2006 Supreme(SC) 56

2006(1) Supreme 344
Supreme Court of India
(From Bombay High Court)
Y.K. Sabharwal, CJI., B.N. Srikrishna and R.V. Raveendran, JJ.
Shrikant —Appellant
versus
Vasantrao & Ors. —Respondents
Civil Appeal No. 5895 of 2004
Decided on 20-1-2006
Counsel for the Parties :
For the Appellant : G.L. Sanghi, Sr. Advocate, S.V. Deshpande, Prag Barde and Ms. Anuradha Rustagi, Advocates.
For the Respondents : D.A. Dave, Sr. Advocate, S.U.K. Sagar, Ms. Bina Madhavan, Ambagh, Advocate for M/s. laywer’s Knit & Co.

Important point
While the term ‘State’ may include a State Government as also statutory or other authorities for the purposes of part III or Part IV of the Constitution, the term ‘State Government’ in its ordinary sense does not encompass in its fold either a local or statutory authority.
Judgment

Headnote:(i) Election Law—Constitution of India—Article 191—Representative of the People Act, 1951—Sections 8, 8A, 9, 9A, 10, 10-A—Disqualifications for being chosen as, and for being, a Member of the Legislative Assembly or Legislative Council of a State—Grounds under the Constitution—Disqualifications under the Act.

       Held : A person cannot, therefore, be disqualified unless he suffers a disqualification laid down in Article 191 of the Constitution or under sections 8, 8-A, 9, 9-A, 10 or 10-A of the Act. It is not possible to add to or subtract from the disqualifications, either on the ground of convenience, or on the grounds of equity or logic or perceived legislative intention. A combined reading of Article 191 of the Constitution of India and Chapter III of the Representation of the People Act, 1951 makes it clear that a person can be held to be disqualified for being chosen as, and for being, a Member of the Legislative Assembly or Legislative Council of a State only on the following, and no other, grounds:

       Disqualifications under the Constitution of India :

       i) If he holds any office of profit under the Government of India or the Government of any State [specified in the First Schedule], other than an office declared by the Legislature of the State by law not to disqualify its holder - vide Article 191(1)(a);

       ii) If he is of unsound mind and stands so declared by a competent court - vide Article 191(1)(b);

       iii) If he is an undischarged insolvent – vide Article 191(1)(c);

       iv) If he is not a citizen of India, or has voluntarily acquired the citizenship of a foreign State, or is under any acknowledgement of allegiance or adherence to a foreign State - vide Article 191(1)(d);

       Disqualifications under the Act:

       v) If he is convicted and sentenced for any offence as provided/enumerated in Section 8 of the Act;

       vi) If he is found guilty of corrupt practices by an order under section 99 of the Act - vide section 8-A of the Act;

       vii) If he is a person who having held an office under the Government of India or under the Government of any State has been dismissed for corruption or for disloyalty of the State - vide section 9 of the Act;

       viii) If he is a person having a subsisting contract with the State Government for the supply of goods to or for the execution of any works undertaken by that Government. - vide section 9-A of the Act;

       ix) If he is a person who is a managing agent, manager or secretary of any company or corporation, in the capital of which the State Government has not less than twenty - five per cent share - vide section 10 of the Act;

       x) If he is a person who has been declared as disqualified by the Election Commission for having failed to lodge account of election expenses within the time and in the manner required by or the under the Act - vide section 10-A of the Act.

       The disqualifications under sections 8 to 10-A of the Act are clear and very specific. They do not leave any room at ‘elbow joints’ to widen or narrow the disqualifications. (Paras 11 and 12)

       (ii) Election Law—Constitution of India—Articles 102(1)(a), 191(1)(a), 58(2) and 66(4)—Disqualifications for membership of Houses of Parliament and membership of State Legislative Assembly/Council and disqualification for election as President and Vice President—Distinction.

       Held : At this juncture, it is of some relevance to notice the distinction between Articles 102(1)(a) and 191(1)(a) which deal with disqualification for membership of Houses of Parliament and the membership of the State Legislative Assembly/Council on the one hand and Articles 58(2) and 66(4) which deal with disqualification for election as President and Vice President, on the other hand. While Article 102(1)(a) and 191(1)(a) disqualify any person holding any office of profit under the Government of India or Government of any State, Articles 58(2) and 66(4) disqualify any person holding any office of profit under the Government of India or the Government of any State or under any local or other authority subject to the control of any of the said Governments. There is thus a conscious and deliberate omission of the words ‘office of profit under any local or other authority subjected to the control of any of the said Governments’ while listing the disqualifications for membership of Houses of Parliament and membership of Legislative Assembly/Council of a State. Holding an ‘office of profit under local or other authority’ is not a disqualification for being elected to either house of Parliament or State Legislative Assembly/Council, but disqualification for being elected as the President or Vice-President. (Para 13)

       (iii) Election Law—Representation of the People Act, 1951—Sections 9A and 10—Disqualification for Government contracts—Disqualification for being chosen as a Member of Legislative Council—Term ‘appropriate government in Section 9-A—Means the ‘State Government’—Notice of Election was given by Returning Officer to elect a member to the Maharashtra Legislative Council—Appellant was declared elected—Election petition filed by respondent, one of the rival candidates, challenging election of appellant—Allegations made that appellant was a government contractor carrying on business and had entered into three contracts with the State Government for execution of works undertaken by appropriate Government—Respondent’s case that such contracts were subsisting, on the date of filing of nomination/scrutiny of nomination papers/declaration of result—Contract with the State Government, stood transferred to ‘Godawari Marathwada Irrigation Development Corporation, an authority constituted under Maharashtra Godawari Marathwada Irrigation Development Corporation Act—Contracts were entered into with Maharashtra Jeevan Pradhikaran, an authority constituted under the Maharashtra Jeevan Authority Act—High Court held that appellant had subsisting contracts with the appropriate government and therefore, incurred disqualification u/s 9A of the Act—Whether a statutory body or authority which answers the definition of ‘State under Article 12 of the Constitution, for purposes of Part III and IV of the Constitution is an ‘appropriate government’ for purposes of Section 9A of the Act—(No)—Whether GMIDC and MJP can be termed as ‘appropriate government’ for purposes of Section 9A of the Act—(No).

       Held : As we are dealing with disqualification for being chosen as a Member of the Legislative Council, the term ‘appropriate government’ in section 9-A refers to and means the ‘State Government’. The term ‘State Government’ is not defined either in the Constitution of India or in the Act (that is Representation of the People Act, 1951). Clause (a) of sub-section (1) of section 2 of the Act provides that unless the context otherwise requires, each of the expressions defined in section 2 or sub-section (1) of section 27 of the Representation of the People Act, 1950, but not defined in the Act, shall have the same meaning as in that Act. Section 2(j) of the Representation of the People Act, 1950 defines “State Government”. (Paras 14 and 15)

       The High Court after an exhaustive consideration of the provision of MGMIDC Act and MJA Act, and the principles laid down by this Court with reference to Article 12, has held that GMIDC and MJP answer the definition of “State” under Article 12 of the Constitution. This is not seriously disputed by the Appellant. Having reached the conclusion that both GMIDC and MJP answer the definition of State under Article 12, the High Court wrongly and if we may say so, without any logical basis, assumed that they are `appropriate government’ and consequently, the appellant who had subsisting contracts with GMIDC and MJP incurred disqualification under section 9-A of the Act. Neither Article 12 nor the decisions rendered with reference to Article 12 is of any assistance for interpreting Section 9A of the Act. The term `State Government’ (as also the term `Central Government’) is used in the various provisions relating to disqualification, in contradistinction from its instrumentalities or local or other authorities. While it is true that the meaning of the terms `State’ and `State Government’ may depend on the context in which they are used, the manner in which the said terms are used in the various provisions relating to disqualification leaves no doubt that `State’ refers to an entity described in the First Schedule to the Constitution of India and `State Government’ refers to the three wings of governance of the `State’ that is Executive, Legislature and Judiciary. The term `State Government’ in section 9A (read with section 7 of the Act) should, therefore, be understood in its ordinary and normal sense, and not with reference to the extended meaning under Article 12 of the Constitution of India. (Para 16)

       The decisions rendered under Article 12 lay down that a body would answer the definition of State under Article 12 if it is financially, functionally and administratively dominated by or under all pervasive control of the “Government”. On the other hand, where the control by the “Government” is merely regulatory, whether under any statute or otherwise, it would not serve to make the body ‘State’. Thus the very decisions relied on by the High Court make it clear that ‘instrumentalities of State’ are different from ‘State Government’, though both may answer the definition of ‘State’ under Article 12 for the limited purpose of Part-III of the Constitution. Further, the very inclusive definition of ‘State’ under Article 12 by referring to Government of India, the Government of each of the States and the local and other authorities, makes it clear that a ‘State Government’ and a local or other authorities, are different and that they fall under a common definition only for the purpose of Part-III of the Constitution. This Court has consistently refused to apply the enlarged definition of ‘State’ given in Part-III (and Part-IV) of the Constitution, for interpreting the words ‘State’ or ‘State Government’ occurring in other parts of the Constitution. While the term “State” may include a State Government as also statutory or other authorities for the purposes of part-III (or Part-IV) of the Constitution, the term “State Government” in its ordinary sense does not encompass in its fold either a local or statutory authority. It follows, therefore, that though GMIDC and MJP may fall within the scope of ‘State’ for purposes of Part-III of the Constitution, they are not “State Government” for the purposes of section 9-A (read with section 7) of the Act. (Para 17)

       The object and intent of section 9A of the Act is to maintain the purity of the legislature and to avoid conflicts between duty and interest of members of Legislative Assembly and Legislative Council. The said object is sought to be achieved by ensuring that a person who has entered into a contract with the State Government and therefore liable to perform certain obligations towards the State Government, is not elected as a member of the Legislative Assembly or Legislative Council, lest he should use his influence as an elected member of Legislature to dilute the obligations or to seek and secure undue advantages and benefits in respect of the subsisting contracts. It seeks to ensure that personal interests will not override his duties and obligations as a member of Legislature or Legislative Council. For the purpose of section 9-A, what is relevant is whether the candidate has a subsisting contract with the appropriate Government (in this case, the State Government) either for supply of goods to the State Government or for execution of any work undertaken by the State Government. (Para 18)

       Therefore, when section 9-A provides that subsistence of a contract with the appropriate government (either for supply of goods or for execution of any work undertaken by that government) will disqualify a candidate for being elected as a member of the Legislative Assembly or Legislative Council, the term ‘appropriate Government’ refers to the State Government alone, and not to any instrumentality of the State Government. We, therefore, hold that GMIDC and MJP constituted under the MGMIDC Act and MJA Act respectively, are not ‘State Government’ and, therefore, any contracts with them are not contracts entered into by the candidate with the appropriate government. We accordingly answer both parts of question (i) in the negative. (Para 20)

       We will next consider the question as to whether the contract dated 19.5.1996 entered by the appellant with the Maharashtra State Government which stood transferred to GMIDC in the year 1998 could be considered to be a subsisting contract with the State Government in the year 2002. (Para 21)

       A contract subsists till the rights and obligations thereunder are finally performed. The general rule is that though an employer may assign the benefits and obligations of a contract to an assignee, he will not be relieved of his obligations towards the contractor, unless the contractor is also a party to the assignment, in which event there is an assignment coupled with novation, (a new contract between the assignee and the contractor). But the exception to this general rule is where a statute vests certain assets of the State in a statutory corporation (or Government Company or other specified person) and provides that as a consequence, the rights and obligations of the State relating to such assets shall stand transferred to such statutory corporation (or Government Company or specified person). In that event, the statute engrafts itself into the existing contract and as a consequence, the statutory corporation stands substituted in place of the original employer, and the existing contracts become contracts between the statutory corporation and the contractor. In case of such statutory vesting/transfer, the consent of the contractor for the substitution of the contracting party and the assignment/transfer of the contract is not necessary. (Para 24)

       It is not in dispute that from the appointed date (1.10.1998), the Tawarja Project (a Medium Irrigation Project in Latur Division) with all rights, liabilities and obligations of the State Government stood vested in and transferred to the Corporation (GMIDC). As a consequence, all rights, liabilities and obligations relating to the said project, including the rights, liabilities, and obligations under the contract dated 19.5.1996 (which was one of the contracts relating to the said project) statutorily vested in and stood transferred to GMIDC, and the contract ceased to be a contract with the State Government. When all rights and obligations of the State Government under the contract were transferred and vested in the statutory corporation (GMIDC) by virtue of the statute, no separate instrument of transfer or assignment is necessary, nor the consent of the contractor is necessary for the transfer and vesting, as the statute engrafts itself over the subsisting contract. The contract, on such statutory transfer and vesting, though originally entered with the State Government ceased to be a subsisting contract with the State Government from the date of such transfer and vesting and will be considered as a subsisting contract with the statutory corporation (GMIDC). Therefore, the contract dated 19.5.1996 though subsisting on the date of filing of nominations and scrutiny of nomination, was not a contract with the appropriate Government, but with GMIDC. (Para 26)