31-01-2020 (Page 1 of 120) www.manupatra.com Trans Law .

MANU/SC/0144/1977
Equivalent Citation: AIR1978SC 68, (1977)4SCC 608, [1978]2SCR1

IN THE SUPREME COURT OF INDIA

Original Suit No. 8 of 1977
Decided On: 08.11.1977
Appellants:State of Karnataka
Vs.
Respondent:Union of India (UOI) and Ors.
Hon'ble Judges/Coram:
M. Hameedullah Beg, C.J., Jaswant Singh, N.L. Untwalia, P.N. Bhagwati, P.N.
Singhal,
P.S. Kailasam and Y.V. Chandrachud, JJ.

JUDGMENT
M. Hameedullah Beg, C.J.
1. "India, that is Bharat, shall be union of States". The very first mandate of the
first article of our Constitution to which we owe allegiance thus prohibits, by
necessary implication, according to the plaintiff in the original suit now before us
under Article 121 of the Constitution of India, any constitutionally unjustifiable
trespass by the
Union Government upon the domain of the powers of the States. The State
of Karnataka, has, therefore, sued for a declaration that a notification dated 23-
5-1977 (hereinafter referred to as 'The Central Notification') constituting a
Commission of Inquiry in purported exercise of its powers under Section 3 of
the Commissions of Inquiry Act, 1952 (hereinafter referred to as 'the Act'), is
illegal and ultra-vires. This declaration is sought on one of two alternative
grounds : firstly, that the Commissions of Inquiry Act, 1952, does not
"authorise the Central Government to constitute a Commission of Inquiry in
regard to matters falling exclusively within the sphere of the State's legislative
and executive power", and, secondly, that if the provisions of the Act do cover
the Central Government Notification, they are ultra- vires for contravention of
"the terms of the Constitution as well as the federal structure implicit and
accepted as an inviolable basic feature of the Constitution". Consequentially, the
plaintiff seeks a perpetual injunction to restrain the respondents, the Union of India
and Shri A. N. Grover, the one-man Commission of Inquiry into "charges of
corruption, nepotism, favouritism and misuse of Governmental power against the
Chief Minister and other Ministers of the State of Karnataka", from acting under
the Central Government's notification.
2. The plaintiff State's case is : that, the Congress Party was returned by the
electors by a majority at an election held in the State in 1972; that the
majority party in the legislature elected Shri Devraj Urs as its leader who then
formed his Government as required by Article 163 of the Constitution; that, the
Government thus installed, by what must be deemed to be the will and decision
of the State Legislature, continues to enjoy the confidence of the legislature
and is in office; trial, in the recent Lok Sabha elections, the Congress party
headed by Shri Devraj Urs achieved a resounding success by having won 26
out of 28 seats so that the Janata party, which is in power at the center,
must be deemed to have been rejected by the electorate, but it is indirectly,
through the appointment of a Central Commission of Inquiry trying to
discredit the Congress Party and its leaders in the State of Karnataka, and,
thereby, interfering with the democratic machinery of
control and supervision of the Government of the State
provided by the Constitution itself.
3. On 26th April, 1977, the Union Home Minister sent a letter to the Chief
Minister of the State communicating the allegations contained in a Memorandum
submitted by certain members of the opposition party in the Karnataka State
Legislature and asked him to make hi* comments. The Chief Minister gave a
reply dated 13th May, 1977 a copy of which was attached to the plaint.
4. The Chief Minister, in his reply, complains that "slanderous propaganda has
been unleashed without any verification of the truth or otherwise of the
allegations or past history of most of the charges". He points out that broadcasts
and press reports had given him an intimation of the allegations sent to him
even before they were received by him with the Home Minister's letter. The
Chief Minister said : "It is reasonable to presume that the object of this
campaign of slander is mainly to tarnish the image of the Congress party, my
colleagues and myself in an effort to gam, if possible, power for your party in the
State immediately after your party was totally rejected by the electorate of the
State in the recent Lok Sabha elections". The insinuation was that the whole
object of manipulated charges against the Chief Minister was to vilify him and
his Government and to bring him down in the estimation of the public so as
to destroy the support which the Congress party had from the people of the
State. It was thus a charge of malice in fact.
5 . The Chief Minister also admitted, in his letter to the Union Home said to
be embodied in our Constitution and described them as "the corner-stone of
national unity and national integrity". He asserted : "the Constitution is the
source of all
power for the various organs of the center and the State and all actions and
exercise of all power under any of the statutes either by the center or by the
State must conform to and be subordinated to the scheme of distribution of
powers, legislative and executive, under the Federal Scheme of the
Constitution".
6. The Chief Minister also admitted in his letter to the Union Home Minister, that
the Constitution "in certain exceptional circumstances provides for the center
making inroads into the exclusive domain of the State Legislature or the State
executive". But, he denied that the exceptional circumstances, expressly
provided for in the Constitution, for interference by the center, existed in the
instant case.
7 . Evidently, the Chief Minister meant that there was no room for invoking
the emergency provisions under Article 356 of the Constitution which provides
for the assumption by the President of India of any of the functions of the
Government and by the Union Parliament of the functions of the State
Legislature, provided "the President is satisfied on receipt of a report from the
Governor of a State or otherwise that a situation has arisen in which the
Government of the State cannot be carried on in terms of the Constitution".
8. The Chief Minister also invokes the aid of the principles of democracy
which, according to him, permeate the whole scheme of the Constitution, so
that Chief Ministers and other State Ministers can be called to account only
by the State Legislature to which they are responsible. He asserted that "the
Cabinet system of Government is a basic feature of the Indian Constitution".
This implies, according to hint, that all control over ministerial actions vests in
the State Legislatures only and not in the Union Government, subject, of course,
to exceptions expressly provided. With regard to the actions of the State
Government, he complained that the assumption of inquisitorial or supervisory
functions by the Union Government at the instance of "an extra constitutional
agency, however high, would destroy the basic character of the Cabinet system
of Government and would rob the legislature of the State and its people, of the
constitutionally guaranteed right of having a Government of their choice subject
to their control". He claimed that the State had exclusive right to investigate
charges relating to matters falling "within exclusive domain of the State under
the Constitution". He warned against the dangers to national interest by undue
interference with the federal scheme contemplated by the Constitution.
9. The Chief Minister, after having emphatically asserted what he conceived to be
the object of the proceedings against him and his constitutional rights, very
properly offered to place all the material having a bearing upon the 36
charges out of which he admitted that 23 related to him. He offered to clear
himself of these charges. He pointed out that 4 of the charges related to his
colleagues and had been discussed in the legislature. He also said that 3
charges had already been enquired into by the former Prime Minister. He said
that he did not want these to be reopened. He cited the speech of Shri Om
Mehta. a former Minister of State, in the Lok Sabha, on 5th May 1976, where
it was stated that some memoranda had been sent, containing allegations of
corruption and misuse of power made against the Chief Minister and other
ministers of Karnataka by some members of the Legislative Assembly, as long
ago as 1973. According to that statement there were 99 allegations out of which
16 concerned the Chief Minister personally. Shri Mehta was said to have declared
that the allegations against the Chief Minister were found to lack substance
after the settled procedure of inviting comments from the Chief Minister had
been observed. The Chief Minister then dealt at considerable length with the
individual charges.
1 0 . In the plaint before us, it was pointed out that charges of the nature
now referred to the one man Commission by the Central Government had been
made over
since 1972 elections both on the floor of the Legislature and elsewhere. It also
said that they had been explained and answered on the floor of the Legislature
repeatedly. The Chief Minister complained that the same allegations had been
repeated after a new Government had assumed office at the center.
11. . It was also asserted in the plaint that, in order to allay any suspicion in
the minds of the public in the State, and, in view of the continued agitation
for a judicial probe, and, in accordance with the highest and best traditions
of Government, the State Government, by a notification, dated 18th May,
1977, appointed a Commission of Inquiry under Section 3(1) of the
Commissions of Inquiry Act, 1952. A copy of the notification of the State
Government was attached to the complaint. It was alleged that a copy of it had
also been sent to the Home Minister on 18th May, 1977.
12. One of the submissions by the plaintiff is that the State Government
notification dated 18th May, 1977, appointing its own Commission to inquire into
all the matters and irregularities, to which additions could be made and of which
further particulars could be provided, covers all that could be enquired into by
the Grover Commission under the notification dated 23rd May, 1977, which
specifically excludes matters covered by the Karnataka Government's notification
dated 18th May, 1977. Reliance is placed on proviso (b) to Section 3(1) of the
Act which prohibits the Central Government from appointing another
Commission "to inquire into the same matter for so long as Commission
appointed by the State Government is functioning, unless the Central
Government is of opinion that the scope of the inquiry should be extended
to two or more States".
13. The written statement filed on behalf of the Union of India raises 2
preliminary objections as follows before replying seriatim to the paragraphs in
the plaint. The preliminary objections are :
1 . The suit by the State of Karnataka is not maintainable inasmuch
as the impugned notification S.O. No. 365(E) dated 23rd May 1977
constituting the Commission of Inquiry does not affect the plaintiff-
State. By impugned notification a Commission of Inquiry under Section
3 of the Commissions of Inquiry Act, 1952, has been constituted for the
purpose of making an inquiry into the charges of corruption, nepotism,
favouritism and misuse of Governmental power against the Chief
Minister and certain other Ministers of the State of Karnataka specified in
the notification. The inquiry is against the Chief Minister and certain
other Ministers as individuals and not against the State of Karnataka.
The inquiry is rather in the interest of State that such corruption ,
nepotism, favouritism should not exist in the State. The State of
Karnataka is not directly interested in the inquiry proposed to be held
against the Chief Minister and certain other Ministers of the State. The
individuals occupying the office of Chief Minister and Ministers are
distinct from the State itself.
2 . Article 131 of the Constitution of India gives original jurisdiction
to the Hon'ble Supreme Court in any dispute between the Government of
India and one or more States etc., if the dispute involves any question of
law or fact or which the existence or extent of a legal right depends.
There being no dispute between the Government of India and the
State, the suit is not maintainable. There is no legal right of the
plaintiff-State to file the present suit.
14. The Union of India denied that the matters now to be enquired into by the
Grover Commission constituted a resuscitation of previous charges and
allegations which
had been disposed of. Mala fides in the institution of the Commission of
Inquiry is denied. The validity of all provisions of the Act is staunchly
defended. The Inquiry ordered by the Central Government is, its asserted, quite
competent and not covered by the State Government notification. It is denied
that the federal scheme or democratic principles embodied in the Constitution
are affected by the institution of a Commission of Inquiry of the kind set up. It is
submitted that the Central Government Commission of Inquiry was ordered to
enable an appropriate and completely impartial fact finding process to take
place so that either the Central Government or any other authority or even
members of the public may, in accordance with democratic principles, act in
a manner which is constitutionally proper and fully justified. In any case, the
conduct of the Chief Minister of a State with regard to affairs of State and the
manner in which he used his official position were, according to Union
Government, matters of public importance into which the Central
Government was quite competent to order impartial fact finding inquiries in
public interest.
15. On the above set of pleadings, the following issues were framed by this
Court :
1. Is the suit maintainable ?
2 . Is the impugned notification ultra vires the powers of the Central
Government under Section 3 of the Commissions of Inquiry Act ?
3 . If Section 3 of the Commission of Inquiry Act authorises the
Central Government to issue the impugned notification, is the Section
itself unconstitutional ?
16 . An important preliminary question to be decided, for the reasons
already indicated, concerns the nature of the two inquiries, one by the State
Government and another instituted by the Central Government. If the two
notifications cover substantially "the same matter", it may not be necessary to
deal with other questions at all. The parties have very fully argued their cases on
this question even through no separate or specific issue has been framed on it
Both the parties have raised this issue specifically in their pleadings. They
have argued on the assumption that a decision on it is implied in the trial of
other issues in the case. We will, therefore, take it up first separately as a
preliminary question which we should decide before taking up other matters in
issue. A determination of this question has an important bearing on matters
argued for purposes of deciding each of the three issues framed above. Even if
the question was not directly or indirectly involved in the decision of each of the
three issues framed above, a decision on it seems necessary for clearing the
ground for a correct approach to the whole case. It is certainly not a question we
could abstain from deciding simply because no specific issue was framed
separately on it at the outset. Although, in view of the fact that the question
has been put in issue and so understood and very fully argued by the parties, a
separate and specific issue need not be framed upon it, yet, because of the
crucial importance of it, we formulate it now separately and specifically as
follows : Do both the State and the Central Government inquiries relate to
the 'same matter' within the meaning of proviso (b) to Section 3(1) of the
Act so as to bar an inquiry by the Central or Union Government so long as
the State Commission is functioning ? The State Government's notification
dated 18-5-1977, reads as under :-
Government of Karnataka
Karnataka Government Secretariat
Vidhana Soudha
Bangalore, May 19, 1977
28. The first thing that strikes one, on a bare reading of the two notifications is
that, whereas the State Notification seems scrupulously to avoid any mention
of any particular act or part of any individual whatsoever, the whole object of
the Central Government notification seems to be to inquire into the correctness
of the allegations made against the Chief Minister of the State principally and
into allegations against other specified individuals incidentally. The objects and
subject matter of the Central Government notification become clearer by looking
at Annexures 1 and 2 of it giving particulars of transactions to be investigated.
The first five items of Annexure 1 and separate transactions in each of which
the Chief Minister of the State is himself alleged to have played the principal
role in such a way as to indicate his exclusive responsibility. In other
transactions, such as in items 10, 11 and 13, the Chief Minister is shown as
having participated with others. And, in the remaining transactions
mentioned, the allegations do not place the responsibility on any particular
individual, but they seem designed to elicit the truth of allegations of
favouritism, nepotism, and misuse of power against whoever may be
responsible. Annexure 2 of the Central Government notification begins by a
statement which shows that its object is to determine whether the Chief
Minister or any other Minister of the Government of the State of Karnataka,
indulged in nepotism, favouritism, or misuse of Governmental powers in a
number of transactions which are listed as items
1 to 25 there. On the other hand, the State Government notification, without
mentioning the persons who might be responsible for any excessive or
improper payments, or favouritism, or misappropriation, or irregularity,
mentions certain contracts in favour of various companies, or parties under 32
heads. It then states, as a separate item of inquiry, the question as to who
were the persons responsible in the lapses, if any, mentioned earlier. In other
words, apart from their parts in certain lapses the responsibility of the Chief
Minister or any other Minister of the Government of Karnataka could not be
inquired into by the Commission appointed under the State notification. And, all
that the State notification seems to empower its Commission to enquire into,
with regard to transactions mentioned there is whether there was any excessive
payment or irregularity involved. Hence, it speaks of responsibility for "lapses"
as though one could assume that there was no dishonest motive. The
emphasis, in the State notification, is on the question of observance or non-
observance of rules coupled with the question whether certain payments were
proper. And, the question of affixation of responsibility is confined to "lapses" in
the course of these transactions only.
29. Even if a transaction has been made completely in accordance with the
rules, it may, nevertheless, be an act of favouritism tainted with corruption or
dishonesty. Less deserving parties could be deliberately preferred over more
deserving parties in much transactions. It is not difficult to make out
compliance with the rules or to show on paper that the most deserving party
has received the benefit of a contract. Indeed, even the post deserving party
may receive a contract or a benefit under a decision taken by a Government
or its Ministers who may have received an illegal gratification for it without
anything what so sever appearing on the records of the Government about
the bribe received by the Minister concerned. Hence, in addition to the fact that
the items mentioned in the two notifications mostly do not tally with each
other, it appears to us that the objects of the State notification do not go
beyond investigation into the illegality or irregularity of any transaction and
"responsibility" only of persons concerned to point out what they were. If one
may so put it, the State notification is meant to set up a Commission which
has to inquire whether the veil worn by certain transactions is correct in
form and covers it fully, but the Central Government notification is clearly
meant to enable the Commission appointed to tear down even the veil of
apparent legality and regularity which may be worn by some transactions. It
authorises the Grover Commission to inquire into and discover the reality or
substance, if any, behind certain (mostly other) transactions. The object of the
Central Government notification seems clearly not only to affix responsibility
for transactions mentioned there on individuals who may be really guilty even if
a few of them could be said to have been mentioned in both notifications. We
do not think that such notifications would justly or fairly be spoken of as
covering "the same matter", as contemplated by proviso (b) to Section 3(1) of
the Act, because the State Commission is there to examine the appearance or
the surface whereas the Central Commission is expected to delve deeper into
what could only lie behind or below it.
P.N. Bhagwati, J.
2 2 9 . I entirely agree with the judgment just delivered by my learned
brother Chandrachud so far as the merits of the claim in the suit are
concerned, but on the question of maintainability of the suit under Article 131 of
the Constitution, I would like to express my opinion in a
separate judgment, notonly because the constitutional issue
it raises is one of some importance, but also because I find that though there was
some discussion in regard to the scope and ambit of this article in the judgment
delivered by me on behalf of my learned brother Gupta and myself in the State of
Rajasthan v. Union of India MANU/SC/0370/1977 : [1978]1SCR1 it did not take
into account certain aspects of the question and a fuller consideration
appeared to be clearly necessary. The facts giving rise to the suit are set out in
detail in the judgment pronounced by my Lord the Chief Justice and hence it
is not necessary to reiterate them. Suffice it to state that the Suit has been
filed by the State of Karnataka against the Union of India to quash a
notification issued by the Central Government setting up a Commission to
inquire into certain charges of corruption and nepotism against the Chief
Minister and some other ministers of the State of Karnataka. The question is
whether the suit is maintainable under Article 131, for a preliminary
objection against the maintainability of the suit has been raised by the
learned Additional Solicitor General on behalf of the Union of India.

230. The answer to the question depends primarily on the true

interpretation of Article 131. This article confers on the Supreme Court, subject
to the other provisions of the Constitution, exclusive original jurisdiction in any
dispute-(a) between the Government of India and one or more States, or (b)
between the Government of India and any State or States on one side and one
or more other States on the other, or (c) between two or more States, if and in
so far as the dispute involves any question (whether of law or fact) on which
the existence or extent of a legal right depends. It is clear on a plain reading
of this article that it does not lay down any particular mode of proceeding for
exercise of the original jurisdiction conferred by it. No doubt, Part III of the
Supreme Court Rules contemplates that the Original jurisdiction of the
Supreme Court under this article shall be invoked by means of a suit, but that
is not the requirement of the article and in interpreting it, we should be careful
not to allow our approach to be influenced by considerations of 'cause of
action' which are germane in a suit. The scope and ambit of the original
jurisdiction
must be determined on the plain terms of the article without being inhibited by
any a priori considerations.
231. Now, plainly there are two limitations in regard to the dispute
which can be brought before the Supreme Court under Article 131. One is in
regard to parties and the, other is in regard to the subject-matter. The article
provides in so many terms that the dispute must be between the Government
of India and one or more States or between two or more States. The object of
the article seems to be that since in a federal or quasi-federal structure, which
the Constitution seeks to set up, disputes may arise between the Government of
India and one or more States, or between two of more States, a forum should
be provided for the resolution of such disputes and that forum should be the
highest Court in the land, so that final adjudication of such disputes could be
achieved speedily and expeditiously without either party having to embark on a
long, tortuous and time consuming journey through a hierarchy of Courts.
The article is a necessary concomitant of a federal or a quasi-federal
form of Government and it is attracted only when the parties to the
dispute are the Government of India or one or more States arrayed
on either side. This is the limitation as to parties. The other limitation as to
subject-matter flows from the words "if and in so far as the dispute involves
any question (whether of law or fact) on which the existence or extent of a
legal right depends". These words clearly indicate that the dispute must be one
affecting the existence or extent of a legal right and not a dispute on the
political plane not involving a legal aspect. It was put by Chandrachud, J.,
very aptly in his judgment in the State of Rajasthan v. Union of India (supra)
when he said : "Mere wrangles between governments have no place under the
scheme of that article....". It is only when a legal, as distinguished from a mere
political, issue arises touching upon the existence or extent of a legal right that
the article is attracted. Hence the suit in the present case would obviously
not be maintainable unless it complies with both these limitations.

232. The contention of the learned Additional Solicitor General on

behalf of the Union of India was that the test for determining the
maintainability of the suit was not whether the right of the Central Government
to set up a Commission of Inquiry against the Chief Minister and other
ministers of the State of Karnataka was questioned in the suit, but whether the
impugned action of the Central Government infringed any legal right of the
State. The learned Additional Solicitor General submitted that since the
impugned action of the Central Government was directed against the Chief
Minister and other ministers of the State, the legal right infringed would be
that of the Chief Minister and the concerned ministers and they would have a
cause of action against the Union of India since they would be prejudicially
affected by the executive action of the Central Government which is alleged to
be in contravention of the Constitution and the law. They have a legal right to
immunity from subjection to the unconstitutional exercise of power by the
Central Government and this right can certainly be enforced by them. But that
would be by way of a petition under Article 226 or Article 32, if a
fundamental right is involved, and not under Article 131. Even the State
Government may be said to have a cause of action on the ground that the
impugned action of the Central Government affects its personnel, namely, the
Chief Minister and other ministers and the State Government may legitimately
claim to have sufficient interest to maintain a petition under Article 226 to
challenge the impugned action. But it cannot file a suit under Article 131
because it is only the State which can maintain such a suit and not the State
Government.
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