Holding

The Court held that the Act and Ordinances are constitutionally valid and do not violate Articles 14 or 19(1)(c), but the termination of Dr. Jagadanand Jha’s service without a hearing was unlawful and the termination order was set aside.

Summary

The Bihar Government enacted Ordinances and later the Bihar Private Educational Institutions (Take Over) Act, 1987 to nationalise private educational institutions in phases, selecting the Lalit Narayan Mishra Institute as the first institution. The Institute (as a society) and its registrar, Dr. Jagadanand Jha, challenged the statutes on grounds of violation of Articles 14 and 19(1)(c) of the Constitution, lack of legislative competence, and the legality of Jha's termination without a hearing. The Court held that the phased nationalisation was a valid legislative classification, not discriminatory, and that the statutes fell within the State’s competence under Entry 42 of List III; they did not infringe the right to form an association. However, the termination order was void for failing to afford Dr. Jha a chance to be heard. Consequently, the termination order was quashed while the statutes were upheld.

Issues considered

The validity of the Bihar Private Educational Institutions (Take Over) Act and the preceding Ordinances under Article 14 of the Constitution.
Whether the statutes infringe the right to form association under Article 19(1)(c).
Whether the State Legislature had competence to enact the Act (relevant entries of the Seventh Schedule).
Whether compensation is required for acquisition of property after the 44th Amendment (Article 31(2)).
The legality of the termination of Dr. Jagadanand Jha’s service without a hearing under principles of natural justice.

Legislation cited

Bihar Private Educational Institutions (Take Over) Act, 1987s. 2(a), s. 3(1), s. 3(2), s. 3(3), s. 4(1), s. 6
Bihar Private Educational Institutions (Take Over) Ordinance, 1986s. 6
Bihar State Universities Act, 1975
Constitution (Forty‑fourth Amendment) Act, 1978
Constitution of Indias. Article 14, s. Article 19(1)(c), s. Article 31(2)

Subjects

NationalisationArticle 14Article 19(1)(c)Legislative competenceAcquisition of propertyNatural justiceTermination of service

Judgment

312 SUPREME COURT REPORTS [1988] 3 S.C.R.

Allowing the writ petitions (Civil) Nos. 87 of 1987 and 439 of 1987
A
and Civil Appeal No. 4141of1986, in so far as they related to the order
of termination of the services of Dr. Jagadanand Jha, and dismissing
the writ petitions (Civil) Nos. SS of 1987 and 431 of 1987 and Civil
Appeal No. 4142of1986, the Court,

B HELD: The provisions of the Act are the same as those of the two
Ordinances Nos. IS and 30 of 1986. The first attack on the validity of
the Act and the Ordinances was founded on the plea of violation of Article
14 of the Constitution. It was contended that the Act and the Ordi·
nances were discriminatory in nature and violative of Article 14 of the
Constitution of India and should be struck down. The contention was

1
wholly misconceived. The Ordinances were not promulgat~ and the
c Act was not passed for the purpose of nationalisation of the Institute
only. It was apparent from the provisions of the Ordinances and the Act
that the private educational institutions as defined therein were to be
taken for the purpose as mentioned in the Preambles to the Ordinances
and the Act In a phased manner. All the Institutions which answered the
D description given in section 2(a) of the Act were to be nationalised. It
was not correct to say that the Institute had been slgnled out for
nationalisation. [3I9E; 321D; 3230-F]

There can be no doubt that when nationalisation had to be done in
a phased manner, all the institutions cannot be taken over at a time.
E The nationalisation in a phased manner contemplates that by and by the
object of nationalisation will be taken over. In implementing the
nationalisation of the private institutions In phased manner, the Legis-
lature had started with the Institute, and the question of singling out the
Institute or treating it as a class by itself did not arise. It was the
legislative decision that the Institute should be taken over In the first 1
F phase of nationalisation. The Legislature had not left it to the discretion
of the executive government for the purpose or selecting the private
educational institution for the first phase. It was very difticult to assail a ,.
legislative decision. Of course, a legislative decision can be assailed if it
is violative of any provision of part III of the Constitution. So far as
Article 14 was concerned, the Court did not think that it had any
G manner of application Inasmuch as the question of discrimination did
not arise as soon as it was conceded that It was a case of nationalisation
in a phased manner and that for the first phase the Institute had been
chosen by the Legislature itself. The Institute had been chosen by the •
legislative process. It was true that the Ordinances were promulgated • ' ·•·
under Article 213 of the Constitution., but it could not be characterised . ,
H as an executive act. In· any even, ultimately, the Legislature itself had ·

~·.
L.N.M. INSTITUTE v. STATE OF BJHAR 313

passed the Act with the inclusion of the Institute in the Schedule thereto A
as the only institution to he nationalised in the first phase. Even assum-
ing that the question of discrimination might arise also for the purpose
of selection for the first phase, there were justifiable reasons for select-
ing the Institute for the first phase of nationalisation; the State had
changed the name of the Institute, provided the site for the Institute, got
the building constructed through its own agencies and funds and B
supervised the prescription of syllabi. The fact could not be excluded
that since 1975 it is the State of Bihar nnrturing the Institute, spending
money and exercising necessary control over it, and these facts fully
juftified the propriety of legislative wisdom in selecting the Institute for
nationalisation in the first phase. [323G-H; 324B-C; 325C-E]

»f' There could be no doubt that on the date the -Ordinances were c
) pri.mulgated and the Act was passed, the same could not be challenged
on the ground of non-implementation of the legislative intent in
nationalising similar institutes by amending the Schedule. If a legisla-
tive enactment cannot be challenged as discriminatory on the date it is
passed, it is difficult to challenge the same as violative of Article 14 of D
the Constitution on the ground of inaction of the executive in imple-
menting the purposes of the Act, regard being had to the fact that it was
the Legislature which had made the selection for the f"trst phase of
nationalisation. If no such selection had been made by the Legislature
and the entire thing had been left to the discretion of the Government, it
might have been possible to complain of discriminatory treatment. It is E
common knowledge that when any litigation ensues and remains pend-
ing, the Government generally does not take any step till the final
ilisposal of the litigation. It was apparent that in view of the pendency of
litigations, the State Government had granted approval of only tempor-
ary affiiiation to the three institutions mentioned in the additional
affidavit of the petitioner-society and that too on certain conditions. If f
the State Government had no intention of taking over other institutions
in accordance with the provisions of the Act, it would have sanctioned
permanent affiliation to the three institutions. The Court could not
accept the contention of the petitioner-society that the professed object
of nationalisation in phases was a mere pretence and a colourable device
, to single out the Institute or that the facts of exclusion of eleven simi- G
~ latrhly siituti~t ed I~stitutertsedan~ thef ds?b~~entt_rectognthitio.n of thedthArete
" 11
o er ns u es unpa vice o 1scrimma mn o e unpugne c.
·· ,._ The question of discrimination or discriminatory treatment of the Insti-
., ';,,1. lute did not arise and the contention of the petitioner-society in this
'J' ;egard was rejected. [325G-H; 326A-B; F; 327E-F]
~ H
314 SUPREME COURT REPORTS I1988] 3 S.C.R.

The next attack of the petitioner-society to the impugned Act was
A founded on violation of the provision of Article 19(1)( c) of the Constitu-
tion. The question was whether the fundamental right of the petitioner-
society, as conferred by Article 19(1)(c), had been infringed or not, and,
further, whether the fundamental right to form association, as con-
tained in Article 19(1)(c) of the Constitution, also included<Within it the
B concomitants or the activities or the objects or purposes of an associa-
tion. l327F; 328E]

Article 19(l)(c) confers a right on the citizens to form association.
In exercise of such a right, the petitioner-society had constituted itself
into an association. That right of the Society remained unimpaired and
uninterfered with by the impugned Act and Ordinances. There was no
c doubt that the Institute had been taken over by the provisions of the
Ordinances and the Act. It was true that with the taking over of the
Institute, the Society had lost its right of management and control of the
Institute, but that is the consequence of all acquisitions. When a prop-
erty is acquired, the owner loses all control, interest, and ownership of
D the property. Similarly, the Society, which was the owner of the Insti-
tute, had lost all control and ownership of the Institute. It might be
equally true that the Institute was the only activity of the Society, but
what was concerned was the right of the Society to form association. So
long as there was no interference with the Society, its constitution or
composition, it was difficult to say that because of the taking over or
E acquisition of the Institute, which was the only property of activity of
the Society, the fundamental right of the Society to form association had
been infringed. The decision of this Court in Damyanti Naranga v.
Union of India, 11971] 3 SCR 240, had not manner of application to the
present case. The observations made in the decision of this Court in All
India Bank Employees' Association v, National Industrial Tribunal,
F I1962] 3 SCR 269, supported the view the Court had taken that the
fundamental-right guaranteed under Article 19(l)(c) does not extend to
or embrace within it the objects or purposes or activities of an associa-
tion. It does not carry with it a further guarantee that the objects or
purposes or activities of an association so formed shall not be interfered
with by law except on grounds as mentioned in Article 19(4). In the
G circumstances, the contention of the petitioner-society that because of
acquisition of the Institute, the Society bad lost its right of management
over the Institute, and the Institute being the main or the only activity
of the Society, the Impugned legislations interfered with the right of the
society to form and continue the association and, as such, were uncon·
stitutional and void under Article 19(1)(c) of the Constitution. was un-
H sound and rejected. l329C-D; 330B-C, E; 331E-G; 332A-BI
•
''
L.N.M. INSTITU1E v. STATE OF BJHAR 315
'y
Another ground on which the validity of the Act and the Ordi-
A
nances was assailed was the absence of legislative c~mpetence of the
State Legislature. Counsel for Jhe petitioner-society submitted that hav·
ing regard to the pith and substance of the Act, the Act fell within Entry
66 of List l and the Entry 25 of List III and Entt1 66 of List I must be
harmoniously construed, hut to the extent of overlapping, the power
) conferred hy Entry 66 must prevail over the power of the State under B
Entry 25. [332C, F)

- By the impugned Act, the Legislature has not laid down any law
relating to the subjects mentioned in the Entry 66, List I, or in Entry
25, List III. The Act only provides for the taking over of private educa·
tional institutions in phases and has taken over the Institute to start
-~-
with tor the first phase. An Entry in any of the Lists of Seventh c
JI
I Schedule will apply when a law is enacted by the Legislature on any of
• the subjects mentioned in the Entry. In this case, the impugned Act
does not lay down any law touching the subject referred to in Entry 66,
List I, or Entry 25, List III. Therefore, neither of these two Entries
appli~d. The Entry that applies to the impugned legislation is Entry 42
D
of List III, pertaining to acquisition and requisition of property. The
taking over of the private educational institutions and the Institute in
the first phase is nothing but acquisition of property. The Institute was
the property of the petitioner-society and by the impugned Act the
property stood transferred to and vested absolutely in the State Govern·
~
ment, free from all encumbrances. The only Entry relevant is Entry 42
of List III. As soon as Entry 66 of List I was excluded, it was irr.elevant
E
which of the Entries-25 or 42 of List III-was applicable, in either
case, the State Legislature was competent to make the enactment.
There was no substance in the contention of the petitioner-society that
the Act" was invalid because the State Legislature had lacked compel-
~- ence in passing the same. [3338-F)
F
As it is held that the impugned Act is really a legislation relating to
acquisition of property within the meaning of Entry 42 of List III, the
question might arise whether after the repeal of Article 31(2) by the
Constitution (Fourty·Forth Amendment) Act, 1978, any compensation
was compulsorily payable for the acquisition of property. The point was
not ultimately pressed, and the Court was not called upon to decide the G
~- point or express any opinion on the same. [334B·D I

The Court then dealt with the case of. Dr. Jagadanand Jha,
Registrar of the Institute, whose services were terminated by an order
dt. April 21, 1986, as a result of the Ordinance No. 15 of 1986 promul·
gated on April 19, 1986. [334D-E] H
316 SUPREME COURT REPORTS [19881 3 S.C.R.

A The petitioner Dr. Jagadaoaod Jha was not a member of the
teaching staff; he was the Registrar of the Institute, which comes within ll'
the expression "other categories of staff'' under sub-section (4) of Sec-
tion 6 of the said Ordinance. It is true that under sub-paragraph (4), it
has been provided that sub-paragraphs (2) and (3) shall apply mutatis
mutandis, but such application will be limited to the term of appoint-
B ment and other conditions of service of a member of non-teaching staff
of the institution. Io other words, the State Government may appoint a
committee for the purpose of considering the term of appointment and
other conditions of service of the meoibers of the non-teaching staff,
and has to decide accordingly. It was thus apparen.t that the State
Government proceeded on the basis that under sub-paragraph (4) of
paragraph 6 of the Ordinance, it was to consider the question of termi-
c nation of the services of the members of the non-teaching staff as in the
case of the members of the non-teaching staff, as provided in sub-
paragraph (3) of paragraph 6 of the Ordinance. Even then,. the Court
was not impressed with the manner and haste in which the order of
termination had been passed. Although it was alleged that a Committee
c had been formed and the State Government had terminated the services
of the petitioner on the report of the Committee, the Court could not
understand the necessity for such haste; in the circumstances, it would
not be unreasonable to infer that the Committee or the State Govern-
ment had not properly applied its mind before the order of termination
of the services of Dr. Jha was made. [336E-H; 337A-BI ~
E
There can be no dispute that when there is a legislative direction
for termination of the services of employees, the compliance with the
principles of natural justice may not be read into such direction and, if
·such terminations are effected without giving the employees concerned
an opportunity of being heard, no exception can be taken on the same.
-
F But in this case, sub-paragraph (4) of paragraph 6 of the Ordinance
does not contain any direction for the termination of the services of the
members of non-teaching staff. Even in spite of that, if the State Gov-
ernment wanted to terminate the services of the petitioner Dr. Jha, it
could not be done without giving him an opportunity of being heard, for
such an act on the part of the State Government would be an
G administrative act. It is clear from the provision of sub-paragraph (4) of
paragraph 6 that the services of the members of the non-teaching staff
have been intended to be continued. The services of the petitioner Dr.
Jha, who had been working in the post of Registrar of the Institute for a
long time, could not be terminated without giving him an opportunity of
being heard. Counsel for the respondents also did not oppose this view.
H Therefore, as the petitioner had not been given an opportunity of being
--------------~-----

L.N.M. INSTITUTE v. STATE OF BIHAR 317

heard, the impugned order of termination of the services of the
A
petiti<mer could not be sustained. [337C-G; 338A)

!lc:'t th~ Society and Dr. Jha were not able to substantiate the
allegation of ma/a [ides against the then Chief Minister of Bihar. Even
assuming although holding to the contrary, that the Chief Minister had
acted ma/a fide, the same could not vitiate the legislative process in the B
exercise of which the impugned Act and the Ordinances bad been
respectively passed and promulgated. The respondents also bad failed
to prove the alleged mismanagement of the Institute by the Society or
Dr. Jha; the allegation of mismanagement was not pressed. (338B-Cl

The impugned order dated April 21, 1986 of termination of the
services of the petitioner Dr. Jha was quashed. Writ Petitions (Civil)
c
Nos. 87 of 1987 and 439of1987 and Civil Appeal No. 4141of1986 in so
far as they related to the said order of termination or the services or Dr.
Jagadanand Jha, were allowed. The State Government would be at
liberty to consider the question of termination of the service of Dr. Jha
after giving him a reasonable opportunity to make representation. The D
Writ Petitions (Civil) Nos. 55 of 1987 and 431of1987 and Civil Appeal
No. 4142 of 1986 were dismissed. (338D-E)

State of Rajasthan v. Mukandchand, (1964) 6 SCR 903; Magan/al
· Chaganlal (P) Ltd. v. Municipal Corporation of Greater Bombay.
(1975) I SCR I; in re The Special Courts Bill, 1978, (1979) 2 SCR 476; £
Shri Ram Krishna Dalmk v. Shri Justice S.R. Tendolkar & Ors.,
[1969) SCR 279; B.S. Reddyv. Chancellor, Osmania University, (1967)
2 SCR 214; Sakal Papers (P) Ltd. v. Union of India, (1962) 3 SCR 842;
Dwarkadas Shrinivas of Bombay v. Sholapur Spinning & Weaving Co.
Ltd., (1954) SCR 674; Damyanti Naranga v. Union of India, [1971) 3
SCR 840; All India Bank employees' Association v. National Industrial F
Tribunal, (1962) 3 SCR 269; State of Bihar v. Maharajadhiraja Sir
Kameshwar Singh of Darbhenga, (1952) SCR 889 (1009) and K.I.
Shephard v. Union of India & Ors., (1987) 4 SCC 431, referred to.

CIVIL ORIGINAL/APPELLATE JURISDICTION: Writ Pet-
ition (Civil) No. 55 of 1987 etc. G

(Under Article 32 of the Constitution of India).

· Soli J. Sorabjee, S.N. Kackcr, F.S. Nariman, R.K. Jain, B.B.-
Singh, Ran jit Kumar, Dhanan jay Chandrachud, Rakesh Khanna, R.P.
Singh,. L.N. Sinha for the appearing parties. H
318 SUPREME COURT REPORTS [1988] 3 S.C.R.

The Judgment of the Court was delivered by
A
DUTT, J. In these writ petitions and civil appeals, Lalit Narayan
Mishra Institute of Economic Development and Social Change, Patna,
a Society registered under the Societies Registration Act, 1860, and its
Registrar, Dr. Jagadanand Jha, have challenged the constitutional val-
B idity of two Ordinances being Bihar Ordinances Nos. 15 of 1986 and 30
of 1986 replaced by the Bihar Private Educational Institutions (Taking
Over) Act, 1987, hereinafter referred to as 'the Act'. Dr. Jagadanand
Jha has further challenged the validity of the order of termination of
his service as the Registrar of the Institute dated April 21, 1986 in Writ
Petition (Civil) No. 439 of 1987. As disposal of Writ Petition (Civil)
-
C No. 431of1987 wherein the constitutional validity of the Act has been
challenged and Writ Petition (Civil) No. 439 of 1987 in which the
legality of the order of termination of service of the said Dr. Jaga-
danand Jha has been challenged will virtually mean disposal of the
other writ petitions ·and appeals, we propose to deal with these two
writ petitions.
D
The Institute, Lalit Narayan Mishra Institute of Economic
Development and Social Change, Patna, hereafter referred to as
'Institute', was initially named Bihar Institute of Economic Develop-
ment and was started in 1973 under the Chairmanship of Dr. Jagan-
nath Mishra, the then Minister of Irrigation and later on the Chief ~
E Minister of Bihar. It was named as Lalit Narayan Mishra Institute of
Economic Development and Social Change to commemorate the
memory of late Shri Lalit Narayan Mishra, once upon a time, Union
Railway Minister. It may be noticed at this stage that the name of the
Institute and the name of the Society are the same.

F The Institute was basically started as a research institute. In J_
..
1974, the Magadh University recognised the Institute for the purpose
o'f research. Subsequently, Ranchi, Patna and Bihar Universities also
granted recognition to the Institute as a research institute. In March,
1977, the Magadh University declared the Institute as an autonomous
Institute under section 73 of the Bihar State Universities Act, 1975.
G
On April 19, 1986, the State Government of Bihar promulgated
Ordinance No. 15 of 1986 whereby the Institute was taken over. It is
alleged that the Ordinance was promulgated and the Institute was
taken over at the instance of the then Chief Minister of Bihar Sri
Bindeshwari Dubey. The petitioner-Society has also alleged mala fides .
H on the part of the Chief Minister of Bihar in taking over the Institute
L.N.M. INSTITUTE v. STATE OF BIHAR [DUTT, J.] 319

by promulgating the Ordinance. On the day the Ordinance was prom-
A
ulgated, possession of the Institute was taken, and the services of Dr.
J agadanand Jha, who was the Registrar of the Institute, were termina-
ted by the impugned order dated April 21, 1986. Besides contending
that the Ordinance and the order of termination of the petitioner Dr.
Jagadanand Jha are illegal and invalid, the petitioner-society and the
said Jagadanand Jha allege that all these have happened because of the B
personal enmity of the Chief Minister against Dr. Jagannath Mishra,
the Chairman of the Society and the Institute.

The petitioners filed writ petitions before the Patna High Court
challenging the validity of the said Ordinance No. 15 of 1986 and the
order of termination of services of Dr. Jagadanand Jha. The Patna
High Court, however, by its judgment dated August 26, 1986 dismis- c
_, sed both the writ petitions. Both the Society and br. Jagadanand Jha
have preferred two appeals by special leave being Civil Appeal No.
4142 of 1986 and Civil Appeal No. 4141of1986 respectively against
the said judgment of the Patna High Court. The Society and Dr.
Jagadanand Jha have also challenged the Ordinance No. 30 of 1986 by D
Writ Petition (Civil) No. 55 of 1987 and, as stated already, they .have
also challenged the constitutional validity of the Act replacing thc>c
Ordinances.

At this stage, it is necessary to refer to the provisions of the Act
which are the same as that of the two successive Ordinances Nos. 15 E
and 30 of 1986. Some submissions have been made at the Bar on the
Preamble to the Act which reads as follows:

"TO PROVIDE FOR TAKING OVER BY THE STATE
GOVERNMENT OF PRIVATE EDUCATIONAL
INSTITUTIONS OF THE STATE OF BIHAR. F

WHEREAS, the State of Bihar has bright prospects
of rapid growth of Industrial and Economic Development,
the relevancy and importance of specialised knowledge of
Business Management has assumed great importance;
G
AND, WHEREAS, for that purpose it is necessary to
ensure a high level of educational and training facilities and
the co-ordination of the training with important industrial
and business units;

AND, WHEREAS, it has been resolved to nationa- H
"I
'
320 SUPREME .COU\l.T REPORTS [1988] 3 S.C.R.

lise this branch of education in phases."
A
Oause (a) of section 2 of the Act defines "Private Educational
Institutions" as follows:
.'; .
"S. 2(a). "Private Educational Institution" means a pri-
B vate educational college, institute or school, affiliated to
any University of the State of Bihar or recognised by the
State Government and imparting education, and/or train-
ing in Business Management or Business Administration or
-matter connected with Economic and Social Development
and/or conducting degree or diploma course in one or the
other branch of education mentioned above;"
c
Chapter II of the Act relates to taking over of Private College/
Institute. Section 3 of chapter II runs as follows:

"S. 3(1) With effect from the date of this Act, the institu-
D ( tion as specified.-in. the Schedule of this Act shall stand
· transferred to and shall vest absolutely in the State Govern-
ment free from all encumbrances.

(2) The State Government may from time to time by
a notified order amend the Schedule by the inclusion of any
E institution and the same shall stand vested and transferred
to in the State Government with effect from the date
mentioned in the notification.

(3) All the assets and properties of the institution,
Governing Body/Managing Committee/Association,
F whether mOYable or immovable including lands, buildings,
workshop, stores, instruments, machinery, vehicles, cash
balance, reserve fund, investment, furniture and others
shall on the date of taking over, stand transferred to and
vested in the State Government free from all encum-
brances." r
G
· Section 4( 1) of the Act provides that the Commissioner shall be
deemed to have taken charge of the Institution which stands vested in
the State Government under the provisions of the Act. Section 6
relates to the determination of terms of services of the teaching staff
and the other employees of the Institution. The Schedule to the Act
H specifies the name of the Institute, namely, "L.N. Mishra Institute of
L.N.M. INSTITUTE v. STATE OF BIHAR [DUTT, J.J 321
y Economic Development and Social Change, Patna" in tenns of section
A
3(1) of the Act. Under the Preamble to the Act, it is necessary to
·l
rationalise private education relating to business management in view
of a very good possibility of a rapid industrial and economic develop-
~- ment of the State of Bihar. The nationalisation has been resolved to be
made in phases. It has been already noticed that under section 3(1) of
·! the Act, the Institution mentioned in the Schedule will be transferred B
,J to the State Government and will be actually vested in it free from all
encumbrances. The Schedule mentions only one Institute and in view
of section 3(1) it has vested in the State Government. It is said that the
first phase relates to the taking over of the Institute and that has been
done. Section 3(2) also provides for amendment of the Schedule by
including any institution. In other words, the other institutions which
-tJi.- answer the description of private educational institutions as defined in c
clause (a) of section 2 of the Act will also be nationalised, not at a
time, but in phases, the first phase having started with the take over of
the Institute. This, in short, is the scheme of the Act.

The first attack to the validity of the Act and the said two Ordi- D
nances is founded on the plea of violation of Article 14 of the Constitu-
"'( tion. It is submitted by Mr. Sorabjee, learned Counsel appearing on
behalf of the petitioner-Society, that while it is true that Article 14
forbids class legislation, it does not, however, forbid reasonable clas-
sification. We are reminded of the principle of law as laid down in State
~ of Rajasthanv. Mukandchand, 1196416 SCR 903; Magan/al Chagan/al E
(P) Ltd. v. Municipal Corporation of Greater Bombay, [1975] ! SCR 1

- ,
and in re The Special Courts Bilt; 1978, I!979] 2 SCR 476. In all these
cases, it has been laid down that in order to satisfy the test ofpennissi-
ble classification under Article 14, two conditions must be fulfilled,
namely, ( 1) that the classification must be founded on an intelligible
~l. differentia which distinguishes persons or things that are grouped F
together from others left out of the group and (2) that the·differentia
must have a rational relationship to the object sought to be achieved
by the statute in question. It is urged by the leamed Counsel that the
impugned Act on the face of it does not disclose any basis or _princ_iple
for singling out the Institute and for treating it as a class by itself. It is
submitted that neither in the preamble nor in the provisions of the Act G
is there the slightest indication for treating the Institute as a class· by
.~ itself.

Much reliance has been placed by the learned Counsel for the
petitioner on the decision of this Court in Shri Ram Krishna Dalmia v.
Shri Justice S.R. Tendolkar & Ors., [1959] SCR 279. In that case, the H
322 SUPREME COURT REPORTS [1988] 3 S.C.R.

A Central Government in exercise of its power under section 3 of the
y
Commissions of Enquiry Act, 1952, issued a notification dated
December 11, 1956 appointing a Commission of Enquiry to enquire
into and report in respect of certain companies mentioned in the I
Schedule attached to the notification and in respect of the nature and ~
extent of the control and interest which certain persons named in the
B notification exercised over these companies. Das, C.J. speaking for
the Court observed that it was not established that the petitioners and
their companies had been arbitrarily singled out for the purpose of
hostile and discriminatory treatment and subjected to a harassing and
oppressive enquiry. It was further observed that nowhere in the peti-
tions was there even an averment that there were other persons or
-
C companies similarly situated as the petitioners and their companies.
Certain principles of law have been laid down in that decision. These
principles still hold the field and are helpful in considering the con-
stitutionality of a statute. One of these principles is that a law may be
q:>nstitutional even though it relates to a single individual if, on account
of_ some special circumstances or reasons applicable to him and not
D applicable to others, that single individual may be treated as a class by
himself.
The other decision that has been relied upon by the petitioner is
B.S. Reddy v. Chancellor, .Osmania University, [1967] 2 SCR 214.
What happened in that case was that ·section .5 of the Osmania
University (Second Amendment) Act, 1966 introduced into the
E Osmania University Act, 1959 a new section 13A whereby it was pro-
vided that the person then holding the office of the Vice-Chancellor of
the University could only hold that office untill a new Vice-Chancellor
was appointed, and that such new amendment mustbe made within 90
days of the commencement of the said amendment Act whereupon the
old Vice-Chancellor would cease to hold office. It was held by this
-
'

Court that there was no justification for the impugned 1egislation, that
is, the provision of section 13A, resulting in a classification of the
Vice-Chancellors into two categories, namely, the appellant as the
existing Vice-Chancellor and the future Vice-Chancellors to be
appointed under the Osmania University Act. It was held that both ...
these categories constituted one single group or class, and that even
G assuming that the classification of these two types of persons as coming
under two different groups oould be made, nevertheless, it was essen-
tial that such a classification must be founded on an intelligible
differentia which would distinguish the appellant from the Vice-
Chancellors appointed under the Osmania University Act. The Court
held that there was no intelligible differentia on the basis of which the
H
classification could be justified.
324 SUPREME COURT REPORTS [1988] 3 S.C.R.

A
private educational institutions, as defined in section 2(a) of the Act, Y
will be nationalised in a phased manner.

It is the legislative decision that the Institute should be taken
over in the first phase of the nationalisation. The Legislature has not
left it to the discretion of the executive Government for the purpose of
B selecting the private educational institution for the first phase. It is
very difficult to assail a legislative decision. Of course, there can be no ~.
doubt that a legislative decision can be assailed if it is violative of any
provision of Part III of the Constitution. So far as Article 14 is con-
cerned, we do not think that it has any manner of application inasmuch
as the question of discrimination does not arise as soon as it is con-
ceded that it is case of nationalisation in a phased manner and for the
c first phase the Institute has been chosen by the Legislature itself. 1~

The decision of this Court in the cases of Dalmia (supra) and
Osmania University (supra) have no manner of application because in
those two cases the question of discrimination did really arise. But, in
D the instant case, there cannot be any discrimination when nationalisa-
tion has to be made in phased manner.

It is, however, submitted that there was no justification to pick
and choose the Institute even for the first phase. As has been stated
already, the Institute has been chosen by legislative process. It is true
E that the Ordinances were promulgated under Article 213 of the Con-
stitution of India, but it cannot be characterised as an executive act. In
any event, ultimately the Legislature itself has passed the Act with the
inclusion of the Institute in the Schedule thereto as the only Institution
to be nationalised in the first phase. Even assuming that the question
of discrimination may arise also for the purpose of selection. for the
F first phase, we are of the view that there are justifiable reasons, which
will be stated presently, for selecting the Institute for the first phase of
nationalisation.

Mr. Kacker, learned Counsel appearing on behalf of the Chief
Minister of Bihar, has placed before us two resolutions of the Educa-
G tion Department of the Government of Bihar dated Jurle 10, 1975 and
November 21, 1975. By the first mentioned resolution, it was decided
to rename the Bihar Institute of Economic Development as Lalit 'f'·
Narayan Mishra Institute of Economic Development and Social
Change to commemorate the memory of late Shri Lalit Narayan Mis-
hra, who was the Railway Minister, and to enlarge the working scope
H of the Institute and to develop it into a significant and useful memorial.
L.N.M. INSTITU1E v. STAIB OF BIHAR [DUTT, J.[ 325
'r It was also resolved that· the entire expenditure of the Institute wout.1
A
be borne by the State government (Education Department) and for
this purpose annual grants would be .sanctioned. A steering committee
under the chairmanship of the Education Minister was constituted. It
is not disputed that since June, 1975 every expenditure for maintaining
and running the Institute has been incurred by the State of Bihar. It is
_J submitted by Mr. Kacker that the facts disclosed in the writ petition B
have brought out prominently the interest the State had taken in not
only financing, but also controlling the entire development and run·
ning of the Institute. The total amount of money spent by the State
Government in nurturing the Institute works out to about Rs.1.60
crores. Facts also disclose that not only the State had changed the
~- name of the Institute, but also provided the site for the Institute, got
~ the building constructed through its own agencies and funds and even c
supervised the prescription of syllabi. There is much force in the
contention of Mr. Kacker that in a sense the State Government was
running the entire Institute without nationalisation and when it
decided to nationalise such institutions for the purposes mentioned in
the Preambles of the Act and Ordinances, this Institute was chosen to D
be the very first with all sense of justification and propriety. In consid-
ering the propriety of legislative wisdom in selecting the Institute in
the first phase of nationalisation, we cannot exclude the fact that since
1975 it is the State of Bihar which has been nurturing the Institute
~ spending a considerable sum of money arid exercising necessary con-
trol over it, as oontended on behalf of the petitioner-Society. The facts E
stated above, in our opinion, fully justify-the propriety of legislative
wisdom in selecting the Institute as the subject-matter of nationalisa-
tion in the first phase.

i It is, however, complained on behalf of the Institute that since
April 19, 1986 when the first Ordinance was promulgated, no other
institution has been added to the Schedule, though nearly two years
F

have passed in the meantime. It is submitted that this fact demons-
trates that the professed object of nationalisation in phases is a mere
pretence and a colourable device to single out the Institute for dis-
criminatory treatment. The taking over of the Institute is an act of
legislation and not an act of the Government. The question to be G
considered is whether at the time when the Ordinances were promul-
-""" gated or the Act was passed, the same suffered the vice of discrimina-
tion or not. There can be no doubt that on the date the Ordinances
were promulgated and the Act was passed, the same could not be
challenged on the ground of non-implementation of the legislative
intent in nationalising similar institutes by amending the Schedule. If a H
326 SUPREME COURT REPORTS [1988] 3 S.C.R.
y
A legislative enactment cannot be challenged as discriminatory on the
date it is passed, it is difficult to challenge the same as violative of
Article 14 of the Constitution on the ground of inaction of the execu-
tive in implementing the purposes of the Act, regard being had to the
fact that it was the Legislature which had made the selection for the
first phase of nationalisation. If no such selection had been made by
B the Legislature and the entire thing had been left to the discretion of )..
the Government, it might have been possible to contend of discri-
minatory treatment. The respondents have, however, given an expla-
nation for not including the other similar institutions in the programme
of nationalisation, to be precise, in the Schedule to the Act.

C In paragraph 24 of the counter-affidavit of the respondents Nos. ··r--
1, 3 and 4 affirmed by Shri Ram Shankar Prasad, Deputy Secretary, 1
Department of Education, Government of Bihar, it has been stated,
inter alia as follows:

"Since the validity of the Act is under cloud, being the
D subject matter of challenge before this Hon'ble Court, the
State Government has not yet taken over other Institutes.
However, itis submitted that the proposal to take over two
other institutes in the second rhase is at the final stage and
is awaiting the final decision with regard to the validity of
the Act. When the cloud is cleared, further step for taking
E over other institutes imparting education in similar branch
will be taken."

It is common knowledge that when any litigation ensues and
remains pending, the government generally does not take any step till
the final disposal of the litigation. It is also the case of the respondents
F that because of the pendency of the litigation challenging the validity
of the Ordinances and the Act, the Government did not take any steps
for nationalisation of similar institutes for the second phase.

A grievance has been made on behalf of the petitioner-Society
that even after the promulgation of the Ordinances, three other Insti-
G tutes, the details of which have been set out in the additional affidavit,
have been re~ognised. An explanation for the recognition of the three .~
Institutes has' been given in paragraph 25 of the counter-affidavit of the
respondents Nos. 1, 3 and 4. The explanation is that the affiliation is
granted under the Bihar State University Act by the University with
the approval of the State Government. Three Institutes mentioned in
H paragraph 4 of the additional affidavit of the petitioner-Society were
L.N.M. INSTITUTE v. STATE OF BIHAR [DUTT, J.J 327

recommended by the concerned university for affiliation. The State
A
Government has concurred in the grant of temporary affiliation sub-
ject to certain conditions and only for two sessions. In other words, the
explanation is that permanent affiliation has not been granted by the
State Government. It is also the case of the said respondents that these
institutions are not imparting training in the various courses which are
being taught in the Institute. The Institute has sponsored and taken B
out various research programmes and training in computer which are
· not available in the three institutions named in paragraph 4 of the
additional affidavit. It is thus apparent that in view of the pendency of
litigations, the State Government has granted approval to only tem-
porary affiliation to the three institutions and that too on certain con-
ditions. If the State Government had no intention of taking over other
institutions 'in accordance with the provisions of the Act, in that case,
c
the Government would have sanctioned permanent affiliation to the
three institutions. It is made clear in the affidavit of the respondents
Nos. 1, 3 and 4 that the State Government, after the disposal of the
litigations, that is to say, after the disposal of these writ petitions and
the civil appeals, would go on with the nationalisation of other institu- D
tions by the amendment of the Schedule to the Act. Therefore,
although there has been delay in implementing the provisions of the
Act, such delay is unintentional and because of the pendency of litiga-
tions. In the circumstances, we are unable to accept the contention
made on behalf of the petitioner-Society that the professed object of
nationalisation in phases is a mere pretence and a colourable device to E
single out the Institute or that the facts of exclusion of eleven similarly
situated Institutes and the subsequent recognition of the three other
Institutes impart vice of discrimination to the impugned Act. As has
been stated already, the question of discrimination or discriminatory
treatment of the Institute does not arise and the contention of the
J.. petitioner-Society in this regard is rejected. F

The next attack of the petitioner-Society to the impugned Act is
founded on violation of the provision of Article 19(1-)(c) of the Con-
stitution. It is urged on behalf of the petitioner-Society that in taking
over the Institute, there has been an infraction of the fundamental
right of the Society to form association. It is contended that by the G
impugned Act the management of the Society has been totally disp-
laced and its composition changed. AU assets and properties are vested
in the State Government and the Commissioner is deemed to have
taken charge of the Institute. It is submitted ihat all incidents of own-
ership and management have been taken over by the State and what is
being left to the company is paper ownership and management and, as H
328 SUPREME COURT REPORTS [1988] 3 S.C.R.
'-../
A such, in substance apd effect the right of association of the Society is '
clearly affected. It is submitted that the Act is not saved under Article
19(4) of the Constitution because the fundamental right of the Society
to form association has been interfered with not in the interests of the
sovereignty and integrity of India or public order or morality.

B At this stage, it may be pertinent to refer to the fact that by the
impugned Ordinances and the Act, what has been taken over is the
Institute. Although the name of the Society and of the Institute is the
same, these are two different entities. It is ilot disputed that by the
impugned legislations the Institute and not the Society has been taken
over. No restriction whatsoever has been imposed on the functioning
of the Society. Indeed, the provisions of the Ordinances and the Act
c do not refer to the Society but to the Institute. The entire argument of
the petitioner-Society is founded on the infraction of the fundamental
right of the Society to form association.

The question, therefore, is whether the fundamental right of the
D petitioner-Society, as conferred by Article 19(1)(c), has been infringed
or not. It has been stated already that the Society has not been taken
over by the impugned Act or Ordinances. The Institute has been
established by the Society in implementation of one of its objects. In
other words, the Institute constitutes one of the activities of the Soci-
ety. The question naturally arises w:1ether the fundamental right to
E form association, as contained in Article 19(1)(c) of the Constitution,
also includes within it the concomitants or the activities or the objects
or purposes of an association.

Our attention has been drawn to the principles laid down in two
-
f
decisions of this Court relating to the interpretation of the provisions
of the Constitution, namely, Sakal Papers (P) Ltd. v. Union of India, J,__
[1962] 3 SCR 842 and Dwarkadas Shrinivas of Bombay v. Sholapur '
Spinning & Weaving Co. Ltd., [1954] SCR 674. In these two decisions,
it has been laid down that while considering the nature and content of
the fundamental rights, the Court must not be too astute to interpret
the language of the Constitution in so literal a sense as to whittle them
G down, but must interpret the same in a manner which would enable the
citizens to enjoy the rights guaranteed by it in the fullest measure
subject, of course, to permissible restrictions. Further, in construing
the Constitution it is the substance and the practical result of the act of
the State that should be considered rather than its purely legal aspects,
and that the correct approach in such cases should be to enquire as to
H what in substance is the loss or injury caused to the citizens and not
L.N.M. INSTITUTE v. STATE OF BIHAR [DUTT, J.J 329

merely what manner and method has been adopted by the State in
placing the restriction. A

The above principles, as laid down in those two decisions, are
well settled and no exception can be taken to them. It is true that the
provisions of the Constitution, particularly the provisions relating to
the fundamental rights, should not be construed in a pedantic manner, B
but should be construed in a manner that would enable the citizens to
enjoy the rights in the fullest measure. But, that does not surely mean
and it was not the intention of this Court to lay down that in construing
the provisions relating to fundamental rights, it should be stretched to
the extent of covering even certain extraneous matters which would be
far· from the ambit and scope of the fundamental rights. Article
19(1)(c) confers a right on the citizens to form association. In exercise c
of such a right the petitioner-Society has constituted itself into an
association. That right of the Society remains unimpaired and unin·
terfered with by the impugned Act and Ordinances. It is, however,
complained that the only activity of the Society was its right of man-
agement of the Institute which was founded in implementation of its D
objects. Having been taken over, the Society only exists in paper. Such
interference with the activity of the Society is really, interference with
the right of the Society to form association. It is submitted that Article
19( I)( c) not only guarantees the fundamental right to form associa·
tion, but also its continuation. It is further submitted that in law
interfering with or divesting the management of the Society of the E
Institute is clear interference with its right to continue the Association.

In support of the above contentions, reliance has beenplaced on
behalf of the petitioner-Society on Sholapur Spinnig & Weaving Com-
pany's case (supra). In that case, the question that came up for consid·
eration was whether by the impugned Ordinance there was deprivation F
of the rights of the Company in violation of Article 31(2) of the Con·
stitution. It was the contention of the Government that it had taken
over the superintendence of the affairs of the Company and that the
impugned legislation was merely regulative in character. In rejecting
the said contention, this Court observed that the promulgating the Or-
dinance the Government had not merely taken over the superintend- G
ence of the affairs of the Company, but in effect and substance had
taken over the undertaking itself and, in the circumstances, practically
all incidents of ownership had been taken over by the State and
nothing was left with the Company but the mere husk of title. In the
premises, the impugned statute had over-stepped the limits of legiti·
mate Social Control Legislation and infringed the fundamental right of H
330 SUPREME COURT REPORTS [19881 3 S.C.R.

A the Company guaranteed to it under Article 31(2) of the Constitution
and is, therefore, unconstitutional. This Court found as a fact that the
undertaking itself was taken over in the guise of regulatory legislation
in violation of Article 31(2) of the Constitution. The facts of that case
are completely different from those of the present case. There can be
no doubt that the Institute has been taken over by the provisions of the
B Ordinances and that Act. It is true that with the taking over of the
Institute, the Society lost its right of mangement and control of the
Institute, but that is the consequence of all acquisitions. When a prop-
erty is acquired, the owner loses all control, interest and ownership of
the property. Similarly the Society, which was the owner of the Insti-
tute, has lost all control and ownership of the Institute. It may be
C equally true that the Institute was the only activity of the Society, but
we are concerned with the right of the Society to form association. So
long as there is no interference with the Society, its constitution or
composition, it is difficult to say that because of the taking over or
acquisition of the Institute, which was the only property or activity of
the Society, the fundamental right of the Society to form association
D has been infringed.

Mr. Sorabjee, learned Counsel for the petitioner-Society, has
placed strong reliance upon the decision of this Court in Dalliyanti
Naranga v. Union of India, [1971] 3 SCR 840. In that case, by a
legislative enactment, namely, the Hindi Sahitya Sammelan Act, 1962,
E the institution known as the Hindi Sahitya Sammelan was declared an
institution of national importance. By the said Act a statutory Samme-
lan was constituted as a body corporate by the name of the Hindi
Sahitya Sammelan. Under section 4(1) of the Act, the Sammelan was
to consist of the first members of the Hindi Sahitya Sammelan, which
was a registered Society founded for the development and propagation
F of Hindi and all persons who might become. members thereafter in
accordance with the rules made in that behalf by the first governing
body to be constituted by the Central Government by notification. The
Act provided for vesting in the Sammelan of all property, movable or
immovable, of or belonging to the Society. The constitutionality of the
Act was challenged accordingly on the ground that it interfered with
G the right of the petitioners to form association under Article 19( l )( c)
of the Constitution. It has been held that the Act does not merely
regulate the administration or the affairs of the Society; what it does is
to alter the composition of the Society itself. The result of this change
in composition is that the members, who voluntarily formed the Soci-
ety, are now comp~lled to act in that Association with other members
H who have been imposed as members by the Act and in whose admis-
L.N.M. INSTITUTE v. STATE OF BIHAR [DUTT, J.] 331
'-r sion to membership they had no say. Further, it has been observed that
A
the right to form association necessarily implies that the persons form-
ing the Society have also the right to continue to be associated with
only those whom they voluntarily admit in the Association. Any law by
which members are introduced in the voluntary association without
any option being given to the members to keep them out or ariy law
w~ich takes away the membership of those who have voluntarily B
-1..' joined, will be a law violating the right to form association. It has also
been held that the right guaranteed by Article 19(1)(c) is not confined

- to the initial stage of forming an association, but it also includes within
1

it the right to continue the association.

-? The decision in Damyanti's case (supra) has no manner of appli-
~ cation to the facts of the present case. In that case, the composition of c
t~e Society was interfered with by introducing new members, which
was construed by this Court as interference with the fundamental right
df the Society to form association and to continue the ·same. In the
instant case, the composition of the Society has not been touched at
~JI. All that has been done is to nationalise the Institute of the Society D
by the acquisition of the asseis and properties relating to the Institute.
The Society may constitute its governing body in accordance with its
rules without any interference by the Government.

-+ In this connection, we may refer to a decision of this Court in All
India Bank Employees' Association v. National Industrial Tribunal, E
[ 1962) 3 SCR 269. Ayyangar, J, speaking for the Court, observes that
the right guaranteed by Article 19( 1)(c) of the Constitution does not
,carry with it a concomitant right that unions formed for protecting the
interests of labour shall achieve their object such that any interference
'to such achievement by any law would be unconstitutional unless it
j_ ,could be justified under Article 19(4) as being in the interests of Public F
,order or morality. The right under Article 19(l)(c) extends only to the
I formation of an association or union and in so far as the activities of

·the association or union are concerned or as regards the step which the
1

union might take to achieve its object, they are subject to such laws as
may be framed and such laws cannot be tested under Article 19(4).
1

This observation supports the view we have taken that the fundamen- G
ta! right guaranteed under Article 19(1)(c) does not extend to or
--'-, 1

1
embrace within it the objects or purposes or the activities of an associ-
. ation. In other words, it does not carry with it a further guarantee that
I the objects or purposes or activities of an association so formed shall

not be interfered with by law except on grounds as mentioned in Arti-
cle 19(4), namely, sovereignty and integrity of India or Public order or H
332 SUPREME COURT REPORTS [1988) 3 S.C.R.

morality. In the circumstances, the contention made on behalf of the
A
petitioner"Society that because of the acquisition of the Institute, the
Society lost its right of management over the Institute and the Institute
being the main or the only activity of the Society, the impugned legis-
lations interfere with the right of the Society to form and continue the
association and, as such, unconstitutional and void under Article
B J9(1)(c) of the Constitution, is unsound and rejected.

Another ground on which the validity of the Act and Ordinances
has been assailed is absence of legislative competence of the State
Legislature. It is submitted by the learned Counsel appearing on -
behalf of the petitioner-Society that the professed aims and objects of
the Act are to ensure the high level. of educational and training ··t-·
C facilities and to nationalise this branch of education and, accordingly,
having regard to ·the pith and substance of the Act, it falls within Entry
1
66 of List I. Entry 66 is as follows:

"66. The co-ordination and determination of standards in
D institutions or higher education or research and scientific
and technical institutions."

We may also refer to Entry 25 of List III which runs as follows:

"25. Education, including technical education, medical ;r-
E education and universities subject to the provisions of
Entries 63, 64, 65 and 66 of List I; vocational and technical
training of labour."

Counsel submits that Entry 25 of List III and Entry 66 of List I
must be harmoniously construed, but to the extent of overlapping the '1
F power conferred by Entry 66 must prevail over the power of the State --'1-
under Entry 25. On the other hand, it is submitted by Mr. Kacker that
the impugned legislation does not even purport to deal with
co-ordination and determination of standards in taking over institution
of higher education. Counsel submits taking over of such institutions
would affirmatively be covered under Entry 25 itself and, negatively,
G what is carved out is only co-ordination and determination of stan-
dards. It is submitted that Entry 25 of List III is enough to sustain the )..... ·
Act.

By the impugned Act, the Legislature has not laid down any law
relating to the subjects mentioned in Entry 66, List I, or in Entry 25,
H List III. The Act only provides for the taking over of private educa-
L.N.M. INSTITUTE v. STATE OF BIHAR {DUTT, J.J 333

tional institutions in phases and has taken over the Institute to start
A
with for the first phase. It may be that the purpose of such taking over
or tjationalisation of private educational institutions is to ensure a high
level of educational and training facilities and the co-ordination of the
training with important industrial and business units. An Entry in any
of the Lists of Seventh Schedule will apply when a law is enacted by the
Legislature on any· of the subjects mentioned in the Entry. In the B
instant case, as has been noticed already, the impugned Act does not
lay down any law touching the subject referred to in Entry 66, List I, or
E~try 25, List III. In our opinion, therefore, neither of these two
Entries applies. Even assuming that one of these two Entries applies,
then it is Entry 25, List Ill, and not Entry 66, List I; as contended on
behalf of the respondents. The impugned legislation if held to be one
I
o,n education or technical education, is surely not relating to any mat- c
ters referred to in Entry 66, List I. We are, however, of the view that
~ntry 25 also has no application.

The Entry that applies to the impugned legislation is Entry 42 of
.List III pertaining to acquisition and requisition of property. The tak- D
'ing over of the private educational institutions and of the Institute in
;the
'
first phase is nothing but acquisition of property. The Institute was
;the property of the petitioner-Society and by the impugned Act the
~property stands transferred to and vested absolutely in the State Gov-
~ emment free from all encumbrances. Thus, the Institute has been
,' acquired by the impugned legislation and, therefore, the only Entry E
which is relevant is Entry 42 of List III. As soon as Entry 66 of List I is
excluded, it is quite irrelevant which of the Entries- 25 or 42 of List
Ill-is applicable. Therefore, whether it is Entry 25 or Entry 42, in
either case, the State Legislature is competent to make enactment.
There is, therefore, no substance in the contention made on behalf of
the petitioner-Society that the Act is invalid because the State Legisla- F
ture lacked competence in passing the Act.

Now the question is whether after the repeal of Article 31(2) by
the Constitution (Forty-Fourth Amendment) Act, 1978, any conpen-
sation is compulsorily payable for acquisition of property. The ques-
tion may arise, as it is held that the impugned Act is really a legislation G
relating to acquisition of property within the meaning of Entry 42 of
List III. Indeed, while urging that the Act falls within the ambit of
Entry 66 of List I and, as· such, beyond the· competence of the State
Legislature, Mr. Sorabjee submits that it does not come within th~
purview of Entry 42 of List III, as no compensation for the acquisition
of the Institute has been provided for. He has drawn our attention to H
{:

334 SUPREME COURT REPORTS [1988) 3 S.C.R.

the observation of Chandrasekhara Aiyar, J. in the State of Bihar v.
A
Maharajadhiraja Sir Kameshwar Singh of Darbhanga, [1952) SCR 889
( 1008) that payment of compensation is an essential element of the
valid exercise of the power to take. Besides drawing our attention to
the said observation, the learned Counsel has not pursued the point;
on the contrary, it is submitted by him that as on the date of the
B decision in Kameshwara Singh's case {supra), that is, before its amend-
ment by the Constitution {Seventh Amendment) Act, 1956, Entry 42
related to "principles on which compensation for property acquired or
acquisition for any other public purpose is to be determined and the
form and the manner in which such compensation is to be given", so
the said observation was made. This means that the learned Counsel is
of the view that after the repeal of Article 31(2) of the Constitution, no
c compensation is compulsorily payable for the acquisition of property.
In other words, the point is not ultimately pressed. In the circumst-
ances, we are not called upon to decide the point or express any
opinion on the same.

D Now we may deal with the case of Dr. Jagadanand Jha, Registrar
of the Institute. The first Ordinance, namely, Ordinance No. 15 of
1986, was promulgated by the Governor on April 19, 1986 and the
service of Dr. Jha were terminated by an order dated April 21, 1986
which is extracted below:

E "The Governor of Bihar in exercise of power under section
6 and sub-sections (2), (3) &{4) of Bihar Private Educa-
tional Institutions {Take Over) Ordinance, 1986 and Bihar
Ordinance No. 15 of 1986 and Education Department.
Notification No. 99/C has cons.idered the report of the
Committee and has come to the conclusion appointment '<
F and promotion of officers and workers was not done as per -~-
rules of the University, nor in accordance with Govern-
ment directions and notifications and their stay in the Insti-
tute was not in the interest of the said Institute. Therefore,
the services of following persons are dispensed with
immediate effect:
G
1. Dr. Jagannath Mishra-Chairman-cum-Director )...
General.

2. Sri Jagadanand Iha-Registrar."

H Paragraph 6 of the Ordinance, which is verbatim the same as
L.N.M. INSTITUTE v. STATE OF BIHAR [DUTT, J.J 335
\- section 6 of the Act, reads as follows:
A
"6. Determination of terms of services of the teaching staff
and .other employees of the institution.-(1) As .from the
date of the notified order, all the. staff employed in the
institution shall cease to be the employee of the institution;
B
Provided that they shall continue to serve the institu-
tion on an ad-hoc basis till a decision under sub-section (3)
and (4) is taken by the State Government.

(2) The State Government will set up one or more
·•f.. Committees of experts and knowledgeable persons which
c
will examine the bio-data of each member of the teaching
"- staff and ascertain whether appointment, promotion or
confirmation was made in accordance with the University
Regulation or Government direction/circular and take into
consideration all other relevant materials, such as qualifi-
cation, experience, research degree etc. and submit its D
report to the State Government.

(3) The State Government on receipt.of the report of
the Committee or Committees, as the case may be, will
~ decide in respect of each member of teaching staff on the
merits of each case, whether to absorb him in Government E
service or whether to terminate his. service or to allow him

- to continue on an ad-hoc basis for a fixed term or on con-
tract and shall, where necessary, redetermine the rank,
pay, allowance and other conditions of service ..

-1_ (4) The State Government shall similarly determine F
the term of appointnient and other .conditions of service of
other categories of staff of the Institution on the basis of
facts to be ascertained either by a committee or by an
. officer entrusted with the. task and the provisions of sub-
sections (2) and (3) shall apply mutatis mutandis to such
case." G
I
Under paragraph 6(1), all the staff employed in the institution
""" shall cease to be the employees of the Institute from the date of the
notified order. Under.the proviso, however, such employees will con-
tinue on an ad-hoc basis till a decision under sub-paragraphs (3) and
(4) is .taken by the Government. Under sub-paragraph (2) of para·· H
336 SUPREME COURT REPORTS [1988) 3 S.C.R.

graph 6, the State Government is to set up one or more committees of
A experts and knowledgeable persons for the purpose of ascertaining
whether or nor appointment, promotion or confirmation of each
member of the teaching staff was made in accordance with the
University Regulation or Government direction/circular and to submit
its report to the State Government. Sub-paragraph (3) of paragraph 6
B en joins the State Government to decide in respect of each member of
teaching staff on the merits of each case whether to absorb him in
Government service or to terminate his service or to allow him to
continue on an ad-hoc basis for a fixed term or on contract etc. Sub-
paragraphs (2) and (3) relate to the members of teaching staff of the
concerned institution. Sub-paragraph (4) of paragraph 6 of the Ordi-
C nance deals with the cases of other categories of staff of the institution. ·'r--
It provides that the State Government shall similarly determine the :r
term of appointment and other conditions of service of other cate-
gories of staff of the institution. It is clear that there is some distinction
between sub-paragraph (3) and sub-paragraph (4). While under sub-
paragraph (3), the State Government is to decide, among other things,
D whether the service of a member of teaching staff will be terminated or
not, under sub-paragraph (4), the State Government has not been
enjoined to decide whether the service of any member of a non-
teaching staff will be terminated or not, all that has been directed to be
decided by the State Government under sub-paragraph (4) relates to
the term of appointment and other conditions of service.
E
Admittedly, the petitioner Dr. Jagadanand Jha was not a
member of the teaching staff, but, as noticed already, he was the
Registrar of the Institute, which comes within the expression "other
categories of staff'' under sub-paragraph (4). It is true that under
sub-paragraph (4) it has been provided that sub-paragraphs (2) and (3)
F shall apply mutatis mutandis but, such application will be limited to the ), I
term of appointment· and other conditions of service of a member of
non-teaching staff of the institution. In other words, the State Govern-
ment may appoint a committee for the purpose of considering the term
of appointment and other conditions of service of the members of the
non-teaching staff and the State Government has to decide accord-
G ingly.

It is thus apparent that the State Government proceeded on the
basis .that under sub-paragraph (4) of paragraph 6 of the Ordinance,
the State Government was to consider the question of termination of
the services of .mem'bers of non-teaching staff as in the cases of inem-
H hers of teaching staff, as provided in sub-paragraph (3) of paragraph 6
~
L.N.M. INSTITUTE v. STATE OF BIHAR [DUTT, J.I 337

of the Ordinance. Even then, we are not impressed with the manner
A
and haste in which the order of termination has been passed. The
Ordinance was promulgated on April 19, 1986 and the order of termi-
nation was made on April 21, 1986. Although it is alleged that a
Committee was formed and the State Government terminated the
services of the petitioner on the report of the. Committee, we fail to
understand the necessity for such haste and, in the circumstances, it B
will not be unreasonable to infer that the Committee or the State
Government had not properly applied its mind before the order of
termination of the services of Dr. Jha was made.

There can be no dispute that when there is a legislative direction
for termination of the services of employees, the compliance with the
principles of natural justice may not be read into such direction and, if c
such terminations are effected without giving the employees concer-
ned an opportunity of being heard, no exception can be taken to the
same. But, in the instant case, sub-paragraph (4) of paragraph 6 of the
Ordinance does not contain any direction for the termination of
services of the members of non-teaching staff. Even in spite of that, if 0
the State Government wants to terminate the services of the petitioner
Dr. Jha, it cannot be done without giving him a reasonable opportun-
ity of being heard, for such act on the part of the State Government
would be an administrative act. In this connection, we may refer to our
decision in K.l. Shephard v. Union of India & Ors., [1987) 4 SCC 431
wherein it has been held that the scheme-making process under section
45 of the Banking Regulation Act, 1949 being administrative in
nature, the rules of natural justice are attracted, as the scheme pro-
vides for the termination of services of the employees. It is clear from
the provision of sub-paragraph (4) of paragraph 6 that the services of
the members of non-teaching staff have been intended to be con-
tinued. The petitioner Dr. Jha has been working in the post of F
Registrar of the Institute for a pretty long time. We are, therefore, of
the view that his services cannot be terminated without giving him an
opportunity of being heard. The learned Counsel, appearing on behalf
of the respondents, also do not seriously oppose the view that in such
circumstances, the petitioner Dr. Jha should have been given an
opportunity of being heard. G

It is alleged in the impugned order of termination that the
appointment and promotion of the petitioner were not done as per the
rules of the University nor in accordance with the Government direc-
tions and notifications and his stay in the Institute was not in the
interest of the Institute. If the petitioner was given an opportunity to H
338 SUPREME COURT REPORTS [1988] 3 S.C.R.

A make a representation, he could substantiate that the above findings
were erroneous. In any event, as the petitioner was not given an
opportunity of being heard, the impugned order of termination of the
services of the petitioner cannot be sustained.

Before parting with the cases, we may record that both the Soci-
B ety and Dr. Jha have not been able to substantiate the allegation of
ma/a fides against the then Chief Minister of Bihar. Even assuming,
although holding to the contrary, that the Chief Minister had acted
ma/a fides, the same cannot vitiate the legislative process in the exer-
cise of which the impugned Act and Ordinances were respectively
passed and promulgated. The respondents also have failed to prove
C the alleged mismanagement of the Institute by the Society or by Dr.
Jha. Indeed, they have not pressed the allegation of mismanagement.

For the reasons aforesaid, the impugned order of termination
dated April 21, 1986 of the petitioner Dr. Jagadanand Jha is quashed.
D Writ Petitions (Civil) Nos. 87 of 1987 and 439 of 1987 and Civil Appeal
No. 4141 of 1986 in so far as they relate to the said orderof termination
of services of the petitioner Dr. Jagadanand Jha are allowed. The
State Government will be at liberty to consider the question of termi-
nation of service of the petitioner after giving him a reasonable
opportunity to make representation.
E The Writ Petitions (Civil) Nos. 55 of !987 and 431of1987 and
Civil Appeal No. 4142 of 1986 are dismissed.

There will be no order for costs in any of these matters.

S.L.