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2002 DIGILAW 61 (AP)

Margadarsi Chit Fund Private Limited Hyderabad v. State/Government Of A. P.

2002-01-23

S.R.K.PRASAD, S.R.NAYAK

body2002
( 1 ) ALL these writ appeals are directed against the common order of a learned single Judge of this Court dated 28-9-1999 made in W. P. No 10015 of 1992 and batch. The appellants are the petitioners in the writ petitioners. In the writ petitions, the petitioners sought for a Mandamus declaring the Memo No: 78348/regn. 112/91-92, dated 4-6-1992 issued by the Government of Andhra Pradesh and the consequential Circular Memo No: CF/24005/91, date 18-7-1992 as mala fide, arbitrary, inoperative and illegal being violative of the provision of the A. P. Chit Funds Act. 1971 (for short the Act ) and the Rules made thereunder and as violative of the fundamental rights of the petitioners guaranteed under Article 19 (1) (g) of the Constitution of India and for a con-sequential direction to the respondent authorities not to insist for the deletion of Bye-laws 11 (3) (a) , 14 (a) and 16 (c) and certain other bye-laws providing for the procedure for meeting the expenditure in relation to and in managing and conducting the Chit business of the petitioner companies. ( 2 ) IN the affidavits filed in support of the-writ petitions, it was contended that the impugned memo dated 4-6-1992 is ultra vires of the Act. In the affidavit filed in support the writ petition No: 10015 of 1992 in para (6), it is contended as follows:" 1 submit that the said Memo of the Government of A. P. No: 78348/regn. II 2/91-92 No. CF/24005/91 dated 18-7-1992 are being Impugned in this writ petition as ultra vires their power, violative of the provisions contained in the statute and the rules made thereunder besides being malafide". ( 3 ) THE learned single Judge, as we could see from the impugned order, considered only the question as to whether the administrative instructions/ clarifications issued by the Government in the impugned memo are in conformity with the provisions of the Act or not but the primary question as to whether the impugned memo is ultra vires of the Act or not is not dealt with by the learned Judge anywhere in the judgement. ( 4 ) SRI E. Manohar, learned Senior Counsel appearing for the appellants would tell us that before the learned single Judge it was specifically contended that the Impugned memo was ultra vires of the Statute and unfortunately that precise question was not dealt with by the learned Judge. ( 4 ) SRI E. Manohar, learned Senior Counsel appearing for the appellants would tell us that before the learned single Judge it was specifically contended that the Impugned memo was ultra vires of the Statute and unfortunately that precise question was not dealt with by the learned Judge. The correctness of the statement made by the learned Senior Counsel is not contested by the learned Government Pleader who appeared on behalf of the respondents. Be that as it may, as we can see from the affidavits, a specific ground is taken in the writ affidavit contending that the impugned memo is ultra vires of the Act, and that question being a pure question of law going to the root of the matter. It is imperative and appropriate to decide that question in the first Instance. ( 5 ) WE do not think it necessary to review the merits of the opinion taken by the learned single Judge on the question whether the administrative instructions/ clarifications issued by the Government of Andhra Pradesh in the impugned memo dated 4-6-1992 are in conformity with provisions of the Act or not. We say this because, after hearing the learned Senior Counsel for the appellants and the learned Government Pleader for Revenue, we are satisfied that the Impugned memo could not be sustained in law because prima facie and ex-facie, it is ultra vires of the Act. ( 6 ) AS can be seen from the statement of objects and reasons of the Act, the Act intends to secure the observance on the part of the Promoters of the Chit Funds, the terms and the conditions subject to which the Chit fund subscriptions are collected by them. For this purpose the Statute has created the authorities like Registrar of Chits, Director of Chits and it has also conferred certain powers on Government. The Government is conferred with power under Section 63 of the Act to frame rules for carrying out the purposes of the Act and that under Section 66 of the Act, the Government, by issuing notification, is empowered to exempt any person or class of persons to whom or any chit or class of chits to which this Act applies from all or any of its provisions, subject to such conditions as they deem fit and also the power to cancel or modify any such notification issued by it. ( 7 ) A careful reading of the provisions of the Act would show that the State Government has no role, except under Section 63 and 66 of the Act as regards administration of the Statute. When these matters were heard earlier, although on the basis of the stand taken in the pleading of the State Government it was contended that the impugned memo dated 4-6-1992 is the one issued by the State Government by virtue of the Rule making power under Section 63 of the Act, today, at the time of hearing, the learned Government Pleader for Revenue would quite fairly submitted that the clarifications issued in the impugned memo are not Rules framed by the State Government by virtue of the power conferred upon it under Section 63 of the Act, but they are administrative instructions/ clarifications issued by the State Government in exercise of its executive power. When the Court pointedly asked the learned Government Pleader to trace the authority of the State Government to issue such administrative instructions/ clarifications contained in the impugned memo with reference to the provisions of the Act, the learned Government Pleader was not in a position to trace the State Government s authority with reference to any of the provisions of the Act. However, the learned Government Pleader would maintain that the impugned memo was issued by the State Government by exercising the inherent power vested in it. Then again, when the Court pointedly asked the learned Government Pleader to elaborate as to the source of the inherent power of the State to issue such instructions or clarifications, he was not in a position to trace or locate the State Government s so-called inherent power . ( 8 ) THE first facet of Rule of Law as well as ground norm of administrative law is that when a Public authority does something affecting an interest or a right of others power to do so should be traceable to an authority granted by the Constitution and/or the law and if it fails to trace its authority, its action is liable to be condemned as ultra vires of the law. Everything must be done according to law is a cardinal principle of the rule of law. The Government should be conducted within a framework of rules and principles recognised by law. Everything must be done according to law is a cardinal principle of the rule of law. The Government should be conducted within a framework of rules and principles recognised by law. The Government and all public authorities and officers are subject to legal limitations. There is no such thing as absolute or unfettered executive/ administrative power. The impugned action undoubtedly has the effect of affecting and /or influencing/ guiding the decision-making by the authorities created under the Act. It also needs to be emphasized that the power vested in the original authority as well as the appellate authority under the Act are quasi judicial in nature and exercise of such power by the statutory authority cannot be permitted to be meddled or interfered with or influenced by the State Government unless its power to do so is traceable to an authority granted by the Act itself. Even according to the learned Government Pleader, the administrative instructions/ clarifications contained in the impugned memo, if they are required to be obeyed by the authorities under the Act, then, they have the effect of Influencing/guiding the decision of the statutory authorities. If that is so, and since the State Government has failed to trace its authority to issue such directions or clarifications with reference to any of the provisions of the Act or even otherwise, the impugned memo should be condemned as ultra vires of the Statute. ( 9 ) IN the result and for the foregoing reasons, we allow these writ appeals and set aside the order of the learned single Judge and allow the writ petitions and quash the Memo No. 78348/ Regn. II-2/91-92, dated 4-6-1992 issued by the State Government and also the Circular Memo No. CF/24005/ 91, dated 18-7-1992 issued by it. No order as to costs.