Holding

The Supreme Court held that the second reference could not validly expand the scope of the enquiry beyond the material before the government, and the portion of the second reference lacking such material was invalid and quashed, while overlapping matters could be examined under the original reference.

Summary

The Leader of Opposition filed a writ petition challenging alleged irregularities in a lottery run by the Churhat Children Welfare Society, leading the Madhya Pradesh Government to appoint a commission of enquiry under the Commissions of Enquiry Act, 1952. While the commission was pending, the State issued a second notification enlarging the terms of reference, adding a clause probing the personal wealth of a political figure. The respondent challenged the second reference, and the High Court quashed the portion of the notification that extended beyond the material before the government, holding it to be a non‑application of mind and an invalid exercise of power under Section 3. On appeal, the Supreme Court affirmed that the matters covered in Clauses A and B of the second reference were already within the original reference and could be examined therein, and that the extra clause concerning personal assets lacked sufficient material and was rightly struck down. The Court clarified that the State may appoint a fresh commission if it has objective material, but cannot expand an existing reference without proper basis. Consequently, the State's appeal was dismissed.

Issues considered

Whether the State Government can validly enlarge the terms of reference of an existing commission of enquiry by a second notification under Section 11 of the Commissions of Enquiry Act, 1952.
Whether the second reference violated Section 3 of the Act by a non‑application of mind.
Whether the matters sought to be investigated in the second reference were already covered by the original reference.

Legislation cited

Subjects

Commission of enquiryEnlargement of referenceNon‑application of mindSection 3Section 11State government powersJudicial reviewLottery scandal

Judgment

A STATE OF MADHYA PRADESH
v.
ARJUN SINGH AND OTHERS

NOVEMBER 17, 1992

B {M.H. KANIA, CJ., N.M. KASLIWAL AND.K. RAMASWAMY, JJ.]

Commissions of Enquiry Act, 195rSection ll~ommission of. en-
. quirf-Enlargenient of tenns of original reference by notification-Whether
second reference illega~Supreme Court's dire~tions to State Government.
c · · - The Leader of Opposition in the Legislative Assembly of the State
filed a ·writ Petition in the High Court on 18.10.1987, highlighting the
· illegalities,-irregularities and misuse of powers by high officials .and ptibl_ic
men in the Government in the matter of a lottery condu~ed by one
Churhat Welfare Society and sought appropriate directions from the High
D Court.

The Writ Petition w~s decided on January 20, 1989. On 24.2.1989, a
notification was issued in purst1ance to the judgment, appointing a com-
mission of enquiry presif,led over by a _Judge of the Madras High Court.

JJy a notification issued under' Section 11 of the Commissions of
Enquiry Act 1952, th,e con1_mission was empowered to follow the procedure
under the Act.

During the pendency of the enquiry, the appellant State Government
by a· fresh notiOcation .dated 29.3.1990 enlarged ,the terms of the original
F reference.

The respondent filed a Writ Petition challenging the second refer-
ence made under
~. .
notification dated 29.3.1990.
' ' . ,

The High Court though rejected all the grounds on which the
G
notification of the secon(I reference was challenged, quashed the notifica·
tion dated 29.3.1990, holding that it suffered from non application of mind
and invalid exercise of powers under Section 3 of the Act.

The appellant-State Government against the judgment of the High
H Court preferred the present appeal before this Court.
' . . 162
-
STATE OFM.P. v. ARJUN SINGH 163

Disposing of the appeal, this Court A

HELD: 1.1. The terms of reference contained in Clauses A and B of
the second reference are al~ady covered in the terms of the original
reference. In this view of the matter there can be no bar to the commission
to enquire into these matters under the original reference itself. (166-C]
B
1.2. So far as Clause 'C' of the second reference is concerned, the
original reference in term No.1 itself covers the question as to how the
affairs of the Churhat Children Welfare Society are conducted and ho'r
the share of its profit derived and the money collected through lottery has
been utilised. Nothing precludes the commission from making an e«Juiry C
as to whether any profit derived or money collected through Churhat
Lottery had been utilised for constructing the mansion/bungalow at Kerva
Dam. [166-D]

1.3. The High Court rightly quashed the portion of Clause C as there
was no relevant material before the State Government for enlarging the D
scope of existing ·enquiry under the original reference. [166-F]

1.4. The High Court's judgment does not preclude the State Govern-
ment from appointing any commission of enquiry according to law afte~
applying its mind to any fresh or further material placed before it. Such E
formation of opinion depends on the subjective satisfaction of an ap-
propriate Government but should be based on an objective or real material
and not merely on some vague allegations or hearsay evidence or to make
fishing enquiry. [166-H, 167-A]

CIVIL APPELLATE JURISDICTION : Civil Appeal No.4842 of F
1992.

From the Judgment and Order dated · 4.3.1992 of the Madhya
Pradesh High Court in Misc. Petition No.1681 of 1990.

Shanti Bhushan, G.L. Sanghi, N.C. Jain and Satish K. Agnihotri for G
the Appellant. ·

Kapil Sibal, N.S. Kale, Rajinder Singh, J.B. Dadachanji, Vasant B.
Mehta, Mrs. A.K. Verma, Mrs. S. Pathak, Ravindra Srivastava. (For JBD

-
_,.
& Co.) S.V. Deshpande and S. Sukumaran for the Respondents. H
164 SUPREME COURT REPORTS (1992) SUPP. 3 S.C.R.

A The Judgment of tl:ie Court was delivered by

'KASLIWAL, J. ·Special leave granted.

This appeal by the State of Madhya Pradesh is directed against the
judgment of the Madhya Pradesh High Court dated 4.3.1992 in Miscel-
B laneous Petition No.1681 of 1990, quashing the notification dated 29.3.1990.

· · Shri Kailash Joshi the then Leader of Opposition in the Legislative
Assembly of the State of Ma.dhya Pradesh filed a Writ Petition (M.P.
No.3909 of 1987) on 18.10.1987. Appropriate directions were sought from
the Court in the matter of a lottery conducted by Churhat Welfare Society
C and the petitioner highlighted illegalities, irregularities and misuse of
powers by high officials and public men in .the Government. The said .Writ
Petition was decided on January 20, 1989. The Government of Madhya
Pradesh in pursuance to the aforesaid judgment issued a notification on
24.2.1989 appointing a commission of enquiry presided over by Shri Justice
D S.T. Ramalingam, Judge of the Madras High Court. The terms of reference
were stated, .as under:-

"(1) How the affairs of the Churhat Children Welfare
Society are conducted and how the share of. its profit
derived and the money collected through lottery has been
E utilised?

(2) What is the amount collected draw-wise by the agent
· and the Society and what is the .tax liability as per the
Madhya Pradesh Lottery (Niyantran Tatha ·Kar) Ad-
hiniyam, 1973?
F
(3) Whether any irregularities, illegalities and offences
were committed in organizing the lottery, holding of draw
of lottery, distribution of· prizes, and in that evei;i the
person responsible for the same.
G
(4) Any .other matter incidental or connected with the
above subject matter of enquiry." ·

For oonvenience we shall hereinafter mention the above reference as
~~ri~.d reference'. <;Joverrunent by notification issued under Section 11 of
H The Cominissions of Enquiry Act, 1952 (hereinafter referred to as 't.he
STATEOFM.P. v.ARJUNSINGH[KASLIWAL,J.] 165

Act') empowe:r:,ed the commission to follow the procedure under the Act. A
During the pendency of the enquiry, the State Government by a fresh
notification dated 29.3.1990 enlarged the terms of the original reference (ih
short 'second reference'). The respondent Shri Arjun Singh filed a Writ
Petition (M.P. No.1681 of 1990) Challenging the second reference on
several grounds. The High Court by judgment dated 4.3.1992 rejected all B
the grounds on which the notification of the second reference was chal-
lenged, but quashed the notification dated 29.3.1990 holding that it suffered
from non application of mind and invalid exercise of powers under Section
3 of the Act. The State Government aggrieved against the aforesaid judg-
ment of the High Court has come in appeal before this Court.
c
The terms of second reference issued vide notifi~ation dated 29th
March, 1990 are reproduced as under:-

"A. The entire affairs and activities of Churhat Children
Welfare Society from its inception to the date of the High D
Court Judgment including an enquiry into its assets,
liabilities, income and expenditure, the illegalities com-
mitted by it and the official favour shown or given to it
against the normal and legal procedure and the persons
responsible for the same.
E
B. Whether in- the matter of grant of licence of Churhat
Children Welfare Society under the M.P. Lottery Ad-
hiniyam to run the lottery and grant of tax exemption u/s
26 of t~e said Adhiniyam to the Society either in. anticipa-
tion of the Cabinet approval or by the Cabinet, there was F
any abuse of power? If so, the persons authorities respon-
sible for the same.

C. Since Shri Arjun Singh has failed to give explanation
to the Nation after the High Courfs deci&iori the enquiry
be also made as to at what cost he and his family members G
have acquired and built his mansion at Kerva Dam and
from where they got the funds for that purpose."

The High Court took the view that in the facts of the case and as
disclosed from the contents of the impugned notification, apart from the H
166 SUPREMECOURTREPORTS (1992] SUPP.3S~C.R.

A observations and the comments of the Hi~ Court .(in M.P. No.3909 of
1987) there was no relevant material before the appropriate Government
for enl~rging the scope of existing enquity which was set up only to comply
with the directions contained in the operati~e part of the judgment of the
High Court in the Churhat lottery case. The High Court further observed
B that the resolution or order of the appropriate Government dated 23.3.1990.
which culminated in passing of the impugned notification on 29.3.1990, had
not been produced before them, although a specific prayer for the same
was made· in the prayer clause of the petition. We have heard the learned
counsel for the parties at length and have gone through the reoord.

c In our opinion, so far as the terms of reference contained in Clauses
A and B of the second reference are concerned, the same are already
covered in .tf e t~~ms of t~e ~riginal , reference. Neither counsel con-
troverted this pos1t10n. In this VIew of the matter there can be no bar to
the commission to. enquire into these matters under the original reference
D itself. Now, s9 far as Clause 'C' of the second reference is concerned, the
original reference in term No.1 itself covers the question as to how the
affairs of the Churhat Children Welfare. Society are conducted and how
the share of its profit deriv~d and the money collected through lottery has
been utilised. We further make it clear that nothing precludes the commis-
E sion from making an enquiry as to whether any profit derived or money
collected through Churhat Lottery had been utilised for constructing the
mansion/bungalow at Kerva Dam. But so far as the following portion of
Clause c of the second reference is conCt<rned, the High Court rightly
quashed the _same as there was no relevant material before the State
1
Government Jor enlarging the scope of existing enquiry under the original
F
reference:- \
I (
"the nquiry be also made as to at what cost he and his
fami members have acquired and built his mansion at
Dam and from where they got the funds for that
G se."

It is als made clear that this judgment does .not preclude the State
Government rom appointing any commission of enquiry according to law
after applying its mind to any fresh or further materi_al placed before it.
H Such formation of opinion depends on the subjective satisfaetion of an
STATE OF M.P. v. ARJUN SINGH [KASLIWAL, J.] 167

appropriate Government but should be based on an objective or real A
material and not merely on some vague allegations or hearsay evidence or
to make fishing enquiry. The appeal is disposed of as aforestated. No order
as to costs.

V.P.R. Appeal disposed of.