Talluri Srinivas v. Union of India, Ministry of Corporate Affairs & Anr.

14. Similar situations have arisen earlier. In Kwality Restaurant & Ice- Cream Co. Vs. The Commissioner of VAT, Trade and Tax Department and Ors., (2012) 194 DLT 195, functioning of Appellate Tribunal, Value Added Tax, was challenged and questioned. Appellate Tribunal as constituted was a three member body of Chairman, Administrative Member and Judicial Member. However, in respect of certain appeals on six dates one of the members was absent and was not a part of the Bench, which had heard the appeals. Later on the third member joined the Bench after leave of absence. Objection to the presence of this member was raised. Procedure to be followed in such cases and questions relating to proper quorum were raised and answered. The assessee had argued and objected to the third member joining mid-stream in a part heard matter. Revenue‟s argument was that the Appellate Tribunal as constituted being a composite body of three members, appeals could have been heard during absence of one member, but the moment the member returned, she was entitled participate in the hearings so long as the arguments had not concluded. Court noticed absence of power or stipulation for constitution of benches and hearing of appeals in composition of benches of less than three members. The Division Bench upon due consideration held:-

15. In W.P. (C) No. 2674/2012, Kavita Meena & Ors. Vs. Government of National Capital Territory of Delhi & Ors. and other connected matters decided on 22nd May, 2012, challenge was regarding composition of Selection Committee, which as per column 13 of the Recruitment Rules, was to consist of Chairman, SCERT, Director, SCERT, Director of Education and representative of SC/ST to be nominated by Chairman, SCERT. It had transpired that the Chairman, SCERT and Director Education, Department of Education had not participated in some of the meetings when interviews were held. Issue was whether the Selection Committee was duly constituted in view of the Rule position. It was held as under:- "5. The learned counsel appearing on behalf of the petitioners contended that once the majority of the members of the Selection Committee were present in the interviews held for selecting candidates, the selection process cannot be said to have been vitiated. It was also contended that as no quorum has been prescribed under the Recruitment Rules, the only requirement was that the majority of the members of the Committee should be present. In the present case, there were actually 4 to 5 members present in each of the interviews held during the period from 08.07.2010 to 28.07.2010. Therefore, the majority of the members of the Selection Committee were present in each and every interview meeting which was held. It was also submitted on behalf of the petitioners that the absence of the Chairman of SCERT did not make any difference inasmuch as the members present could nominate one amongst them to chair the meetings. In the present case, all the meetings were chaired by the Director, SCERT. The learned counsel for the petitioners placed reliance on two decisions of the Supreme Court in the case of Ishwar Chandra v. Satyanarain Sinha & Ors (1972) 3 SSC 383 and People‟s Union for Civil Liberties v. Union of India and Anr. (2005) 5 SCC 363 in support of the aforesaid contention.

6. The learned counsel for the respondents, who were applicants before the Tribunal, reiterated their stand before the Tribunal and supported the decision of the Tribunal. In addition, they referred the decision in the case of State of Andhra Pradesh & Anr. v. Dr. Mohanjit Singh and Ors. 1988 (Supp) SCC 562. It was contended that because of the said decision, the absence of a person from the Selection Committee vitiated the selection process.

7. Having heard the learned counsel for the parties, we are of the view that the decision rendered by the Tribunal is not in accordance with law and has to be set aside. The reason is that the two Supreme Court‟s decisions cited by the learned counsel for the petitioners clearly hold the field and in so far as the decision cited by the learned counsel for the respondents is concerned, that is clearly distinguishable.

8. In Ishwar Chandra (supra), the case before the Supreme Court was concerning the appointment of the Vice-Chancellor of Saugar University. For the purpose of the appointment of the Vice- Chancellor, a Selection Committee was to be constituted under Section 13(2) of the University of Saugar Act, 1946. The Committee to be constituted was to consist of three persons; two of whom were to be elected by the Executive Council by single transferable vote from amongst persons not connected with the University or a College and the third was to be nominated by the Chancellor who was also empowered to appoint one of them as Chairman of the Committee. The two persons elected by the Executive Council of the University were Mr G.K. Shinde, a former Chief Justice of a High Court and Justice T.P. Naik of the Madhya Pradesh High Court while the third member, Shri C.B. Agarwal, a former Judge of the Allahabad High Court, was nominated by the Chancellor. Justice Naik was, however, unable to attend the meeting which was slated to be held on 04.04.1970 and in his absence the other two persons, namely, Shri Shinde and Shri Agrawal met as a Committee and submitted a panel of names from which the Chancellor appointed the appellant before the Supreme Court as Vice-Chancellor. The question that arose was whether only two members of the Committee, who were present, could have validly selected the appellant as a ViceChancellor. The Supreme Court, after considering the various facts and circumstances of the case, came to the following conclusion:- “If for one reason or the other one of them could not attend, that does not make the meeting of others illegal. In such circumstances, where there is no rule or regulation or any other provision for fixing the quorum, the presence of the majority of the members would constitute it a valid meeting and matters considered there at cannot be held to be invalid”.

9. The Supreme Court in arriving at this conclusion has placed reliance on the said proposition as stated in Halsbury's Laws of England, Third Edition (Vol. IX, page 48, para 95), which reads as under:-.

Human Rights Act, 1993, stipulated that the appointment of Chairperson and other Members of the National Human Rights Commission has to be made, after obtaining recommendations of a Committee comprising:- The Prime Minister • The Speaker of the House of People • The Minister Incharge of the Ministry of Home Affairs in the Government of India • Leader of Opposition in the House of People • Leader of Opposition in the Council of States • Deputy Chairman of the Council of States It so happened that the selection in the case before the Supreme Court took place by a Committee in which the Leader of Opposition in the House of People was absent. Therefore, the selection was under challenge. The Supreme Court held as under:-

16. The aforesaid quotation refers to two decisions of the Supreme Court in Ishwar Chandra v. Satyanarain Sinha & Ors. (1972) 3 SSC 383 and People’s Union for Civil Liberties v. Union of India and Anr. (2005) 5 SCC 363. In Ishwar Chandra (supra) issue arised related to the validity of constitution of the Selection Committee constituted under the statute. It was held that if for one reason or the other, one of the members of the Selection Committee did not attend a meeting, it would not make the meeting of others illegal. This was stated as the correct position in law, unless there was a rule or regulation to the contrary fixing a specified quorum to constitute a valid meeting. Thus, in the absence of a specific stipulation prescribing and fixing a minimum quorum, majority of the members present would constitute a valid quorum. Reference was specifically made to Halsbury's Laws of England, Third Edition (Vol. IX, page 48, para 95), that if a corporate act is to be done by a definite body along or a definite body coupled with an indefinite body, a majority of the definite body must be present.

17. Decision in People’s Union for Civil Liberties (supra) related to appointment of a member of the National Human Rights Commission as per and under the Protection of Human Rights Act, 1993. As per the statute selection was mandated to be by a Committee in which the Leader of Opposition in the House of People was a member. In the selection under question, leader of the opposition was absent and had not responded to the intimation sent to him, for he was hospitalized. The Supreme Court held that the Act in question had not fixed a minimum quorum for selection nor did it provide for a particular procedure to be followed. Therefore in the absence of one member out of six members would not vitiate the opinion of the other five members.

18. Three of the aforesaid decisions, which relate to Selection Committee, albeit would be relevant and germane for the purpose of deciding the present writ petition, for the ratio and precept would be equally applicable to the statutory position in the present case. The CA Act does prescribe that the Appellate Authority will be a body constitute of five persons, but does not prescribe and does not fix a minimum quorum. The statute is silent on the procedure to be followed and adopted when one or more members cannot participate. In absence of a provision and stipulation to the contrary, quorum in such cases is in order and complete when majority of the members are present and participate. Therefore, if one of the members of the Appellate Authority for valid and good reason has recused and does not want to participate, hearing in the appeal can proceed and would not suffer invalidity on the ground of lack of quorum.

19. In the present case no vacancy has arisen which can be filled up as the said fifth member has neither resigned nor has been removed. There is no provision in the enactment to fill up "vacancy" by recusal in a particular case by any other mode. Temporary absence or recusal of a member in a particular appeal, would not make the Appellate Tribunal dysfunctional till a new member is appointed, which as recorded above as per the CA Act is impermissible.

20. In Ram Autar Santosh Kumar vs. State of Bihar & Ors., AIR 1987 Patna 13, a Full Bench of the Patna High Court had examined the question whether a rule prescribing quorum for Assessment Sub-Committee constituted under Section 27-A(1) of the Bihar Agricultural Produce Market Act, 1961 was ultra vires the main provision or the rule making power. Section 27A(1) had stipulated that an Assessment Sub-Committee shall consist of Chairman, Vice Chairman and Secretary of the Market Committee for the purpose of assessment of levy and fee. It did not prescribe any minimum quorum. Quorum for Assessment Sub-Committee prescribed by Rule 88 was two members who had the discretion to refer the case to a Bench of all members of the Sub-Committee. For several reasons, the challenge was rejected. What is of importance for the present decision are the observations in paragraph 20 of the said judgment which reads:

21. We would at this stage refer to the decision in Vijay Singh Lamba (supra) wherein the Supreme Court held that „quorum‟ denotes minimum number of members of any body or persons whose presence is necessary in order to enable that body to transact its business validly so that its acts may be lawful. Generally, it would be left to the Committees/Bodies themselves to fix the quorums for the meetings. However, in the said case, the syndicate which had appointed the Standing Committee had fixed the quorum, which it was held, was valid. Pertinently it was observed that it would be inappropriate to draw parallels between such cases and a court proceeding where a matter by law, the case was required to be heard by Benches of three Judges. Reliance placed by the petitioner on the said observations would be entirely fallacious and wrong, for the present case statutory provisions quoted above refer to constitution of the Appellate Authority consisting of five members, without the enactment specifically prescribing or fixing any quorum. The contention that by default or in the absence of any provision fixing statutory quorum, all five members of the Appellate Authority must sit to constitute a valid quorum, otherwise the proceedings before the Appellate Authority will be illegal and invalid, has to be rejected and refused as fallible and flawed. This contention has been repeatedly examined and answered in negative.

22. Observations of the Supreme Court in Vijay Singh Lamba (supra) are not relevant and do not assist and help us answer the question raised. For Court hearings quorum may be one, two, three or more Judges. Obviously hearing cannot be by a bench of different strength. It would not be difficult to reject the contention, if we pose the right question, whether recusal by a Judge when reference is made to the entire court, would be invalid for want of quorum. Recusal of one or even more Judges would not render the decision as illegal or invalid for want of quorum. Similarly, recusal would not affect the quorum and validity of the decision of the Appellate Authority.

23. Petitioner has relied on decision of the Constitution Bench of seven Judges in The United Commercial Bank Ltd. vs. Their Workmen, AIR 1951 SC 230. The said decision was cited and distinguished by a Division Bench of this Court in Bharat Bijlee Ltd. Versus Commissioner of Trade and Taxes, ST. APPL. 74/2014, decided on 18th February, 2016 on the ground that the statutory provisions of Sections 7 and 8 of the Industrial Disputes Act, 1947 interpreted therein were different from the statutory provisions relating to Appellate Tribunal in Delhi Value Added Tax Act,

2004. We would like to elaborate and point out explicit and intelligible distinction between provisions under consideration in United Commercial Bank Ltd.(supra) and the present statute. Majority judgment authored by Kania, CJ. on behalf of himself and three Hon'ble Judges in United Commercial Bank Ltd.(supra), had drawn and highlighted the clear cut difference in the language of Section 7 relating to constitution of "Industrial Tribunal" viz. Section 5 relating to constitution of "Conciliation Board" and Section 6 relating to constitution of "Court of Inquiry" to hold that the Award pronounced was by an Industrial Tribunal improperly constituted and therefore not vested with jurisdiction. To understand the distinction and the ratio of the majority judgment, we would like to quote the relevant sections i.e., Sections 5 to 8:-

28. In Election Commission of India & Anr. Vs. Dr.Subramaniam Swamy and Anr. (1996) 4 SCC 104, challenge was made to participation of the the Chief Election Commissioner as head of the three member Election Commission on the ground that conflict of interest and impartiality. In that context, issue had arisen whether under the law the three member Election Commission must sit en banc or not at all. In other words, the legal question was whether Constitution had made it imperative for the Chief Election Commissioner to be a participant in each and every decision of the three m ember Election Commission. The answer was in negative and against the contention. Constitution, it was observed, was silent on the said aspect as it was thought unnecessary, perhaps improper to provide for the same having regard to the constitutional status of the Commission. Constitution had relied on sagacity and wisdom of the persons, who would man the Commission. Reference was made to the earlier decision, reported as T.N. Seshan, Chief Election Commissioner of India Vs. Union of India & Ors. (1995) 4 SCC 611 challenging conversion of one member election commission into a three member Commission. T.N. Seshan (supra) had affirmatively rejected the contention that the Election Commission must take decision in one voice or not at all and any decision by the majority would be inconsistent with scheme of Article 394. In Dr.Subramaniam Swamy and Anr. (Supra), the Supreme Court referred to the principle that will of a corporation or body could be expressed by whole or by majority of members. It was interpreted that all members of the Election Commission need not participate and would not constitute by law a necessary quorum. Majority could constitute a valid quorum. Reference was made to the doctrine of necessity and it was observed:

29. F. Pollock in A First Book of Jurisprudence for Students of the Common Law published in 1896 had referred to the rule of necessity to observe: "The settled rule of law is that, although a judge had better not, if it can be avoided, take part in the decision of a case in which he has any personal interest, yet he not only may, but must do so if the case cannot be heard otherwise." The rationale behind the Rule is that the litigation cannot be a non sequitur. In other words, there cannot be a litigation system in which it is impossible to litigate a given case. It is on the aforesaid principle that we have examined the statutory provisions of the CA Act and the effect of recusal of one member of the five-members of the Appellate Authority and held that recusal will not stall hearing and decision of the appeal. Contention of lack of quorum on account of recusal of one member of the five member Appellate Authority for the aforesaid reasons fails and is rejected.

30. We are not, therefore, examining the last contention challenging vires of Rules 13 and 16 of the of the Procedure to be followed for Appeals by the Appellate Authority, 2013, for we are satisfied that the Appellate Authority of four members can hear and decide the appeal, in spite of recusal of one of the members, namely, Mr. Sunil Goyal, for he reasons set out above.

31. In view of the aforesaid discussion, we do not find any merit in the present writ petition and uphold the impugned order dated 26th July, 2017 passed by the Appellate Authority rejecting the plea of the petitioner of lack and want of quorum. The writ petition is accordingly dismissed, with no order as to costs. (SANJIV KHANNA) JUDGE (CHANDER SHEKHAR)

JUDGE MARCH 12th, 2018 NA/pk