could not be promoted as Lt. General and appointed as Corps Commander because of stay order passed by <ORG> in the writ petition filed by Lt. General <NAME>. The said order was vacated and thereafter Lt. General <NAME> was promoted on September 24, 1997 and he functioned as <ORG> with effect from August 23, 1997 without any effect on promotion, pay or any related benefits till he was actually promoted on September 24, 1997. Lt. General <NAME> was appointed as <ORG> after the stay was vacated on September 24, 1997. Hence that period including the period of waiver falls short of the requisite period of two years.

On 5.10.97, respondent No.1 made a statutory complaint that his case should be considered on the basis of merit-cum-seniority subject to being found fit for promotion and ultimately prayed for the following :

(1) The decision to defer his case in connection with the selection board met on October 31, 1996 may be reviewed and if he is deemed to have been placed in command of a corps retrospectively from the date of declaration of the results of <ORG>.

(2) In the alternative, he prayed that the stipulation of commanding of a corps for minimum one year to become eligible for appointment as an <ORG> Commander under the letter dated November 18, 1996 may be waived in his case as the delay in his promotion seems to have been caused entirely in the interest of service.

The Chief of Army Staff recommended waiver of this stipulation contained in the letter dated November 18, 1996 limiting to a period of six months. Therefore, the conclusion of <ORG> that he became eligible to be considered to the higher post does not seem to be valid nor <ORG> was justified in proceeding on that basis. The conclusion of <ORG> to that extent is erroneous.

The ACR for the period 1.10.1997 to 31.1.1998 is to the effect that he considered him fit in every way to hold his present rank and also to the next higher rank. On this basis, it is contended that the Chief of the Army Staff having recommended his case in the ACR as fit for promotion could not alter the same subsequently and give a finding that such a recommendation in ACR will have a limited effect. The position in law is that appraisal report or an annual confidential report is not the sole factor to be considered by the selection authority but one of the matters to be taken note of by such authority. We may advert to two decisions of this Court in this regard, namely, <CITATION> , 1993 (Supp.) 4 SCC 441 and <CITATION> , 1996 (10) SCC 555. Therefore, we are of the view that heavy reliance placed by <ORG> on the ACRs to reach the conclusion otherwise is not justified. In deciding whether a post is a selection post or not, one of the criteria to be considered is if it involves a comparative assessment of officers necessarily the element of selection is involved and, therefore, the post with which we are concerned is indeed a selection post although not totally ignoring a senior.

In raising an argument that respondent No.1 being the senior-most officer in the cadre was being considered for the next higher post. The post in question being a selection post for purposes of promotion, the contention advanced is that all the eligible candidates in that cadre should have been considered and consideration of only two candidates, namely, the appellant in one of the cases and respondent No.1, alone could not meet the necessary criteria. This contention does not also hold water because no one else has made a complaint and the case of respondent No.1 has been duly considered. Thus the argument advanced by <NAME> on this aspect does not stand to reason.

Now we come to the last aspect of the matter, namely, the manner in which the <ORG> Secretary examined the service profiles of the two officers in question. For purposes of convenience, we may set out the relevant portion of the note:

Lt. Gen. <NAME> He was commissioned in the Rajputana rifles regiment of the <ORG> in June, 1962 and has held various <ORG>, Staff and Instructional appointments. He picked up the rank of Lt. Gen. On 24th September, 1997 and started functioning as regular Corps <ORG>er. The General Officer has a balance exposure in <ORG>, Staff and Instructional appointments. However, his staff experience in senior ranks from Brig. onwards is only limited to that of Military Attachee. He has no experience of working in Northern <ORG> and <ORG>. Since 1980 he has worked for about 4 years in field areas. It also appears from his records that he did not participate in 1962, 1965 operations. In his report of 1971, when he participates in the operations, there are some advisory remarks both by the IO and RO as below:-

should be bold and aggressive in operation . Should lead his mean personally to difficult objectives. (Remarks by <NAME>).

.. his performance as a Rifle Coy Commander in the recent operations has been satisfactory though not upto the expected level. (Remarks by RO).

The overall profile of the officer, especially in senior ranks has been clearly above average. All the reporting officers gave him above average ratings with sprinkling of outstanding ratings.

As regards CI operations, the officer has handled the same as <ORG>, <ORG>, but he has not had experience of commanding a regular <ORG> Division. His experience as Corps Commander is also limited. He is a graduate of <ORG> and has also done higher command courses. He is recipient of Chiefs Commendation, VSM and AVSM. He is medical category SHAPE- 1.

Lt. Gen <NAME>: - He was commissioner in <ORG> in June, 1962. He became Lt. Gen in Feb, 1996 and since then he is commanding <ORG> the Eastern Sector. The general officer has rich experience in <ORG> and Staff appointments. He has worked both in Eastern and Northern <ORG>s including high altitude areas. Since 1982 he has worked for about 4 years in remote field areas in the Eastern Sector, especially the border areas with China. He has also held important staff assignments in Military Operations, Infantry and Staff Duties, Directorates in <ORG>. His instructional experience is however limited to junior ranks only and he has practically no experience of CI operations.

The officer did not participate in 1962 and 1965 operations. His report of 1971, the year in which operations took place is quite laudatory. The overall profile of the officer, especially in senior ranks has been clearly above average. All reporting officers have given him above average ratings with sprinklings of outstanding ratings. He is a graduate of <ORG> and has also done Senior Commands and NDS Courses. He is also a recipient of AVSM. He is medical category SHAPE-1.

The contention put forth before us is that there are factual inaccuracies in the statement recorded by the Cabinet Secretary in his note and, therefore, must be deemed to be vitiated so as to reach a conclusion that the decision of the <ORG> in this regard is not based on proper material. The learned Attorney General, therefore, took great pains to bring the entire records relating to the relevant period which was considered by the Cabinet Secretary and sought to point out that there were notings available on those files which justify these remarks. Prima facie, we cannot say, having gone through those records, that these notings are baseless. Critical analysis or appraisal of the file by the <ORG> may neither be conducive to the interests of the officers concerned or for the morale of the entire force. May be one may emphasize one aspect rather than the other but in the appraisal of the total profile, the entire service profile has been taken care of by the authorities concerned and we cannot substitute our view to that of the authorities. It is a well-known principle of administrative law that when relevant considerations have been taken note of and irrelevant aspects have been eschewed from consideration and that no relevant aspect has been ignored and the administrative decisions has nexus to the facts on record, the same cannot be attacked on merits. Judicial review is permissible only to the extent of finding whether process in reaching decision has been observed correctly and not the decision as such. In that view of the matter, we think there is no justification for the High <ORG> to have interfered with the order made by the <ORG>.

Before parting with the case we need to observe that considering the nature of the sensitivity of the posts involved and that each of the officer feeling that he did not get the best of the deal at the hands of the <ORG> or that the members of the force being aware who is the best is not heading them will certainly weaken the esteem and morale of the force. Therefore, the standards to be adopted and applied should be of the highest order so as to avoid such an impression in the force.

In the result, we allow the appeals filed by <ORG> and Lt. Gen. <NAME> and set aside the orders made by <ORG> and dismiss the writ petition filed by respondent No.1.


ORDER Leave granted.

The respondent-assessee was denied exemption under sections 11 and 12 of the Income Tax Act, 1961, and the entire receipt of rupees thirty lakhs in its hands was treated as income. The assessing officer was of the view that the amount of rupees thirty lakhs received from Dubai was in violation of the Foreign Contribution (Regulation) Act , 1976. The Commissioner (Appeals), setting aside the order of the assessing officer, came to the conclusion that the assessee is entitled to exemption. <ORG> has affirmed the order of the Commissioner (Appeals).

The appeal filed by the appellant under section 260A of the Income Tax Act, 1961, has been dismissed by <ORG> observing that no substantial question of law arises in the appeal.

The trust was registered after the receipt of the amount by the assessee from Dubai, though it is claimed that the application for registration had been filed earlier. The question also is about the source of contribution as opposed to its identity. We have indicated these questions only for the purpose of showing that the appeal G. T. A. No. 242 of 2004) required deeper consideration by <ORG> and it could not have been dismissed on the ground that no substantial question of law arises therein. Since we are remitting the appeal for decision afresh by <ORG>, we express no opinion on the questions involved. <ORG> would decide the appeal without being influenced by any observation made in this order.

Accordingly, the civil appeal is allowed, impugned order is set aside and I. T. A. No. 242 of 2004 is remitted to <ORG> for its fresh determination in accordance with law.

No costs.