Delhi High Court

C.L. Devgun vs Ndmc on 27 November, 2008

Author: S. Muralidhar

        IN THE HIGH COURT OF DELHI AT NEW DELHI

                    WRIT PETITION (CIVIL) No. 579 of 2008

                                        Reserved on: September 8, 2008
                                        Date of decision: November 27, 2008

        C.L. DEVGUN                                      .... PETITIONER
                                       Through: Ms. Monika Arora, Advocate

                        versus


       NEW DELHI MUNICIPAL COUNCIL & ORS. ....RESPONDENTS
                         Through: Mr. Vikas Singh, ASG and
                               Mr. Prag Tripathi, ASG with Ms.Madhu
                               Tewatia, Advocate, Mr. Anil Amrit,
                               Mr. Rohit Dhingra and Ms. Sidhi Arora,
                               Advocates for R-1 & R-3.
                               Mr. Ashok Arora, Advocate for R-2.
       CORAM:
       HON'BLE THE CHIEF JUSTICE
       HON'BLE DR. JUSTICE S. MURALIDHAR

                1.     Whether Reporters of local papers may be
                        allowed to see the judgment?            Yes
                2.     To be referred to the Reporter or not?   Yes
                3.     Whether the judgment should be reported Yes
                       in Digest?

                                 JUDGMENT

27.11.2008

S. MURALIDHAR, J.

1. This petition, filed as a Public Interest Litigation („PIL‟), is by a former

employee of the New Delhi Municipal Council („NDMC‟) and seeks a

mandamus to the NDMC to "withdraw the facilities being provided to the non-

official members" and for a declaration of "all the facilities currently being

enjoyed by the non-official members of NDMC as illegal."

Preliminary objection

2. A preliminary objection to the maintainability of the PIL has been raised by

Mr.Vikas Singh, learned Additional Solicitor General (ASG) on behalf of the

Union of India. According to him, the petition is by a former employee of the

NDMC who may be disgruntled and therefore this raises doubts about his

bonafides. He accordingly prays for in limine dismissal of the PIL. In support

of this contention Mr.Singh referred to the decisions of the Supreme Court in

Guruvayoor Devaswom Managing Committee v. C.K. Rajan (2003) 7 SCC

546 and Common Cause v. Union of India (2008) 5 SCC 511. However,

Mr.Parag Tripathi, learned ASG appearing for the NDMC did not raise any

such objection to the maintainability of this petition. He went so far as to say

that any concerned citizen had a right to know whether the monies spent by a

statutory authority like the NDMC were within the scope of its statutory

powers and had been deployed for achieving the objects of the concerned

statute.

3. This petition concerns the provision of facilities to non-official members of

the NDMC, which is a municipal body whose functioning is governed by a

statute of Parliament. It seeks accountability for the expenditure incurred by

the NDMC for such purpose. The expenditure incurred by a statutory authority

of monies entrusted to it, which is contributed to by the public at large, is

certainly expected to be in conformity with and for achieving the objects of the

statute. A demand for transparency and accountability in the functioning of a

statutory body like the NDMC cannot be termed as "frivolous" or "vexatious"

or as serving some "personal interest". The present PIL therefore does not fall

within the „prohibited‟ illustrative categories of cases noted in the decisions

cited by Mr.Vikas Singh. The issue raised in this PIL is of substantial public

importance. The fact that the petitioner happens to be a former employee of the

NDMC cannot by itself disentitle him from agitating such an issue. The

preliminary objection to the maintainability of this petition as a PIL is

accordingly overruled.

Composition of the NDMC

4. Before embarking on the discussion of the issues raised in this PIL, it may

be useful to have an overview of the statutory provisions governing the

functioning of the NDMC. The NDMC is constituted under Section 3 of the

New Delhi Municipal Act 1994 („NDMC Act‟). The NDMC is a unique body

which has control over the relatively small area of 45 sq. kms of the capital

city New Delhi. The monuments housing the key organs of the State - the

Parliament, the Rashtrapati Bhavan, Offices of the Central Government and the

Supreme Court of India are located in this territory. This perhaps was a reason

why it was decided that the area within the jurisdiction of the NDMC would be

accorded a separate status and that the constitution and functions of the NDMC

would be governed by a separate Act of Parliament. It was decided to

constitute a separate municipal council, the members of which are not elected

but nominated by the Central Government in consultation with Chief Minister

of the Government of the National Capital Territory of Delhi (GNCTD).

Section 2(1) of the NDMC Act defines the „Administrator‟ to be the

Administrator of the National Capital Territory of Delhi, who is designated as

the Lieutenant Governor of Delhi by virtue of Article 239AA of the

Constitution of India. It is the Central Government which appoints the

Lieutenant Governor. The control of the NDMC is therefore with the central

government and not the GNCTD.

5. Section 4 of the NDMC Act, which sets out the composition of the Council,

reads as under:

"(a) a Chairperson, from amongst, the officers of the Central Government or the Government, of or above the rank of Joint Secretary in consultation with the Chief Minister of Delhi;

(b) three members of Legislative Assembly of Delhi representing constituencies which comprise wholly or partly of the NDMC area;

(c) five members from amongst the officers of the Central Government or the Government or their undertakings, to be nominated by the Central Government; and

(d) two members to be nominated by the Central Government in consultation with the Chief Minister of Delhi to represent from amongst lawyers, doctors, chartered accountants, engineers, business and financial consultants, intellectuals, traders, labourers, social workers including social scientists, artists, media persons, sports persons and any other class of persons as may be specified by the Central Government in this behalf."

"(2) The Members of Parliament, representing constituency which comprises wholly or partly the New Delhi area, shall be a special invitee for the meetings of the Council but without a right to vote.

(3) Out of the eleven members referred to in sub- section (1), there shall be at least three members who are women and one member belonging to the Scheduled Castes.

(4) The Central Government shall nominate, in consultation with the Chief Minister of Delhi, a Vice- Chairperson from amongst the members specified in clauses (b and (d) of sub-section (1)."

Thus, of the eleven members of the Council, five are non-official members

comprising two categories: three Members of the Legislative Assembly (MLA)

of the NCT of Delhi [Section 4 (1) (b)] and two nominees of the central

government [Section 4 (1) (d)]. The duration of the Council is five years.

6. Under Section 10 of the NDMC Act the General Powers of the Council are

set out. These are further divided under Sections 11 and 12 into obligatory and

discretionary functions respectively. For the discharge of these functions the

NDMC is empowered to constitute Committees under Section 9 of the NDMC

Act. Section 9 (2) states that every such Committee shall consist of members

of the NDMC. The members of the NDMC are invariably part of the

Committees. Under Section 13 of the NDMC Act, the Chairperson of the

NDMC is appointed by the Central Government and is expected to hold the

office for a term of five years. The Chairperson can be removed by the Central

Government if it is found that he is incapable of performing the duties of his

office or has been guilty or neglect or misconduct in the discharge of such

duties, which renders his removal expedient. Section 16 (1) talks of the salary

and allowances and facilities that are made available to the Chairperson.

Section 16 (2) deals with allowances that the members of the NDMC are

entitled to for attending meetings. The present petition raises the issue of

interpretation of the latter provision in the context of NDMC providing

facilities to its non-official members.

Factual background

7. The narration of the facts relevant to the case on hand begins soon after 10th

November 1995 when the NDMC was constituted by the central government in

terms of the NDMC Act. Its first meeting took place on 23rd December 1995.

In response to a reference made to it by the NDMC about the facilities to be

provided to the members of the NDMC, the Ministry of Home Affairs

(„MHA‟), Government of India by a letter dated 27th December 1995 clarified

that:

"2. The Vice-Chairperson and other Members of the Council may be provided such facilities which may

be required for facilitating faithful discharge of their duties and responsibilities."

8. Accordingly, the Vice-Chairman NDMC was provided with a staff car with

driver, office with furniture, office staff, office telephone and electronic

typewriter. The non-official members, including the nominated members, were

provided two Maruti vans in a pool, one Council room with furniture,

telephone, one stenographer and a peon. At its meeting held on 5 th November

1996, the NDMC decided to provide to the members the following facilities:

"(a) Provision of residential telephone or reimbursement of telephone charges up to 650 calls;

(b) Since Vice Chairperson and Shri Ram Bhaj, MLA had official vehicles, the vehicles be provided to remaining non-official members;

(d) Meeting allowance @ Rs.200/- per day.

(e) Medical facilities as admissible to Group A Officers of

NDMC."

9. With effect from May 1997 the quantum of petrol was enhanced to 200 litres

per month. However, the payment of the meeting allowance to the members

was discontinued in 1998. Since non- official members had been provided

vehicles by the NDMC and the official members anyway travelled in their

official vehicles it was felt that the meeting allowance, intended to reimburse

the cost of transportation, need not be paid. By a resolution dated 29 th October

1997 it was decided that accommodation shall be allotted to the officers and

other staff of NDMC members. Non-official members were also provided

residential accommodation.

10. After the NDMC was reconstituted on 22nd December 2000, a letter was

written on 7th March 2001 by Shri B.P. Misra, the then Chairman NDMC to the

MHA requesting for a detailed examination of "the entire matter" and to let

him know "as to what facilities should actually be provided to the non-official

members of the Council." Mr.Misra pointed out in his letter that "there is no

section under the Act except Section 16 (2) which covers the allowances to the

members."

11. By a notification dated 27th December 2005 the central government

decided to reconstitute the NDMC. According to the information placed on

record, at that stage the facilities being made available to the members were as

under:

Allowances for attending meeting of the Council & Its Committees.

(i) Members representing the MLA‟s In addition to getting the Assembly Meeting Allowances from Govt. of NCT of Delhi, they are availing the following facilities from NDMC:-

a) Furnished office space along with stationery/computers and following staff:-

b) Telephones - Intercom & Direct in office and free 650 calls bi-monthly + rent and other charges at residence.

(c) NDMC residential accommodation type „IV/V‟ on normal licence fee.

(d) Staff car with 250 litres of petrol per month and chauffer.

(e) Monthly refreshment allowance of Rs.1500/- per month for Vice Chairperson & Rs.1000/- per month for others.

(f) Medical facilities admissible to Group A officers."

12. On comparison with the facilities made available to the Councilors of

Municipal Corporation of Delhi („MCD‟) in terms of the Delhi Municipal

Corporation (Allowances of Councilors and Persons) Rules 1958 the following

picture emerged. MCD Councilors were paid a meeting allowance @ Rs.300/-

per meeting subject to a maximum Rs.3000/- per month whereas members of

the NDMC were paid Rs.200 per meeting. Subsequently, NDMC members

were paid Rs.1000 per meeting in terms of Rule 3 of the New Delhi Municipal

Council (Allowances for Attending the Meetings of the Council) Rules 2006

(„Meeting Allowance Rules‟) subject to a maximum of Rs.3,000 per month.

MCD Councilors were entitled to the telephone calls up to 2000 per month

without STD facility whereas the NDMC members were entitled for 650 free

calls bimonthly plus rent and other charges. The monthly refreshment

allowance of Rs.1500/- per month for the Vice-Chairperson NDMC and

Rs.1000/- per month for other NDMC members was not available to the MCD

Councilors. Further the NDMC members were provided with a Stenographer,

one Senior Assistant, one Peon and one Beldar each as well as medical

facilities admissible to officers. These facilities were not available to the MCD

councilors.

13. It appears that in the note prepared for the MHA by the NDMC as a

precursor to the Meeting Allowance Rules, it was proposed that in addition to

enhancing the meeting allowance for NDMC members to Rs. 1000 per

meeting, they should be given telephone facilities up to a maximum of 2000

calls per month. Nevertheless, when the Meeting Allowance Rules were finally

made under S.16 (2) of the NDMC Act on 6th Dec. 2006, a provision for

allowance for attending meetings alone was made.

Issues raised

14. The principal issue raised in this PIL is whether the grant of facilities like

residential accommodation, car, driver, secretarial staff etc. to non-official

members of the NDMC apart from the meeting allowance paid in terms

Section 16 (2) of the NDMC Act read with Rule 3 of the Meeting Allowance

Rules is permissible in law. According to the petitioner, it is not. It is submitted

that any facility provided to the non-official members of the NDMC over and

above that admissible under Section 16 (2) of the NDMC Act is without the

authority of law. Also, it is contended that the grant of such facilities has no

nexus to the objects and functions of the NDMC as set out by the NDMC Act.

A further ground of challenge is that the expenditure incurred on the grant of

such facilities to the non-official members is arbitrary and excessive.

15. In the counter affidavit filed by the NDMC the explanation offered for

giving the members the facilities is as under:

"the Council has administratively taken a decision to provide facilities to the non-official members as it was deemed appropriate to be given to them for the efficient discharge of the municipal functions and duties under the Act which also involve interaction with the public/making extensive inspections etc. before formulating policies or taking decisions on important issues of public importance."

Submissions of Counsel

16. It is submitted by Ms. Monika Arora, learned counsel for the petitioner,

that of the five non-official members of the NDMC, three are MLAs who are

already enjoying the facilities of allowance for attending meetings and

telephone to the extent of 2000 calls a month. The grant of any further facilities

to them for being members of the NDMC is not warranted. As regards the two

nominated members, they are expected to be experts in their respective fields

and are not expected to visit the constituencies to discharge their functions.

The grant of facilities for them is, in the circumstances, not justified. It is

reiterated that Section 16 (2) of the NDMC Act is exhaustive of all that can be

granted to non-official members. Drawing a comparison with the facilities

made available to the Chairperson, NDMC under Section 16 (1) of the NDMC

Act, it is submitted that that the legislative intent was not to extend those

facilities to non-official members of the NDMC. It is contended that consistent

with this position, the Meeting Allowance Rules notified by the Central

Government do not provide for telephone facilities as requested by the NDMC.

17. Countering these submissions, it was argued by Mr. Vikas Singh,

learned ASG on behalf of the Union of India that Section 16 (2) of the NDMC

Act is couched in a positive language and is therefore an enabling provision. It

does not place any limitation on the powers of the NDMC to grant its non-

official members such facilities as may be deemed appropriate for the purpose

of discharging their statutory responsibilities under the NDMC Act.

Considering the number of Committees on which the non-official members

have to serve for the purpose of discharging the functions of the NDMC, the

grant of these facilities in addition to the meeting allowance cannot be said to

be ultra-vires the NDMC Act. There was power under Section 50 read with

Section 2(3) of the NDMC Act for the NDMC to grant the facilities to its non-

official members. He also sought to make a distinction between nominated and

elected members, and submitted that the grant of allowance and facilities to the

former from out of the New Delhi Municipal Fund (NDMF) was not without

justification. In any event, considering that the total outlay on this account

constituted a very small fraction of the total budget of the NDMC, it could

hardly be said to be arbitrary, excessive or unreasonable. It was a policy

decision of the NDMC, and outside the scope of judicial review.

18. Mr. Parag Tripathi, learned ASG appearing on behalf of the NDMC,

supplemented the submissions of Mr. Vikas Singh. According to him, there is

nothing in the language of the Section 16(2) of the NDMC Act which prohibits

the NDMC from providing to its non-official members facilities over and

above the meeting allowance. He submitted that while it would be open to the

High Court in the exercise of its powers under Article 226 to examine if the

expenditure of the NDMC towards provision of these facilities had a

reasonable nexus with the objects of the NDMC Act and the functions of the

NDMC itself, in the instant case the Petitioner had failed to demonstrate the

absence of such nexus. Also, there was no allegation that the exercise of

powers in this behalf by the NDMC was mala fide. Referring to Sections 20,

31, 59 and 395 of the NDMC Act, he submitted that there were sufficient

internal statutory mechanisms which would constitute a check on the power of

the NDMC to expend funds for providing facilities to its non-official members.

The Petitioner would have to show, even prima facie, that these internal

mechanisms had either failed or were non-operative, failing which the Court

should decline to interfere.

Interpretation of Section16 (2)

19. The first question that arises concerns the interpretation of Section 16 of

the NDMC Act which reads as under:

"16. Salary and allowances of the Chairperson and members - (1) The Chairperson shall be paid out of the New Delhi Municipal Fund constituted under Section 44 such monthly salary and such monthly allowances, if any, as may from time to time be fixed by the Central Government and may be given such facilities, if any, in relation to residential accommodation, conveyance and the like as may from time to time be fixed by that Government:

Provided that the salary of the Chairperson shall not be varied to his disadvantage after his appointment. (2) The members shall be entitled to receive allowance for attendance at meeting of Council and of any of its committees at such rates as may be determined by rules made in this behalf."

20. The language of Section 16 is unambiguous. Sub-section (1) deals with

what can be provided to the Chairperson. This includes salary, allowances and

facilities. Sub-section (1) of Section 16 further provides that these are to be

fixed by the central government. The contrast with the wording of sub-section

(2) is obvious. The latter speaks of only allowance payable to members for

attending meetings and nothing else. It further states that this will be at rates

that may be prescribed by rules. It is not possible to accept the contention of

the petitioners that the mention of „facilities‟ in sub-section (1) of Section 16 in

relation to the Chairperson and its omission in sub-section (2) thereof should

be interpreted as reflecting the legislative intent not to grant any facilities to the

members of the NDMC. The only inference that is possible to be drawn is that

a statutory protection is accorded to the salary, allowances and facilities

available to a Chairperson under S.16 (1) and the power to fix the extent of

these is vested with the central government which also appoints such

Chairperson. Sub-section (2) on the other hand gives a statutory flavour to just

the allowance payable to members. The manner of the grant of allowances is

by way of Rules by the central government in terms of Section 386 of the

NDMC Act. These points of difference between sub-sections (1) and (2) do not

imply that no facilities, other than allowances for meetings, can be made

available to the members in terms of any other provision of the NDMC Act. In

other words, there is no prohibition in Section16 (2) on the members being

granted facilities in exercise of the powers of the NDMC traceable to any other

provision of the statute.

21. To accept the contention of the petitioner to the contrary would tantamount

to reading a restrictive word like "only" before the words "allowances for

attendance at meeting ..." The petitioner wants the Court to read sub-section

(2) of Section 16 as: "The members shall be entitled to receive only allowances

for attendance at meeting..." The inclusion by the Court of a word that is not

present in the statute would not be permissible in the given circumstances, as it

would be, in the words of Devlin, L.J. in Gladstone v. Bower (1960) 3 All ER

353 (CA), „legislating for casus omissus'. This is also the law as explained by

the Supreme Court. In Hansraj Nathu Ram v. Lalji Raja AIR 1963 SC 1180,

where the issue concerned the interpretation of S.43 of the Code of Civil

Procedure, the Court said (AIR, p. 1181):

"The argument was that in the present case the expression "in a Part B State" should be read as if the expression was "in a Part A State". This again is not permissible for us. Section 43 has to be interpreted as it is

and a Court cannot read it as if its language was different from what it actually is. It is not permissible for this court to amend the law as suggested."

22. In Dental Council of India v. Hari Prakash (2001) 8 SCC 61, addressing

the issue of dictionary definitions being used by the High Court in

interpretation, it was held (SCC, pp. 69-70):

"... construction of the expression used in the Act with reference to dictionaries is not called for. Such a course will result in either omission of words in the Act such as 'established by law' or to add different words which is not permissible in the language of the Act."

23. In the same decision the Supreme Court further observed (SCC, p. 70):

"...The learned counsel for respondents referred to large number of decisions where the meaning of the expression used in an enactment has been given a wider meaning or even to cover a situation which could not have arisen when the law was enacted. But we are afraid, these principles cannot be applied in the present context... what is not included by the legislature cannot be undone by us by adopting the principle of purposive interpretation... the High Court ought not to have proceeded to consider other modes of interpretation when the language of the provision itself is absolutely clear."

24. In Padma Sundara Rao v. State Of Tamil Nadu (2002) 3 SCC 533 the

Court explained (SCC, p. 542):

"It is well settled principle in law that the Court cannot read anything into a statutory provision which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the determinative factor of legislative intent. The first and primary rule of construction is that the intention of the Legislation must be found in the

words used by the Legislature itself. The question is not what may be supposed and has been intended but what has been said... While interpreting a provision the Court only interprets the law and cannot legislate it."

"Two principles of construction - one relating to casus omissus and the other in regard to reading the statute as a whole - appear to be well settled. Under the first principle a casus omissus cannot be supplied by the Court except in the case of clear necessity and when reason for it is found in the four corners of the statute itself..."

25. In the considered view of this Court, the plain language of Section 16 (2) of

the NDMC Act does not admit of an interpretation whereby grant of any

facility to the members of the NDMC beyond allowance for attending meetings

is prohibited under any other provision of the NDMC Act.

Existence of the power to grant facilities

26. The question that next arises is whether the NDMC would be justified in

invoking Section 50 of the NDMC Act to grant facilities to its members as part

of the application of the New Delhi Municipal Fund (NDMF). In this context,

it is important to consider Ss. 2(3), 44, 47, 49 and 50 of the NDMC Act.

Section 44 of the NDMC Act lists out the various sources of revenues which

constitute the NDMF. Section 47 mandates that: "No payment of any sum out

of the New Delhi Municipal Fund shall be made unless the expenditure of the

same is covered by a current budget-grant and a sufficient balance of such

budget-grant is still available notwithstanding any reduction or transfer thereof

which may have been made under the provisions of this Act." The proviso to

Section 47 lists out the items of expenditure that are not covered by the

mandate of the main provision. It is not even the case of the Respondents that

the expenditure on facilities to members of the NDMC is an item not covered

by the main part of Section 47. In other words such expenditure has to be

covered by a "current budget grant." Section 2 (3) defines a "budget grant" to

mean "the total sum entered on the expenditure side of a budget estimate under

a major head and adopted by the Council and includes any sum by which such

budget-grant may be increased or reduced by transfer from or to other heads in

accordance with the Provisions of this Act and the regulation made

thereunder." The procedure outlined under Section 47 itself constitutes a

check on the power of the NDMC to grant a facility that has financial

implications for it. This procedure is mandatory in nature and a facility granted

to the members of the NDMC without adhering to this procedure would be

without the authority of law. It may be noted here that it is not the petitioner‟s

case that this procedure was not followed in the instant case.

27. But that is not all. The purpose for which such facility can be granted is

controlled by Section 50 of the NDMC Act which reads as under:

"50. Application of New Delhi Municipal Fund - (1) The moneys from time to time credited to the New Delhi Municipal Fund shall be applied in payment of all sums, charges and costs necessary for carrying out the provisions of the Act, and of the rules, regulations and bye-laws thereunder, or of which payment is duly directed, sanctioned or required by or under any of the provisions of this Act.

(2) Such moneys shall likewise be applied in payment of all sums payable out of the New Delhi Municipal Fund under any other enactment for the time being in force."

28. To this Court the plain meaning of the expression "shall be applied in

payment of all sums, charges and costs necessary for carrying out the provision

of this Act" occurring in Section 50, when read in the context of Section 47

and Sections 10 and 11, is wide enough to include any expenditure incurred

with a view to discharging the functions of the NDMC, whether the obligatory

ones under Section11 or the discretionary ones under Section 12 of the NDMC

Act. These functions, as was noticed earlier, are discharged through the device

of Committees constituted under Section 9. The members of the NDMC sit in

each of these Committees. In fact Section 9 (2) states that each Committee

"shall consist of members of the Council only", and each Committee shall be

presided over by the Chairperson.

29. We have been shown a list of the various Committees which number more

than 13. The non-official members are invariably members of all such

Committees. They are, in that capacity, expected to visit areas both within and

outside the territorial limits of the NDMC. They are expected to hold office

daily for a certain number of hours for redressal of public grievances. They

attend to both written complaints as well as complaints in person. The

members have to send letters and replies in connection with the public

grievances and follow upon them. They are to prepare the reports of the

various Committees, inspect public works undertaken by the NDMC, and so

on. The members indeed appear to have a busy schedule of activities. In this

context, the question posed by the petitioner whether the facilities granted to

the non-official members have a nexus with the objects of the NDMC Act and

the functions of the NDMC, has to be answered in the affirmative.

30. The conclusion on this aspect of the matter, as regards the scope of Section

50 of the NDMC Act, is that the grant to the members of the NDMC of

facilities (other than allowance for attending meetings) is legally permissible.

The power of the NDMC to grant facilities to the non-official members of the

NDMC, which has financial implications involving the application of the

NDMF, is traceable to Section 50 read with Sections 47, 9, 10 and 11 of the

NDMC Act.

Scope of Judicial Review

31. The contention of the respondents regarding the scope of the powers of

judicial review by this Court under Article 226 of the Constitution has to be

dealt with next. To recapitulate, their submission is that the decision of the

NDMC to grant certain facilities to its members is essentially in the realm of

policy and the Court when asked to review such a decision must adopt a „hands

off‟ approach. Indeed the High Court of Bombay in Laxman Mahurkar v.

Balkrishna Kinikar AIR 1961 Bom 167 and the High Court of Karnataka in

K.N. Subba Reddy v. State of Karnataka AIR 1993 Kar 66 have taken the

view that courts cannot go into questions of legality of government

expenditure. The view expressed is that the Court should refrain from even

examining whether the expenditure is for a legitimate public purpose. This

echoes the trend of earlier decisions of our courts which saw executive policy

making as being in a water tight compartment out of the purview of the court‟s

jurisdiction. The decision in Ram Jawaya Kapur AIR 1955 SC 549 is one such

instance. However, later decisions have acknowledged the complex nature of

executive functioning, particularly where executive or legislative policy has

been translated into a statute with verifiable standards and norms. This has

perceptibly expanded the scope of the court‟s interference.

32. In the present case the Court is not being asked to take a decision whether

the NDMF should be applied to this purpose or that. In fact the NDMC Act

itself sets out the purposes for which the fund can be spent. Section 50

mandates that it shall for the statutory purposes and objectives and none other.

The limited area of examination is whether the expenditure being questioned is

in conformity with and has a nexus with the statutorily identified purpose. In

the background of the law developed by our courts in the past few decades, the

question whether the decisions of a statutory body discharging public functions

is in accordance with the procedure, if any, outlined in the statute and whether

it satisfies the requirement of having a nexus with the objects of the statute

cannot be said to be totally outside the purview of judicial oversight (see for

instance, Shenoy K. Ramdas v. Chief Officer, Town Municipal Council,

Udipi AIR 1974 SC 2177). In V.P. Singh v. Chairman, Municipal Council of

Delhi AIR 1969 Del. 295, a Division Bench of this Court held: "It is a

fundamental principle of legal jurisprudence that Courts will not allow an act

to be done against the mandatory provisions of a statute and wait till the

mischief is done." The other grounds of challenge available are that the

decision of a statutory body is malafide or patently unreasonable or irrational

(M.I. Builders v. Radhey Shyam Sahu (1999) 6 SCC 464). However, that is

not a ground on which the Petitioner has challenged the impugned decision of

the NDMC. Since the development of administrative law by the constitutional

courts in our country has largely mirrored the approach of common law courts

elsewhere, it is instructive to examine some of the decisions of the latter courts

in cases involving questions similar to the ones raised in this petition.

33. In Pack v. Southern Bell Tel. & Tel. Co. 215 Tenn. 503 (1965), the

Supreme Court of Tennessee dealt with a case concerning the relocation of

utility facilities owned by private parties at State cost, which was a part of a

highway expansion project. The questions before the Court were whether the

State had legitimately exercised its police power in providing that the State pay

for such relocation, and what constitutes a „public purpose‟. Impliedly

asserting that the Court could go into these questions, the Tennessee Supreme

Court adopted the following reasoning of the Minnesota Supreme Court in

Visina v. Freeman, 252 Minn. 177 (1958):

"What is a „public purpose‟ that will justify the expenditure of public money is not capable of a precise definition, but the courts generally construe it to mean such an activity as will serve as a benefit to the community as a body and which, at the same time, is directly related to the functions of government."

"The mere fact that some private interest may derive an incidental benefit from the activity does not deprive the activity of its public nature if its primary purpose is public."

34. In State of Missouri v. Forrest Smith 348 Mo. 554 (1941), the issue before

the court was in relation to certain bonds which were issued by a City

municipal corporation, ostensibly for the purpose of constructing a „municipal

office building‟ However, it was found that this was a subterfuge to fund the

building for offices for the Unemployment Compensation Commission, which

would incidentally house a few municipal offices. The raising of funds for this

purpose through the issue of bonds by the City was questioned. It was held that

the primary purpose behind the raising of funds through bonds was the

construction of offices for the Unemployment Compensation Commission,

which was not a „municipal public purpose‟. Therefore, the issue of bonds was

held to be invalid. The Missouri Supreme Court examined what constitutes

„public purpose‟ vis-à-vis a particular body. The important point is that the

Court was not satisfied that the expenditure answered the broad description of

„public purpose‟ but insisted that to be held valid the purpose had to fall within

the ambit of the particular authority‟s duties. Again, it is implicit from the

Missouri Court‟s decision that it viewed itself as having the power to go into

the validity of the public expenditure incurred by the municipal body. It

observed (348 Mo. 554 at p. 558):

"If the dominating motive for the erection of a building by a municipality is a strictly public use, then the expenditure for it is legal under the constitution, although incidentally it may be devoted occasionally to uses that are not public, but if the project of the municipality is merely colorable, masking under the pretext of a public purpose, a general design to enter into the private business of maintaining a building for gain, or devoting it mainly to any other than its public use as a gathering place for citizens generally, such an attempt would be a perversion of power and a nullity, and no public funds could be appropriated for it."

"The true distinction drawn in the authorities is this: If the primary object of a public expenditure is to subserve a public municipal purpose, the expenditure is legal, notwithstanding it also involves as an incident an expense, which, standing alone, would not be lawful. But if the primary object is not to subserve a public municipal purpose, but to promote some private end, the expenditure is illegal, even though it may incidentally serve some public purpose."

35. In R. v. Secretary of State for Foreign and Commonwealth Affairs ex

parte. World Development Movement Ltd. [1995] 1 W.L.R. 386, the Court of

Appeals dealt with the scope of judicial review of public expenditure. A

consortium based in the United Kingdom (U.K.) sought „aid and trade

provision‟ (ATP) from the U.K. government under the Overseas Development

and Cooperation Act 1980 which provided for aid to foreign development

projects. The consortium submitted a formal proposal for setting up a hydro-

electric power project in Malaysia. The Overseas Development Administration

(ODA) sent an appraisal mission. Based on the initial reports of the mission,

the government made an oral offer of partial funding to Malaysia. However,

the final assessment by the ODA was that the economic viability of the project

was „marginal‟. This was later revised to the project being a „very bad buy‟, a

burden on Malaysian consumers, completely uneconomic and not a sound

development project. Despite this, the Secretary of State for Foreign and

Commonwealth Affairs approved ATP support. The justification offered was

that the withdrawal of the offer at that stage would damage the U.K.

government‟s credibility. The UK government‟s decision to proceed with ATP

support for the project led to a pressure group approaching the Queen‟s Bench

Division of the High Court with a petition seeking judicial review of the

decision. The Court identified four issues of which two were: whether the

Applicants had standing to maintain an application for judicial review, and

whether the decision of the Secretary of State was lawful. On the first issue, it

was held that since standing in this case was directly related to jurisdiction, it

was a substantive issue and not merely a preliminary one. The merits of the

challenge was by itself a dominant factor in granting recognition of the

applicants‟ standing. On the second issue, the court asserted its power to

review the decision of the Secretary of State to determine whether its purposes

were within the scope of the statute. It was held that this determination could

be made by the courts upon a review of the evidence available. Consequently,

where the court finds that there is no reasonable economic argument for a

particular expenditure, there was no difference between "questions of propriety

and regularity on the one hand and questions of economy and efficiency of

public expenditure on the other." The Court, in invalidating the decision of the

government, speaking through Rose LJ., observed (W.L.R., pp.401-02):

"For my part, I am unable to accept Mr. Richards's submission that it is the Secretary of State's thinking which is determinative of whether the purpose was within the statute and that therefore paragraph 3 of his affidavit is conclusive. Whatever the Secretary of State's intention or purpose may have been, it is, as it seems to me, a matter for the courts and not for the Secretary of State to determine whether, on the evidence before the court, the particular conduct was, or was not, within the statutory purpose."

"Accordingly, where, as here, the contemplated development is, on the evidence, so economically unsound that there is no economic argument in favour of the case, it is not, in my judgment, possible to draw any material distinction between questions of propriety and regularity on the one hand and questions of economy and efficiency of public expenditure on the other. It may not be surprising that no suggestion of illegality was made by any official, or that the Secretary of State was not advised that there would, or might be, any illegality. No legal advice was ever sought." (emphasis supplied)

36. The above decisions are being referred to not so much for their precedential

value but to discern the approach of a court vested with similar powers of

judicial review when asked to determine the correctness of a decision of a

statutory body that has financial implications. The growing demand for greater

accountability of statutory bodies in the discharge of their statutory functions is

witnessed in the number of cases by way of PIL in our country. The courts

have of course been circumspect in interfering in such cases, as is apparent

from the judgment of the Supreme Court in J. Jayalalitha v. Government of

Tamil Nadu (1999) 1 SCC 53 where the decision of the State government to

permit the use of a sports stadium under its control for hosting the birthday

celebrations of the then Chief Minister was under challenge. The Supreme

Court appears to have permitted the exercise "just this once, and not ever

hereafter" after observing (SCC, p.56):

"It goes without saying that it was the tax-payers money which went to build the Stadium. The tax-payers have a right to its being maintained as such and not to be treated as just any other public place for being hired at convenience by anyone. The justification sought here that the State would be richer by two lacs of rupees as rental for the day does not convince us a wee bit. That understanding is totally alien to the purpose for which Stadia are built and most of all the present one."

37. Judicial forays into areas seen the sole preserve of the executive or the

legislature has invited the criticism of "excessive" activism and "judicial

overreach. At another level, the legislative policy of encouraging greater

transparency and accountability in the functioning of state authorities is

reflected in the Right to Information Act, 2005 (RTI Act). The running theme

of the RTI Act is the need for the expenditure of budgetary allocations by

authorities of State to be undertaken in a transparent and fully accountable

manner. The denial of such information attracts penalties under the RTI Act. It

is expected that the demand for such information and the statutory compulsion

attached to its disclosure will itself act as a check on irresponsible or

unaccounted expenditure of public monies by functionaries of the State. The

bodies designed to uphold the rule of law would be expected to act on such

information and apply corrective remedial measures. These trends, both

judicial and legislative, reinforce the need for asserting, to a limited extent, the

power of judicial review in cases involving a challenge to decisions of

statutory bodies having financial implications.

38. Indeed, Mr. Parag Tripathi fairly stated that if any expenditure is shown to

be ultra-vires the powers under the statute, or was arbitrary, disproportionate or

excessive, or had no nexus with the object sought to be achieved, it would be

difficult to sustain a proposition that the High Court entrusted with the duty of

upholding the Constitution and the rule of law should be powerless to do

anything about it. There could be extreme instances which would shock the

judicial conscience, and where the decision to interfere may not be difficult to

arrive at. For instance, if the NDMC were to have a big birthday bash for its

Chairperson or where it resolves that each of its members should be given a car

costing ten million rupees each, it would be difficult to argue that such

expenditure out of the NDMF is to fulfill the objects of the NDMC Act.

39. However, there may be the not so clear cut cases which do not admit of

easily verifiable objective standards to enable the court reviewing them to

come to a definite conclusion as to their arbitrariness or validity. Here the

approach would be to defer in the first instance to the best judgment of the

authority as to what constitutes an expenditure that is intended to achieve the

objects of the statute. The power of judicial review, although available in such

cases, need not be straightaway exercised if it can be shown that there are

adequate in-built accountability mechanisms that can constitute a check on the

abuse of statutory powers by the statutory body. The aspects of both the

permissibility of the expenditure and its quantum- whether it is excessive or

arbitrary - would be best left to be determined in the first instance by the

internal audit mechanisms which would evolve and apply certain pre-

determined verifiable norms to determine if there has been a breach or an

excess. In departments of the government, for instance, there are norms laid as

to the extent of expenditure and the purpose for which it can be undertaken.

The Comptroller and Auditor General of India, or his counterpart in the State,

usually undertakes an annual review of the accounts of every department and

ministry and reports on whether the expenditure under various heads was in

conformity with the prescribed norms. Thereafter an „action taken report‟ is

called for and examined by the Public Accounts Committee of either the

Parliament or the State legislative assembly as the case might be.

40. In this background, the writ Court‟s interference, in the "not-so-clear-cut"

cases challenging decisions of statutory bodies with financial implications,

would be warranted only if such accountability mechanisms are non-existent,

inoperative or ineffective. The court would first determine whether any internal

statutory „check‟ mechanisms exist. If they do, the next task is to determine if

they are operational and if not to seek to activate them. Where they are

operational and have been invoked, to determine whether the first level review

by such mechanism has resulted in a substantiation of the grievance made.

Next, if it does, to ask if the reports containing the recommendations of such

audit mechanisms have been acted upon by the statutory body by putting in

place remedial and corrective measures. In the considered view of this Court,

this approach would obviate the criticism that there is too much interference by

the court in areas of executive and legislative functioning.

Existence of internal 'checks' in the NDMC

41. As far as the present case is concerned, it is certainly not one of those

„extreme‟ cases which admit of no two opinions on whether the measure or

action under challenge is arbitrary or excessive. The decision of the NDMC

which is under challenge here falls in the domain of the "not-so-clear-cut"

cases. Therefore, before embarking upon an exercise of determining whether

the expenditure incurred by the NDMC on providing facilities to its non-

official members, apart from the allowances for meetings, is arbitrary or

excessive, it would be necessary to examine if the provisions of the NDMC

Act provide for internal checks.

42. At the first level, Section 20 of the NDMC Act mandates that every

decision of the NDMC which involves any expenditure "shall be provided for

under a current budget-grant" and if it is incurred after the close of the said

year it would require the sanction of the Council. Secondly, under Section 31

of the NDMC Act, the Secretary shall place before the Administrator a copy of

the minutes of the proceedings of each meeting of the Council within a

prescribed period of time. Thirdly, Section 47 provides that "no payment of

any sum out of the New Delhi Municipal Fund shall be made unless the

expenditure of the same is covered by a current budget-grant and a sufficient

balance of such budget-grant is still available notwithstanding any reduction or

transfer thereof which may have been made under the provisions of this Act."

As regards the exceptions listed out in the proviso to Section 47 there is a

further check provided under Section 49 which mandates that in such cases

"the Chairperson shall forthwith communicate the circumstances to the

Council, which may take such action under the provisions of this Act as shall,

in the circumstances appear possible and expedient for covering the amount of

the additional expenditure." While these provisions list out the procedure,

Section 50 restricts the purpose for which the expenditure can be made. It

mandates that all such expenditure shall only be incurred "for carrying out the

provisions of the Act, and of the rules, regulations and bye-laws thereunder."

Under Section 55 the NDMC is enjoined to adopt a budget estimate for every

year, which may be altered under Section 56. Section 57 gives the NDMC the

power to re-adjust income and expenditure during the year.

43. As regards the other internal „check‟ mechanisms, Chapter VII of the

NDMC Act contains several provisions relating to „Accounts and Audit‟.

Section 58 mandates that there must be maintained a General account of all

receipts and expenditure of the NDMC. Under Section 59 the Chief Auditor

shall conduct a monthly examination and audit of the accounts of the NDMC

and report thereon to the Chairperson. In terms of the proviso to Section 59,

the Central Government "may at any time appoint auditor for the purpose of

making a special audit of the General Account of the New Delhi Municipal

Fund." Finally, the oversight powers of the Central Government over the

functioning of the NDMC is set out under Chapter XXII of the NDMC Act. In

particular, S.395 gives the Central Government the power to issue directions to

the Council in pursuance of information it receives under Ss. 393, 394, or

otherwise.

44. The above internal check mechanisms ought to be activated first in the

event of their being an apprehension that an expenditure by the NDMC is

beyond the scope of its powers under the Act, or is for a purpose other than

that envisaged by the Act. Whether a particular facility granted to a member is

excessive or arbitrary should be left, in the first instance, to the decision of the

audit mechanisms on the basis of the pre-determined norms.

No case for interference

45. As far as the present case is concerned, that stage has not been reached.

The expenditure incurred by the NDMC on the facilities granted to its non-

official members has not been shown to be excessive or arbitrary by the CAG

or any other statutory audit mechanism. The Petitioner has not laid any factual

foundation to show that the grant of the facilities to the non-official members,

which has financial implications for the NDMC, is in violation of any statutory

procedure. Also, he has not been able to show that the expenditure incurred on

the facilities to non-official members is beyond the prescribed norms. He

appears not to have activated the statutorily available mechanisms for

determining this question. Certainly, if the expenditure on this score is beyond

the prescribed norms, there would be audit objections about which information

could be sought under the RTI Act. Absent such primary level determination, it

would be impermissible for this Court to straightaway undertake a secondary

review to determine if such expenditure is either statutorily impermissible or is

arbitrary, excessive or unreasonable in terms of the financial norms. It is also

not the Petitioner‟s case that the exercise of the powers by the NDMC in

granting such facilities was mala fide. Therefore, on the facts placed before this

Court it is not possible for this Court to grant the relief prayed for by the

petitioner.

Conclusions

46. To summarise the conclusions:

(a) The preliminary objection of the Respondents to the maintainability of

this PIL by the petitioner, who happens to be a former employee of the

NDMC, is overruled.

(b) The plain language of Section 16 (2) of the NDMC Act does not admit

of an interpretation whereby grant of any facility to the members of the

NDMC beyond allowance for attending meetings is prohibited under any

other provision of the NDMC Act.

(c) The power of the NDMC to grant facilities to the non-official members

of the NDMC, which has financial implications involving the

application of the New Delhi Municipal Fund, is traceable to Section 50

read with Sections 47, 9, 10 and 11 of the NDMC Act.

(d) There is a limited power of judicial review in cases involving a

challenge to decisions of statutory bodies having financial implications.

Aside extreme cases, the writ Court‟s interference, in cases challenging

decisions of statutory bodies with financial implications, would be

warranted only if such accountability mechanisms are non-existent,

inoperative or ineffective.

(e) There are sufficient internal „checks‟ and audit mechanisms under the

NDMC Act to ensure that the expenditure by the NDMC on the grant of

facilities to its non-official members is for the purposes envisaged under

the NDMC Act. Absent a primary level determination by such audit

mechanism, it would be impermissible for this Court to straightaway

undertake a secondary review to determine if such expenditure is either

statutorily impermissible or is arbitrary, excessive or unreasonable in

terms of the financial norms.