# L.N.M. INSTITUTE v. STATE OF BJHAR

- **Citation:** [1988] 3 S.C.R. 311
- **Court:** Supreme Court of India
- **Decided:** 1988
- **Case number:** Civil Appeal No. 4141of1986
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/l-n-m-institute-v-state-of-bjhar-9939
- **Pages:** 28

## Headnote

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B
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312
SUPREME COURT REPORTS
[1988] 3 S.C.R.
Allowing the writ petitions (Civil) Nos. 87 of 1987 and 439 of 1987
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,
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
wholly misconceived. The Ordinances were not promulgat~ and the
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 1
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]
E
F
G
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.
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 Legislature 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
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
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
~·.
f'
»
)
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 assuming that the question of discrimination might arise also for the purpose
of selection for the first phase, there were justifiable reasons for selecting 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]
There could be no doubt that on the date the -Ordinances were
pri.mulgated and the Act was passed, the same could not be challenged
c
on the ground of non-implement

## Text

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B
c
312
SUPREME COURT REPORTS
[1988] 3 S.C.R.
Allowing the writ petitions (Civil) Nos. 87 of 1987 and 439 of 1987
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,
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
wholly misconceived. The Ordinances were not promulgat~ and the
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 1
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]
E
F
G
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.
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 Legislature 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
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
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
~·.
f'
»
)
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 assuming that the question of discrimination might arise also for the purpose
of selection for the first phase, there were justifiable reasons for selecting 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]
There could be no doubt that on the date the -Ordinances were
pri.mulgated and the Act was passed, the same could not be challenged
c
on the ground of non-implementation of the legislative intent in
nationalising similar institutes by amending the Schedule. If 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 D
the Constitution on the ground of inaction of the executive 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 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 pending, the Government generally does not take any step till the final
ilisposal of the litigation. It was apparent that in view of the pend ency of
litigations, the State Government had granted approval of only temporary 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 simiG
~
latrhly siituti~t
1
ed
1
I~stitutertsedan~ thef ds?b~~entt_rectognthitio.n of thedthArete
"
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]
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314
SUPREME COURT REPORTS
I 1988] 3 S.C.R.
The next attack of the petitioner-society to the impugned Act was
founded on violation of the provision of Article 19(1)( c) of the Constitution. The question was whether the fundamental right of the petitionersociety, as conferred by Article 19(1)(c), had been infringed or not, and,
further, whether the fundamental right to form association, as contained in Article 19(1)(c) of the Constitution, also included<Within it the
concomitants or the activities or the objects or purposes of an association. 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
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 property is acquired, the owner loses all control, interest, and ownership of
the property. Similarly, the Society, which was the owner of the Institute, 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
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,
I 1962] 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 association. 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
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 unsound and rejected. l329C-D; 330B-C, E; 331E-G; 332A-BI
•
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L.N.M. INSTITU1E v. STATE OF BJHAR
315
'y
Another ground on which the validity of the Act and the OrdiA
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·
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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
E
of List III. As soon as Entry 66 of List I was excluded, it was irr.elevant
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 compelence 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]
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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
the expression "other categories of staff'' under sub-section (4) of Section 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
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mutandis, but such application will be limited to the term of appointment 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 termination 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 subparagraph (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
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 Government had not properly applied its mind before the order of termination
of the services of Dr. Jha was made. [336E-H; 337A-BI
~
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 Government 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
'
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L.N.M. INSTITUTE v. STATE OF BIHAR
317
heard, the impugned order of termination of the services of the
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
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)
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
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
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 PetA
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ition (Civil) No. 55 of 1987 etc.
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(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.
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318
SUPREME COURT REPORTS
[ 1988] 3 S.C.R.
The Judgment of the Court was delivered by
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 valB 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. Jagadanand 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 Development 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
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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.
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
J_
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L.N.M. INSTITUTE v. STATE OF BIHAR [DUTT, J.]
319
by promulgating the Ordinance. On the day the Ordinance was promulgated, possession of the Institute was taken, and the services of Dr.
J agadanand Jha, who was the Registrar of the Institute, were terminated 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
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 dismissed 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
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.
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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;
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;
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AND, WHEREAS, it has been resolved to nationaH
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SUPREME .COU\l.T REPORTS
[1988] 3 S.C.R.
lise this branch of education in phases."
Oause (a) of section 2 of the Act defines "Private Educational
Institutions" as follows:
.'; .
"S. 2(a). "Private Educational Institution" means a private 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 training 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;"
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-
(
tion as specified.-in. the Schedule of this Act shall stand
· transferred to and shall vest absolutely in the State Government 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
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,
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 encumbrances."
r
· 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
3(1) of the Act. Under the Preamble to the Act, it is necessary to
A
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
·! ,J
the Act, the Institution mentioned in the Schedule will be transferred
B
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
-t
including any institution. In other words, the other institutions which c
answer the description of private educational institutions as defined in
Ji.-
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 OrdiD
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 ofpennissible 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
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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
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322
SUPREME COURT REPORTS
[1988] 3 S.C.R.
A Central Government in exercise of its power under section 3 of the
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
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 petitions 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 constitutionality 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.
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G
H
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
Osmania University Act, 1959 a new section 13A whereby it was provided 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
assuming that the classification of these two types of persons as coming
under two different groups oould be made, nevertheless, it was essential that such a classification must be founded on an intelligible
differentia which would distinguish the appellant from the ViceChancellors appointed under the Osmania University Act. The Court
held that there was no intelligible differentia on the basis of which the
classification could be justified.
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A
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324
SUPREME COURT REPORTS
[1988] 3 S.C.R.
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
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 concerned, 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 conceded that it is case of nationalisation in a phased manner and for the
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 nationalisaE
F
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
that the Ordinances were promulgated under Article 213 of the Constitution 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
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 EducaG
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 Mishra, 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
be borne by the State government (Education Department) and for A
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 c
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the building constructed through its own agencies and funds and even
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 considering 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 control 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 nationalisation 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
F
institution has been added to the Schedule, though nearly two years
have passed in the meantime. It is submitted that this fact demonstrates that the professed object of nationalisation in phases is a mere
pretence and a colourable device to single out the Institute for discriminatory treatment. The taking over of the Institute is an act of
legislation and not an act of the Government. The question to be G
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considered is whether at the time when the Ordinances were promulgated or the Act was passed, the same suffered the vice of discrimination 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
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326
SUPREME COURT REPORTS
[1988] 3 S.C.R.
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 executive 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
y
B the Legislature and the entire thing had been left to the discretion of
)..
the Government, it might have been possible to contend of discriminatory treatment. The respondents have, however, given an explanation 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
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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
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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 InstiG
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
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paragraph 4 of the additional affidavit of the petitioner-Society were
J..
L.N.M. INSTITUTE v. STATE OF BIHAR [DUTT, J.J
327
recommended by the concerned university for affiliation. The State
Government has concurred in the grant of temporary affiliation subject 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
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 temporary affiliation to the three institutions and that too on certain conditions. If the State Government had no intention of taking over other
institutions 'in accordance with the provisions of the Act, in that case,
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 institutions 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 litigations.