PETITIONER: <NAME> Vs. RESPONDENT: THE STATE OF MADHYA PRADESH& OTHERS. DATE OF JUDGMENT: 08/08/1996 BENCH: <NAME>, B.P. (J) BENCH: <NAME>, B.P. (J) SEN, S.C. (J) CITATION: JT 1996 (7) 216 1996 SCALE (5)793 ACT: HEADNOTE: JUDGMENT:

J U D G M E N T B.P.JEEVAN REDDY.J.

Leave granted.

These appeals are preferred against the judgment of <ORG> of the Madhya Pradesh. <ORG> allowing the Letters Patent Appeal preferred by the State of Madhya Pradesh against the judgment of a learned Single Judge who had allowed the writ petition filed by the appellant. While we agree fully with the reasoning and conclusion of <ORG>, we think it necessary at the same time to emphasise a few aspects relevant in the case of such contracts. First, the relevant facts briefly.

For the excise year 1994-95, the appellant was the highest bidder for certain number of liquor shops. His bid in a sum of Rs.11,67,00,000/- was accepted, payable in monthly instalments of Rs.97,25,000/- each. After making the necessary deposits and after complying with other conditions, licences were granted to him and he commenced the business with effect from 1.4.1995. He failed to pay the monthly rental (licence fee) for the months of July and August, 1994. Thereupon a notice dated 9.8.94 (exhibit R-3) was issued by the authorities intimating him that he was in arrears of the licence fee for the months of July and August and that if he does not pay the same, the shops would be reauctioned. The appellant was asked to be present personally on 23.8.1994 for showing cause. Though the appellant received the said notice, he did not appear before the specified authority. He thus filed to avail of the opportunity of personal hearing afforded to him. (Though the appellant disputed this fact, <ORG> has accepted the respondent's contention and has found as a fact that the appellant did fail to appear on the date of hearing. We accept the said finding.) On 2.9.94, a notification was issued - communicated to a large number of excise officers and other departments and a copy of which was also sent to the appellant stating that if the appellant did not clear the arrears on or before 12.9.94, the shops would be sold by reauction to be held at 2.00 p.m. on 12.9.94. The said notification is marked exhibit R-12. It was also published in the daily newspaper, <ORG>, The notification mentioned the precise amount of arrears due from the appellant and stated that on the reauction being held, the existing licence in favour of the appellant shall stand cancelled. Since the appellant failed to pay, reauction was held on 12.9.94, whereafter, a demand was made upon the appellant for loss of revenue resulting from reauction, as provided by sub-section (4)(b) of Section 31 of the Madhya Pradesh Excise Act. We may set out sub-section (4) of Section 31 this stage:

"(4) Where a licence is cancelled or suspended under Clause (a), clause (b), clause (c) or clause

(e) of sub-section (1),

(a) the fee payable for the balance of the period for which such licence would have been current but for such cancellation or suspension, may be recovered from the ex- licensee as excise-revenue;

(b) the Collector may take the grant under management or resell it at the risk and loss of the ex-licensee, but any profit realised by such management or resale which is not in excess of the amount recovered under clause (a) for such period shall be paid to the ex-licensee."

The appellant questioned the said demand by way of a writ petition in <ORG>. He submitted that he was not given due opportunity before cancelling the licence as required by sub-section (1-A) of Section 31, that there was no order of cancellation of licence as such and that there was no proper publicity for the reauction conducted. He submitted that on account of lack of due publicity, only one bidder was present at the reauction and that the shops were sold at a low price. The learned Single Judge was impressed by the said contentions and allowed the writ petition. On appeal, however, <ORG> rejected all of them. Before we set out the reasoning of <ORG>, it would be appropriate to set out sub- section (1-A) of Section 31. It reads:

"(1-A) Before making an order cancelling ok suspending a licence, permit or pass under sub-section (1), the authority aforesaid shall record in writing the reasons for the proposed action, furnish to the holder thereof a brief statement of the same and afford him a reasonable opportunity of being heard."

<ORG> held that as held by that <ORG> in an earlier decision, "the court cannot take a hypertechnical view of the provisions and must understand the same in a reasonable manner. Substantial compliance with the requirements of the provisions would meet the ends of justice. Where a specific order of cancellation of licence is not passed but if the requirements are substantially complied with, the court under Article 226 of the Constitution would not ordinarily interfere." <ORG> referred to the notice exhibit R-3 and found as a fact that it was received by the appellant. The Bench also found that the notification (R-12) was duly communicated to all the Excise Officers, other departments, and to the appellant besides being published in the newspaper, <ORG>. After referring to the contents of exhibit R-12, the Bench held that the said notification was both an order of cancellation of the appellant's licence as well as notice of reauction. It also found that there was adequate publicity of the said notification and the fact that only one bidder appeared at the reauction was no ground for holding that there was no proper publicity. It gave reasons why bidder generally do not attend reauctions. <ORG> also found as a fact that the appellant failed to appear on the date of hearing specified in notice (R-3). In the light of the said findings, <ORG> held, and in our opinion rightly, that the learned Single Judge way in error in allowing the writ petition. We fully approve the reasoning of <ORG>.

It has been held by a Constitution Bench of this <ORG> in <NAME> & Other etc. etc. v. Deputy Excise and Taxation Commissioner and Others etc. [A.I.R. 1975 S.C. 1121] that "(T)he writ jurisdiction of <ORG> under Article 226 of the Constitution is not intended to facilitate avoidance of obligations voluntarily incurred." At the same time, it was observed that the licences are not precluded from seeking to enforce the statutory provisions governing the contract. <ORG> must, however, be remembered that we are dealing with parties to a contract, which is a business transaction, no doubt governed by statutory provisions. While examining complaints of violation of statutory rules and conditions, it must be remembered that violation of each and every provision does not furnish a ground or the <ORG> to interfere. The provision may be a directory one or a mandatory one. In the case of directory provisions, substantial compliance would be enough. Unless it is established that violation of a directory provision has resu<ORG>ed in loss and/or prejudice to the party, no interference is warranted. Even in the case of violation of a mandatory provision, interference does not fellow as a matter of course. A mandatory provision conceived in the interest of a party can be waived by that party, whereas a mandatory provision conceived in the interest of public cannot be waived by him. In other wards, wherever a complaint of violation of a mandatory provision is made, the <ORG> should enquire- in whose interest is the provision conceived. If it is not conceived in the interest of public, question of waiver and/or acquiescence may arise - subject, of course, to the pleadings of the parties. This aspect has been dea<ORG> with elaborately by this <ORG> in <ORG>

------------------------------------------------------------ *Reference may also be made to the decision of this Court in <CITATION> [1994 (4)S.C.C. 104].

<CITATION> [1996 (3) S.C.C 364] and in <NAME> v. State of Jammu and Kashmir [1994 (4) S.C.C. 422] on the basis of a large number of decision on the subject. Though the said decisions were rendered with reference to the statutory Rules and statutory provisions (besides the principles of natural justice) governing the disciplinary enquiries involving government servants and employees of statutory corporation, the principles adumbrated therein are of general application. It is necessary to keep these considerations in mind while deciding whether any interference is called for by the <ORG> whether under Article 226 or in a suit. The function of the <ORG> is not a mechanical on. It is always a considered course of action.

There is yet another fact. The contract provides for payment of monthly rental on or before a, particular date. If the amount of monthly rental not paid before the due date, the licence is liable to be cancelled as provided by sub-section (1) of Section 31. It is true that before cancelling the licence, an opportunity of hearing should be given as provided by sub-section (1-A). While the opportunity to be given should be reasonable, the reasonableness or otherwise of the opportunity given must be judged keeping in view the time-frame available. It is a case of a contract stipulating monthly payments. If there is a default in paying a month's rental, notice proposing cancellation may follow. The time given to the licencee to show cause would naturally be a short one for the reason that soon thereafter the next month's rental (licence fee) falls due and if that is not paid, another show cause notice may have to follow. (It must be remembered that in this case, the default was for two consecutive months, July and August. The authorities evidently did not act in haste. Even after one month's default, they waited hoping that he should pay. But when he defaulted for the next month also, they issued the notice proposing cancellation.) What we wish to emphasise is that the opportunity contemplated by sub- section (1-A) cannot be operated in a leisurely manner. A realistic view has to be taken while determining whether the opportunity given was reasonable or not. The object of all excise laws is two-fold viz., to raise revenue and to regulate the trade in liquors which is a noxious substance. There is no fundamental right to trade in liquor ( <CITATION> 1995 (1) S.C.C.

574). The only right of the licencee is to seek to enforce the terms of contract (which is statutory in nature) and the statutory provisions governing the contract. The considerations aforementioned should be kept in mind while examining complaints of violation of statutory Rules, conditions add terms of contract as well as complaints of jack of reasonable opportunity.

Lastly, it is urged the before forfeiting the advance amount or the security deposit, a fresh opportunity of hearing ought to have been provided. From a perusal of the judgment under appeal, however, we do not find that any such contention was urged before it. For this reason, we decline to entertain this plea, which may involve investigation of factual aspects.

The appeals accordingly fail and are dismissed with costs. Advocate's fee Rs.5,000/-.


CASE NO.: Appeal (civil) 4482 of 2003 PETITIONER: <ORG> & Anr. RESPONDENT: Major <NAME> DATE OF JUDGMENT: 22/11/2005 BENCH: ARIJIT PASAYAT & C.K. THAKKER JUDGMENT:

J U D G M E N T ARIJIT PASAYAT, J.

<ORG> of India and the Chief of <ORG> staff, <ORG> Headquarters, South Block, New Delhi, call in question legality of the judgment rendered by a Division Bench of <ORG> in a Letters Patent Appeal. <ORG> by the impugned judgment held that though the <ORG> cannot moderate the appraisal and grading given to an officer while exercising the power of judicial review yet the Annual Confidential Report (in short the 'ACR') for the year 1989- 90 has an element of adverse reflection leading to denial of promotion and, therefore, the same ought to have been communicated to the writ petitioner-respondent which has not been done. Though a detailed statutory complaint was filed the same was summarily dismissed without assigning any reason. The sting of adverseness in all events has perilously affected and damaged the career of the writ- petitioner though not reflected in the variation of the marks. Accordingly, the entry in the ACR for the year 1989- 90 was quashed and the matter was remanded back to the respondents in the writ petition i.e. the present appellants for re-consideration of the writ-petitioner's case for promotion to the post of Lieutenant Colonel. It is to be noted that the writ petition filed by the respondent was dismissed by a learned Single Judge and the same was challenged in the Letters Patent Appeal.

Background facts in a nutshell are as under:

The respondent was considered for promotion to the rank of Lieutenant Colonel by <ORG> held in August 1995, August 1996 and November 1996. He was not empanelled on the basis of overall profile and comparative batch merit. The respondent filed statutory complaint on 3.10.1995 for setting aside the ACRs of 1988-89 and 1989-90. According to him the then initiating officer resented the amalgamation of <ORG> officers of <ORG> main stream and disliked the <ORG> trained officers. Statutory complaint of the respondent was rejected on 27.9.1996. The respondent made second statutory complaint which was also rejected on 17.10.1996. The respondent filed writ petition No.1774 of 1997 before the Delhi High Court praying therein that a writ of mandamus be issued to the appellants herein to promote him or in the alternative he be assessed afresh by <ORG> and for setting aside ACRs. for the years 1988-1990. Writ petition of the respondent was dismissed by a learned Single Judge of <ORG> by order dated 29.4.1997. Aggrieved by the order of dismissal respondent filed LPA No.148 of 1997 before <ORG>. The appellants herein filed counter-affidavit in the said LPA.

<ORG> after going through the records of the case came to the conclusion that there was an adverse element in the ACRs of the respondent for the years 1988-89 and 1989-90 and, therefore, in the terms of letter dated 21.8.1989 of the Sena Sachiv Shakha (no. 32301/34/F/MS/4) he ought to have been given performance counseling. <ORG> quashed the entry of the CR for the year 1988-90 and remanded the case to the appellants for reconsideration.

<ORG> was of the view that there was down grading which was adverse to the respondent and ought to have been communicated.

In support of the appeal learned counsel for the appellants submitted that <ORG> has not kept in view the correct position in law. The fundamental mistake in the approach of <ORG> is that it proceeded on the basis as if whenever there was allotment of marks at a figure lower than for the previous period, it was down gradation, resulted in adverse consequences and ought to have been communicated before the same was considered while considering the respondent's suitability for promotion. The High court proceeded to record that the parameters for recording of ACR was not specified and that being the position, the fact that for the year 1988-89 the respondent was awarded seven marks and for 1989-90 it was six marks amounted to down grading. Since there was no challenge in the writ petition to the effect that there were no parameters for assessment <ORG> ought not to have introduced a fresh case of absence of parameters. Said conclusion is erroneous because elaborate guidelines and parameters have been prescribed. Additionally the ACR for 1989-90 was recorded when the respondent was holding the post of Major while for the previous period he was holding the post of Captain. <ORG> erred in treating un- equals to be equal and proceeded on the basis as if allotment of marks at a figure lower than for the previous period amounted to down grading. This is in fact really not so. The question of any communication did not arise because there was no adverse entry as such. The circumstances when communications have to be made of adverse entries are elaborately provided for. As there was no averment that parameters did not exist in the counter filed, present appellants did not touch on that aspect. But <ORG> overlooked this vital aspect and proceeded on the footing that no parameters existed. On that ground alone according to learned counsel for the appellants <ORG>'s judgment is vulnerable. It is also pointed out that <ORG> relied on the decision of this <ORG> in <CITATION> (1996 (2) SCC 363) to buttress its view. According to learned counsel for the appellants, bare reading of the said judgment clearly indicates that it was only applicable in the case of U.P. Jal Nigam and has no application to the facts of the present case.

Similarly, the decision in <CITATION> . (1997 (4) SCC 7) was rendered on a different set of facts and has no application to the facts of the present case. The office memorandum on which <ORG> relied upon i.e. the letter/circular dated 21st August, 1989 does not in any way help the respondent, and in fact goes against him. It only lays down the modalities to be followed when an officer is found to be not up to mark. The performance counseling is a continuous process and the concerned employee has to be given appropriate guidance for an improvement as and when a weakness is noticed. Only when the officer fails to show the desired improvement the adverse/advisory remarks can be included in the confidential report.

In response, learned counsel for the respondent submitted that <ORG> has taken the correct view considering the fact that serious consequences were involved and directed communication of the entry which had adverse consequences. The reduction in marks for a subsequent period is a clear case of adverse consequences and, therefore, it was correct on the part of <ORG> to give direction as contained in the impugned order. It was also submitted that the U.P. Jal Nigam's case (supra) clearly points out that when there is a down grading in the assessment by award of lesser marks, adverse consequences are involved.

As has been rightly submitted by learned counsel for the appellants, <ORG> case (supra) has no universal application. The judgment itself shows that it was intended to be meant only for the employees of <ORG> only.

Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as <NAME>'s theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. In <ORG> V. Horton (1951 AC 737 at p.761), Lord <NAME> observed:

"The matter cannot, of course, be settled merely by treating the ipsissima vertra of <NAME>, J as though they were part of an Act of Parliament and applying the rules of interpretation appropriate thereto. This is not to detract from the great weight to be given to the language actually used by that most distinguished judge."

In <ORG> v. <ORG> (1970 (2) All ER

294) Lord <NAME> said, "Lord <NAME>'s speech.....is not to be treated as if it was a statute definition. It will require qualification in new circumstances." <NAME>, J in (1971) 1 WLR 1062 observed: "One must not, of course, construe even a reserved judgment of <NAME> as if it were an Act of <ORG>." And, in <NAME> v. <ORG> (1972 (2) WLR 537) Lord <NAME> said:

"There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances made in the setting of the facts of a particular case."

Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper.

The following words of Lord <NAME> in the matter of applying precedents have become locus classicus:

"Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect, in deciding such cases, one should avoid the temptation to decide cases (as said by <NAME>) by matching the colour of one case against the colour of another. To decide, therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive."

*** *** *** "Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of obstructions which could impede it."

The materials on records clearly reveal that the procedure adopted for recording of ACRs. has been elaborately provided for. There are different officers involved in the process, they are: Initiating Officer (in short the 'I.O.'), the Superior Reviewing Officer (in short 'the S.R.O.'), the First Technical Officer (in short the 'FTO') and Higher Technical officer (in short the 'HTO'). As submitted by learned counsel for the appellants the standards for demonstrated performance in the case of Major, Lieutenant Colonel and Colonel are different. The appellant had filed the writ application making a grievance that there were some adverse remarks which were not communicated. The absence of parameters was not specifically highlighted in the writ petition. It appears that on 6th May, 1987 a paper on the selection system was circulated. Paragraph 3 thereof reads as follows:

"Promotion upto the rank of substantive major is carried out based upon the length of service, provided the officer fulfills the mandatory requirements of such a promotion. However, promotions above the rank of Major are done through process of selection."

This is indicative that the promotion is virtually on merit-cum-seniority basis. The document in question elaborately provides the guidelines for assessment. Some of the relevant provisions need to be noted. They are as follows:

"Assessment of the officer is based on the comparative merit of the overall profile of the officers within his own batchee. Needless to say, the grading of the <ORG> is to be assessed from the material placed before the board, and not from personal knowledge, if any.

In case of doubt, benefit must go to the "Service"."

Objectivity in the system of Selection is ensured by the <ORG> Branch, by the following:

"Concealment of the identity of the officers being considered to the members of the <ORG>. The MDS placed before the members does not contain the officer's particulars, date of birth, names of the reporting officers or the numbers of the fmn/unit the officer has served, there by denying any identification of the officer under consideration. (Applicable for Nos. 2, 3 & 4 Selection <ORG>)."

Instruction for Rendition of Confidential Reports of officer for 1989 has also been detailed and the following procedure of Assessment is relevant:-

"The Personal Qualities and variables of Demonstrated Performance have been selected after a considerable research on <ORG> over a period of years to cover the inherent attributes considered essential for the job content of an <ORG> Officer. Each quality has been defined. Marks are required to be entered by the IO and the RO in the columns against each quality. Two marks each have been allotted for three gradation (viz. Above Average 8 or 7, High Average 6 or 5, Low Average 3 or 2) to differentiate within the same."

In the case of Majors, Lieutenant Colonels and Colonels, three sets of Demonstrated Performance variables have been provided in the CR forms. These variables correspond to "Regimental and Command Assignments".

The difference in approach from Captains and below and Major, Lieutenant Colonel and Colonel also spaced out from paragraphs 108 and 109. Paragraph 109 is of considerable importance so far as the present case concerned. The same reads as follows:

"109. Low and Below Average Assessment: When an officer is assessed 3 marks or less in any Personal Quality or the aspect of Demonstrated Performance, then it is a matter of concern since, by an large, officers are required to demonstrate at least High Average performance. In order to establish the cause and for the purpose of natural justice, the assessment needs adequate and explicit elaboration. Further, such assessment should invariably be supported by verbal and written guidelines for improvement, details of which also need to be mentioned in the pen-picture."

A reading of para 109 shows that three marks or less is considered to be adverse and in such cases verbal and written guidelines for improvement are to be given and the details are to be mentioned in the pen picture. The brief contents (pen picture) and objectivity of the report is provided in paragraph 113.

A reference is also necessary to the instructions issued on 3rd February, 1989. Paragraph 103 is of considerable importance and reads as follows:

"103. Assessment contained in a CR will not to be communicated to the officer except in the following contingencies:-

(a) When figurative assessment any where in the CR is Low or Below Average (i.e. 3 marks). In such cases extract of figurative assessment (i.e. 3 or less) will be communicated to the officer.

(b) When the brief comments (pen picture) contains adverse or advisory remarks. In such cases completes pen picture (excluding the box grading) together with comments on Guidance for Improvements will be communicated to the officer. Further, the box grading will also need communication to the officer when assessment is low or Below Average (3 or less)."

According to the modalities provided for recording and communication of adverse entries clearly indicate as to in which cases the communication of adverse or advisory remarks are to be made. Word "Advisory" is not necessarily adverse. Great emphasis was laid on the instructions dated 21.8.1989 titled "Reflection and Communication of adverse and advisory remarks in the Confidential Reports". The same reads as follows:

"The actual pen picture comprises the brief comments given at Paragraphs 13(e)/19(a) of the ACR forms for Majors to Colonels or Paragraphs 13/15 of the ACR Form for Captains and below.

Therefore adverse/advisory remarks, if any, should be endorsed in these paragraphs/sub paragraphs only. The information to be given under the Column "Verbal or Written Guidance for Improvement" (i.e. Para 18(b)/19(b) or Para 15/16) is only to support the adverse/advisory remarks reflected in the pen picture. If there are no adverse/advisory remarks reflected in the pen picture, there is no requirement of including details of verbal or written guidance for improvement given to the ratees during the reporting period. It is reiterated that "Performance Counselling is a continuous process and, therefore, the ratee must be given appropriate "Guidance for improvement" as and when noticed."

A reading of the instructions clearly indicate that there are different stages: first is the counseling, second is the guidance and third is the consequences of the officer failing to show desired improvement. Only when an officer fails to show the desired improvement the adverse/advisory remarks are included in his Confidential Report so that cognizance is taken for his weakness while planning his future placements. <ORG> has clearly overlooked these aspects and on that ground alone the judgment is vulnerable. Additionally, it is noticed that the writ- petitioner had merely made a grievance of non-communication but <ORG> quashed the entry for 1989-90 which is clearly indefensible. In the fitness of things, therefore, <ORG> should re-hear the matter and consider the grievances of the writ-petitioner in the background of the parameters which clearly exist. We make it clear that we have not expressed any opinion on the merits of the case as the matter is being remitted to <ORG> for fresh consideration.

The appeal is accordingly disposed of.


<NAME>, J.

1. This is an appeal by special leave from an order of <ORG> dated May 4, 1945, which varied a decree of <ORG> at Lahore dated March 27, 1944.

2. The respondent, who had been a member of <ORG> since 1922, instituted the present suit on July 20, 1942, against the Secretary of <ORG> for India, challenging the validity of an order by the latter dated August 10, 1940, which purported to remove the respondent from <ORG>,

3. The Secretary of <ORG> for India was the original appellant in this appeal, but, after the hearing before this <ORG> in July last, the Indian Independence Act, 1947, came into operation on August 15, 1947. By Section 15(2) of the Act, the present appeal by the Secretary of <ORG> was abated, and by Section 15(2) the appeal was continued by the High Commissioner. By Sub-section (3) of that section, the expression "the High Commissioner" is defined for the purposes of the section. The High Commissioner for India and the High Commissioner for Pakistan have accepted that they should be treated us appellants in place of the Secretary of <ORG> for India by virtue of Section 15., Their Lordships find it convenient, however, for the purposes of their opinion, to continue to refer to the Secretary of <ORG> as the defendant in the suit and appellant in <ORG> and before the <ORG>.

4. In the plaint, the respondent claimed (1) a declaration that the order of removal was ultra vires of the defendant, (2) that the order was not passed in due process of law and was wrongful, illegal and of no consequence whatever, (3) that he was still a member of <ORG>, and had a right to continue in it, and to hold office from which he was removed by the illegal order of the defendant, and (4) that as a member of <ORG> he was entitled to all rights secured to him by the covenant and rules and regulations issued from time to time by the appropriate authority.

5. The suit was originally instituted in <ORG>, 1st Class,. Lahore, but it was transferred to <ORG>, and was ordered to be heard by a division bench as a Court of first instance. After trial, <ORG>, on March 27, 1944, granted the present respondent a decree to the extent of granting a declaration that the order removing him from office was wrongful, void, illegal and inoperative and that he was still a member of <ORG> ; <ORG> also gave a certificate under Section 205 (1) of the Government of India Act, 1935, that the case involved substantial questions of law as to the interpretation of the Act of 1935. On an appeal by the present respondent, <ORG>, by a majority, on May 4, 1945, varied the decree of <ORG> by ordering that, "in place of the declaration that the order removing the plaintiff from office was wrongful, void, illegal and inoperative and that the plaintiff is still a member of <ORG> there shall be substituted a declaration that the plaintiff Mr. <NAME> was wrongfully dismissed from <ORG> on June 4, 1940." <ORG> remitted the suit to <ORG> to take such action in regard to any application by the respondent for leave to amend to claim damages and to the assessment of such damages as to <ORG> should seem right.

6. The main questions raised in this appeal relate to the proper construction of Section 240 of the Government of India Act, 1935, and their Lordships propose to deal with these in the first instance. Some further narrative of the facts in the case is necessary for this purpose. The respondent was appointed to <ORG> in 1922, and on September 1, 1922, he entered into a covenant with the Secretary of <ORG> in Council. Two observations only occur on this document, viz., that the respondent's service was "to continue during the pleasure of His Majesty, His Heirs and Successors, to be signified under the hand of the Secretary of <ORG> for India," and that there is no covenant under which the respondent was given a right to his pay. The covenant is mainly concerned with the respondent's discharge of his duties.

7. In 1935 the respondent was stationed in Hoshiarpur, where he enlisted one <NAME>, a nephew of his wife, in the subordinate staff of one of the Courts under his control. Soon thereafter the respondent took over charge as District and Sessions Judge at Multan. Early in April, 1937, the respondent was transferred to be employed in the North-West Frontier Province. In September, 1937,the respondent received a letter from the Judicial Commissioner, enclosing a letter from the Chief Secretary to <ORG>, informing the Judicial Commissioner that <ORG> had decided to hold a departmental enquiry under Rule 55 of the Civil Services (Classification, Control and Appeal) Rules into the conduct of the respondent while stationed at Multan during 1935-86, and that eight charges had been framed against the respondent of which copies were enclosed. The letter proceeded to ask that steps should be taken to serve the charges on the respondent and that he should be asked to furnish within a reasonable time a written statement of his defence and to state whether he wished to be heard in person or not. The eight charges were divided into two categories, the first of which alleged improper favouritism or nepotism in connection with <NAME> ; the second category alleged improper victimization of certain of the junior officials who had protested against the attempted promotion of <NAME> by an order of the respondent in December, 1936. At the end of each charge were indicated the witnesses or documents whereby it was proposed to attempt to prove the charge. Near the end there were two paragraphs interposed, which clearly related to all the charges and were as follows:

That the above facts and his failure to offer any sufficient explanation up to the present are sufficient to prove that he had abused his position as an officer entrusted with power of appointment on behalf of the <ORG> to show favour to a relation of his to the detriment of other officials serving under him, in contravention both of the recognised principles governing the conduct of Government servants as well as of the express orders of Government, and that he further abused his position as an officer entrusted with powers of discipline over other officers of the <ORG> to persecute various persons who sought to protect their own interests in a legitimate manner.

That he should show cause why he should not be dismissed, removed or reduced or subjected to such other disciplinary action as the competent authority may think fit to enforce for breach of <ORG> rules and conduct unbecoming to a member of <ORG>.

The respondent put in his written statement in answer to the charges, and thereafter Mr. <NAME>, Commissioner, Rawalpindi Division, was appointed to hold the departmental enquiry. Mr. <NAME> examined the respondent on June 10, 1938, in course of which the respondent pleaded guilty to the first two charges, and, without any further examination of witnesses, he made his report on August 9,1938.As regarded the remaining six charges, he found them unproven, but he indicated that he had not been able to make a full enquiry, and that a longer investigation, including a fortnight at Multan, and a further examination of documents were desirable before coming to final conclusions. Mr. <NAME>'s report was not disclosed to the respondent, and the Government appointed Mr. <NAME>, Commissioner, <ORG>, Punjab, to complete Mr. <NAME>'s preliminary enquiry. Mr. <NAME> took the matter up and wrote to the respondent on November 17, 1938, relative thereto. After various procedure, in which the respondent took part, and in the course of which the Government refused to disclose Mr. <NAME>'s report to him, Mr. <NAME> made his report on January 24,1939,in course of which he examined in detail all the eight charges, and found that the nepotism was " complete and deliberate," and that the charges of victimization were all fully proved.

8. In view of the opinion which their Lordships have formed as to the proper construction of Section 240 of the Act of 1935, it is unnecessary to consider in further detail the validity of the enquiries held by Mr. <NAME> and Mr. <NAME>, and whether the respondent was afforded a reasonable opportunity thereat of answering the charges.

9. On June 21, 1939, <ORG> sent the records of the enquiry, including Mr. <NAME>'s and Mr. <NAME>'s reports, to <ORG>, and expressed their opinion that the respondent should be removed from <ORG> but should be granted a compassionate allowance. This <ORG>, in terms of Section 266(3)(c) of the Government of India Act of 1935, is consulted on all disciplinary matters affecting a person serving His Majesty in a civil capacity in India. The respondent made representations to the <ORG>, protesting against the procedure of the enquiry and submitting arguments on the merits. The <ORG>, in a letter dated August 31, 1939, agreed with Mr. <NAME> and <ORG> that no other conclusion was possible than that the respondent had acted deliberately both in the matter of nepotism and the matter of victimization, and agreed that the respondent should be removed from the service but should be granted a compassionate allowance, which should be equal to a two-thirds pension.

10. By Gazette Notification dated August 10, 1940, the appellant directed the removal of the respondent from <ORG>, and the respondent was so informed by a letter of the same date from the appellant.

11. It is not disputed that the learned Chief Justice has correctly stated the respondent's position at this time as follows:

Whatever representations were made it is clear that at no time before his removal from the service was Mr. <NAME> allowed to see the reports of either Mr. <NAME> or Mr. <NAME>, nor was he informed that either the Punjab Government or <ORG> or <ORG> or the Secretary of <ORG> were definitely proposing on the basis of these reports to remove him from the service. He had received the general invitation to show cause against possible dismissal (amongst other possible punishments) included at the end of the charges originally served on him. But no opportunity to show cause against dismissal was given to him, after dismissal had passed from being a possible punishment to the punishment proposed and recommended. At no time was he given an opportunity, before dismissal, of making representations against the accuracy of facts found by Mr. <NAME> or Mr. <NAME> in their reports or against the adverse deductions drawn against him, particularly by Mr. <NAME>.

Section 240 of the Government of India Act, 1935, provides as follows :

240. (1) Except as expressly provided by this Act, every person who is a member of a civil service of the <ORG> in India or holds any civil post under the <ORG> in India, holds office during His Majesty's pleasure.

(2) No such person as aforesaid shall be dismissed from the service of His Majesty by any authority subordinate to that by which he was appointed.

(3) No such person as aforesaid shall be dismissed or reduced in rank until he has been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him:

Provided that this sub-section shall not apply

(a)where a person is dismissed or reduced in rank on the ground of conduct which has led to his conviction on a criminal charge, or

(b)where an authority empowered to dismiss a person or reduce him in rank is satisfied that for some reason, to be recorded by that authority in writing, it is not reasonably practicable to give to that person an opportunity of showing cause.

(4)Notwithstanding that a person holding a civil post under the <ORG> in India holds office during His Majesty's pleasure, any contract under which a person, not being a member of a Civil service of the <ORG> in India, is appointed under this Act to hold such a post may, if the Governor-General, or, as the case may be, the Governor, deems it necessary in order to secure the service of a person having special qualifications, provide for the payment to him of compensation if before the expiration of an agreed period that post is abolished or he is, for reasons not connected with any misconduct on his part, required to vacate that post.

12. Before dealing with the important questions of construction their Lordships may note that the terms " dismissal " and " removal from the service " were accepted as synonymous, and that the respondent did not maintain before the <ORG>, as he had unsuccessfully maintained in <ORG> and <ORG>, that the appellant had not authority under the Constitution to remove a member of <ORG> from the service. Their Lordships may add that, in their opinion, this question is concluded by the terms of the respondent's covenant, already quoted, under which he agrees to accept the signification of His Majesty's pleasure under the hand of the appellant. Their Lordships have no doubt that the purported removal of the respondent was intended to operate by virtue of Sub-section (1) of Section 240.

13. Three important questions of construction arise for decision, viz. 1st, Is Sub-section (1) of Section 240 qualified by Sub-section (3)? 2ndly, Is Sub-section (3) mandatory, or permissive? and 3rdly, What is the proper construction of the words in sub-section (3) "the action proposed to be taken in regard to him"?

14. On the first question the appellant laid stress on the words " except as expressly-provided by this Act" in Sub-section (1) of Section 240 as excluding any exception not expressly provided for, and referred to Sections 200(2) and 220(2) as illustrations of such, express provision in the case of Judges of <ORG> and <ORG>. It will, however, be noted that neither of these sections states its provisions to be an exception, but makes an express provision which is necessarily inconsistent with Sub-section (1) of Section 240. On the other hand, Sub-section (4) of Section 240 begins, "Notwithstanding that a person holding a civil post under the <ORG> in India holds office during His Majesty's pleasure...," which is clearly expressed as an exception, but the statutory provision which follows does not affect the terminability of the office. It provides for a payment of compensation in certain events, but does not curtail His Majesty's power to terminate at His pleasure. The appellant maintains that Sub-section (3) does not in terras make express provision such as is contemplated by Sub-section (1); but the opening words of Sub-sections (2) and (3)"No such person as-aforesaid " clearly indicate a qualification of, or exception to, an antecedent provision, which is plainly Sub-section (1). Their Lordships find it difficult to deal with this contention irrespective of the decision of the next question. If Sub-section (3) is merely permissive, and not mandatory, there will be no substance in the first question; but, if Sub-section (3) is mandatory, their Lordships are of opinion that it would constitute an express provision of the Act, which would qualify the provisions of Sub-section (1) and provide a condition precedent to His Majesty's exercise of His power of dismissal provided by Sub-section (1).

15. In considering the second question of construction, it will be necessary to refer to the position prior to the Act of 1935, when the relevant statutory provision was made by Section 96B of the Government of India Act, 1919, and, in particular, by Section (1), which provided as follows:

96B. (1) Subject to the provisions of this Act and of rules made thereunder, every person in the civil service of the <ORG> in India holds office during His Majesty's pleasure, and may be employed in any manner required by a proper authority within the scope of his duty, but no person in that service may be dismissed by any authority subordinate to that by which he was appointed, and the Secretary of <ORG> in Council may (except so far as he may provide by rules to the contrary) reinstate any person in that service who has been dismissed....

The later part of the sub-section gives a limited right of appeal, which is not relevant to the present purpose. Under Sub-section (2) of Section 96B, the Secretary of <ORG> in <ORG> is empowered to make rules for regulating the classification of the civil services in India, the methods of their recruitment, their conditions of service, pay and allowances, and discipline and conduct. As already mentioned, the enquiry in the present ease was conducted under Rule 55 of the Civil Services (Classification, Control and Appeal) Rules, which were authorised by this subsection. Rule 55 provides:

Without prejudice to the provisions of the Public <ORG> Inquiries Act, 1850, no order of dismissal, removal or reduction shall be passed on a member of a <ORG> (other than an order based on facts which have led to his conviction in a criminal Court) unless he has been informed in writing of the grounds on which it is proposed to take action, and has been afforded an adequate opportunity of defending himself. The grounds on which it is proposed to take action shall be. reduced to the form of a definite charge or charges, which shall be communicated to the person charged together with a statement of the allegations on which each charge is based and of any other circumstances which it is proposed to take into consideration in passing orders on the case. He shall be required, within a reasonable time, to put in a written statement of his defence and to state whether he desires to be heard in person. If he so desires, or if the authority so direct, an oral enquiry shall be held. At that enquiry oral evidence shall be heard as to such of the allegations as are not admitted, and the person charged shall be entitled to cross-examine the witnesses called, as he may wish, provided that the officer conducting the enquiry may, for special and sufficient reason to be recorded in writing, refuse to call a witness. The proceedings shall contain a sufficient record of the evidence and a statement of the findings and the grounds thereof. This rule shall not apply where the person concerned has absconded, or where it is for other reasons impracticable to communicate with him. All or any of the provisions of the rule may,, in exceptional cases, for special and sufficient reasons to be recorded in writing, be waived, where there is a difficulty in observing exactly the requirements of the rule and those requirements can be waived without injustice to the person charged.

16. It is to be observed that the provisions of Sub-section (1) of Section 96B of the Act of 1919 are made "subject to the provisions of this Act and of rules made thereunder," that it makes express provision corresponding to Sub-sections (2) and (2) of Section 240 of 1935, but no express provision corresponding to Sub-section (3) of 1935 ; that matter was left to Rule 55. It is interesting to contrast two decisions of this <ORG>, delivered on the same day in 1936. <CITATION> for India (1936) L.R. 64 I.A. 40 : S.C. 39 Bom. L.R. 688 it was held that a dismissal of a civil servant by an authority subordinate to that by which he -was appointed was contrary to the provisions of Section 96B, Sub-section (1), of the Act of 1919, and was bad and inoperative. Lord <NAME>, in delivering the judgment of the <ORG>, said (at p. 53), " It is manifest that the stipulation or proviso as to dismissal is itself of statutory force and stands on a footing quite other than any matters of rule which are of infinite variety and can be changed from time to time.

17. In the other case, Rule Venkata Rao v. Secretary of State for India (1936) L.R. 64 I.A. 55 : S.C. 39 Bom. L.R. 690, it was held by the same <ORG> that failure to comply with the rules made under Sub-section (2) of Section 96B of 1919 did not give any right of action. Lord <NAME>, in delivering the judgment of the <ORG>, said (p. 64):

Section 96B and the rules make careful provision for redress of grievances by administrative process, and it is to be observed that Sub-section (5) in conclusion reaffirms the supreme authority of the Secretary of <ORG> in <ORG> over the civil service. These considerations have irresistibly led their Lordships to the conclusion that no such right of action as is contended for by the appellant exists. They regard the terms of the section as containing a statutory and solemn assurance that the tenure of office, though at pleasure, will not be subject to capricious or arbitrary action, but will be regulated by rule.

18. Contrasting the provisions of Section 96B of 1919 with the provisions of Section 240 of 1935 their Lordships have no difficulty in holdingin agreement with both <ORG> and <ORG> the provision as to a reasonable opportunity of showing cause against the action proposed is now put on the same footing as the provision now in Sub-section (2) of Section 240, which was the subject of decision in <NAME>'s case, and that it is no longer resting on rules alterable from time to time, but is mandatory, and necessarily qualifies the right of the <ORG> recognised in Sub-section (1) of Section 240 of 1935. The provisions of Section 96B (1), now reproduced as Sub-section (2) of Section 240 of 1935, and of Sub-sections. (2) and (3) of Section 240 are prohibitory in form, which is inconsistent with their being merely permissive.

19. The third question seeks the proper construction of the phrase "A reasonable opportunity of showing cause against the action proposed to be taken in regard to him." It might be stated more narrowly as the meaning of "the action proposed to be taken." In their judgment, <ORG> said, The plaintiff's contention is that this opportunity should have been afforded to him after the finding of the enquiring officer had been considered and the punishment decided upon. With this contention we are unable to agree. Eight charges were served on the plaintiff and at the end he was asked to show cause why he should not be dismissed, removed or reduced or subjected to such other disciplinary action as the competent authority may think fit to enforce for breach of Government Rules and conduct unbecoming <ORG>. He was aware from the very start of the enquiry against him that removal from service was one of the various actions that could have been taken against him in the event of some or all the charges being established, and in this sense he was showing cause during the course of the enquiry against the action proposed. The plaintiff's contention that there should be two enquiries the first to establish that he had been guilty and the second to determine what should be the appropriate punishment, and that in each stage he should have reasonable and independent opprotunities to defend and show cause does not appear to be correct or intended by the <ORG>.

20. In <ORG>, <NAME> agreed with the conclusion of <ORG> on this question, but the majority of the Court held a contrary view, which is expressed by the learned Chief Justice as follows:

It does however seem to us that the sub-section requires that as and when an authority is definitely proposing to dismiss or reduce in rank a member of the civil service he shall be so told and he shall be given an opportunity of putting his case against the proposed action and as that opportunity has to be a reasonable opportunity, it seems to us that the section requires not only notification of the action proposed but of the grounds on which the authority is proposing that the action should be taken and that the person concerned must then be given a reasonable time to make his representations against the proposed action and the grounds on which it is proposed to be taken. It is suggested that in some cases it will be sufficient to indicate the charges, the evidence on which those charges are put forward and to make it clear that unless the person can on that information show good cause against being dismissed or reduced if all or any of the charges are proved, dismissal or reduction in rank will follow. This may indeed be sufficient in some cases. In our judgment each case will have to turn on its own facts, but the real point of the subsection is in our judgment that the person who is to be dismissed or reduced must know that that punishment is proposed as the punishment for certain acts or omissions on his part and must be told the grounds on which it is proposed to take such action and must be given a reasonable opportunity of showing cause why such punishment should not be imposed.

21. Their Lordships agree with the view taken by the majority of <ORG>, In their opinion, Sub-section (3) of Section 240 was not intended to be, and was not, a reproduction of Rule 55, which was left unaffected as an administrative rule. Rule 55 is concerned that the civil servant shall be informed " of the grounds on which it is proposed to take action," and to afford him an adequate opportunity of defending himself against charges which have to be reduced to writing ; this is in marked contrast to the statutory provision of "a reasonable opportunity of showing cause against the action proposed to be taken in regard to him." In the opinion of their Lordships, no action is proposed within the meaning of the sub-section until a definite conclusion has been come to on the charges, and the actual punishment to follow is provisionally determined on. Prior to that stage, the charges are unproved and the suggested punishments are merely hypothetical. It is on that stage being reached that the statute gives the civil servant the opportunity for which Sub-section (3) makes provision. Their Lordships would only add that they see no difficulty in the statutory opportunity being reasonably afforded at more than one stage. If the civil servant has been through an enquiry under Rule 55, it would not be reasonable that he should ask for a repetition of that stage, if duly carried out, but that would not exhaust his statutory right, and he would still be entitled to represent against the punishment proposed as the result of the findings of the enquiry.

22. On this view of the proper construction of Sub-section (3) of Section 240, it is not disputed that the respondent has not been given the opportunity to which he is entitled thereunder, and the purported removal of the respondent on August 10, 1940, did not conform to the mandatory requirements of Sub-section (3) of Section 240, and was void and inoperative. It therefore becomes unnecessary to consider the respondent's challenge of the proceedings under Rule 55, and the questions of fact relative thereto.

23. <ORG> altered the finding of <ORG>, and made a declaration " that the plaintiff Mr. <NAME> was wrongly dismissed from <ORG> on June 4, 1940, and has further ordered that <ORG> aforesaid do take such action in regard to any application duly made by or on behalf of Mr. <NAME> for leave to amend to claim damages as to <ORG> shall seem right " ; and they remitted the case to <ORG>. In the opinion of their Lordships, the declaration should be varied so as to declare that the purported dismissal of the respondent on August 10, 1940, was void and inoperative, and that the respondent remained a member of <ORG> at the date of the institution of the present suit on July 20, 1942, Any further action by the <ORG> that may have occurred since the raising of the action is not covered by the present suit.

24. The appellant appealed against the order of remit to <ORG> for the assessment of damages, and the order of remit by <ORG> was not maintained by the respondent before <ORG>, but, on the other hand, he maintained that he was entitled to recover by this action his arrears of pay from the date of the purported order of dismissal up to the date of action. It is unnecessary to cite authority to establish that no action in tort can lie against the <ORG>, and therefore any right of action must either be based on contract or conferred by statute. It is sufficient to refer to the judgment of Lord <NAME> in the Scottish case of <NAME> v. The Admiralty [1926] S.C. 842, in which the learned Judge, after reviewing the various authorities, states:

These authorities deal only with the power of the <ORG> to dismiss a public servant, but they appear to me to establish conclusively certain important points. The first is that the terms of service of a public servant are subject to certain qualifications dictated by public policy, no-matter to what service the servant may belong, whether it be naval, military or civil, and no matter what position he holds in the service, whether exalted or humble. It is enough that the servant is a public servant, and that public policy, no matter on what ground it is based, demands the-qualification. The next is that these qualifications are to be implied in the engagement of a public servant, no matter whether they have been referred to in the engagement or not. If these conclusions are justified by the authorities to which I have referred, then it would seem to follow that the rule based on public policy which has been enforced against military servants of the <ORG>, and which prevents such servants suing the <ORG> for their pay on the assumption that their only claim is on the bounty of the <ORG> and not for a contractual debt, must equally apply to every public servantsee Leaman v. King [1920] 3 K.B. 663, <NAME> v. Lord Advocate (1897) 25 R. 112, and other cases there referred to. It also follows that this qualification must be read, as an implied condition, into every contract between the <ORG> and a public servant, with the effect that, in terms of their contract, they have no right to their remuneration which can be enforced in a civil court of justice, and that their only remedy under their contract lies in an appeal of an official or political kind.

25. Their Lordships are of opinion that this is a correct statement of the law. In the present case there is no obligation as to pay in the respondent's covenant, as already mentioned. The respondent sought to establish a statutory right to recover arrears of pay by action in the civil Court; he made reference to certain sections of the Government of India Act, 1985, viz. Sections 179(9), 247 (4), 249 and 250, but it is enough to state that their Lordships are unable to derive from them any statutory right to recover arrears of pay by action. He also referred to Section 32 of the Government of India Act of 1919, which, by Sub-section (2), provides the same remedies against the Secretary of <ORG> in <ORG> as might have been had against <ORG> if the Government of India Act, 1858, and the Act of 1919 had not been passed, but it has been settled ever since <NAME> v. <ORG> (1897) 5 Bing. N.C. 262, that pay could not be recovered by action against the Company, but only by petition, memorial or remonstrance. It follows that the respondent fails in his claim to arrears of pay.

26. Their Lordships will humbly advise His Majesty that the judgment and order appealed from should be varied by substituting, in place of the declaration made therein, a declaration that the order of August 10, 1940, purporting to dismiss the respondent from <ORG> was void and inoperative, and that the respondent remained a member of <ORG> at the date of the institution of the present action on July 20, 1942 ; that the order for a remit to <ORG> should be set aside, and that otherwise the judgment and order should be affirmed. As prescribed by the Order in Council granting special leave, the costs of the respondent will be paid by the appellant as between solicitor and client. Their Lordships are not disposed to accede to, the application made by the respondent during the hearing, at which he was represented by counsel, to be allowed the costs of his coming over to this country from India.