first respondent shall in full and final settlement of all the claims and outstandings of the eighty eight workmen concerned in the reference deposit an amount of Rupees four lakhs each per workman-2016 Nov. http://judis.nic.in/supremecourt/imgst.aspx?filename=44321

                                                                  REPORTABLE


IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                      CIVIL APPEAL No.  11003   OF 2016
                 [Arising out of SLP (C) No. 13727 of 2014]



RASHTRIYA COLLIERY MAZDOOR
SANGH, DHANBAD                          .....APPELLANT


                                   VERSUS

EMPLOYERS IN RELATION TO MANAGEMENT
OF KENDUADIH COLLIERY OF M/S BCCL
& ORS                                              .....RESPONDENTS


                               J U D G M E N T

Dr D Y CHANDRACHUD, J

 1    Leave granted.

 2        The dispute in the present case relates to eighty eight workmen
who had worked as ‘Tyndals’ at the Kenduadih Colliery (of the first
respondent).  On 14 May 1993 a Reference was made to the Industrial
Tribunal by the appropriate government under Section 10(1)(d) of the
Industrial Disputes Act, 1947, of the following dispute :
“Whether the demand of Rashtriya Colliery Mazdoor Sangh  for  employment  of
Shri Arjun Paswan and 87 others, as per list attached is justified?   If  so
to what relief the workers are entitled”.



The job description of Tyndals required  these  workmen  to  be  engaged  in
moving engineering stores, drums of  oil  and  grease  and  they  were  also
responsible for setting up and dismantling of structures,  as  well  as  the
installation and withdrawal of machinery.  The Industrial  Tribunal  by  its
Award dated 16 July 1996 held that :

“it is beyond the question that the persons worked under the contractor  are
genuine one who are the present workmen and they  performed  the  job  which
was of permanent and perennial in nature and the person performing the  same
type of job  in  other  collieries  were  regularized  and  so  no  doubt  a
stepmotherly  attitude  was  taken  so  far  these  concerned  workmen   are
concerned”.

The Tribunal directed the management  to  form  a  panel  of  the  concerned
workmen in accordance with  seniority  and  to  absorb  or  regularize  them
either in the work of Tyndal or in any suitable category so  that  the  list
is exhausted within a period of one year.  Backwages were denied.

3     The first respondent filed a writ petition before the  Jharkhand  High
Court to challenge the Award (CWJC 1655 of 1997).  On 18 May 2004 a  learned
Single Judge  of  the  Jharkhand  High  Court  modified  the  Award  of  the
Industrial Tribunal and directed that as and when the management intends  to
employ regular workmen, it shall grant preference to  the  workmen  governed
by the Award if they are otherwise suitable by relaxing the requirements  of
age and academic qualifications.  This order  of  the  High  Court  attained
finality.

4     In 2007 the Union representing  the  workmen  filed  a  writ  petition
before the High Court (WP(L) 4915 of 2007)  seeking  implementation  of  the
order dated 18 May 2004.   While  disposing  of  the  writ  petition  on  24
September 2010 the High Court recorded the statement of the management  that
no vacancy had occurred in the post of Tyndal since the judgment  which  was
rendered on 18 May 2004.  However, the High Court recorded  the  undertaking
of the management that if any vacancy arises  in  future  and  the  post  is
advertised for which the workmen apply, they would  be  considered  for  the
post and that the management would also accommodate  them  if  there  was  a
vacancy under any other category.  Thereafter, a Review Petition  was  filed
before the High Court based on information  which  was  obtained  under  the
Right  to  Information  Act.   The  learned  Single  Judge  held  that   the
employment which was granted by the management between  2004  and  2008  (as
disclosed in the response to the RTI query on 11 September  2008)  indicated
that the appointment was made only on compassionate  grounds.   Once  again,
while disposing of the Review Petition the statement of the  management  was
recorded that if and when  posts  were  advertised,  the  workmen  would  be
entitled to apply and would be considered.   The  rejection  of  the  Review
Petition has led to the filing of these proceedings.

5     The Appellant has relied on certain proceedings which  took  place  in
another distinct reference to the  Industrial  Tribunal,  Reference  204  of
1994.  The reference was  at  the  behest  of  the  Union  representing  the
workmen engaged in one of the collieries of the first respondent.  An  Award
was  made  by  the  Industrial  Tribunal  on  14   August   2000   directing
regularization of seventy workmen in general  mazdoor  category  No.1.   The
Award was confirmed by a learned Single Judge of the High Court on  26  July
2001 while dismissing the writ petition of the management.   However,  in  a
Letters Patent Appeal the Award was modified by directing that as  and  when
the  management  intended  to  appoint  regular  workmen,  it  would   grant
preference to the workmen concerned  in  the  reference,  if  necessary,  by
relaxing the conditions of  age  and  academic  qualifications.   The  Union
filed a Special Leave Petition under Article 136 of the Constitution  before
this Court.  This Court by a Judgment and Order dated 18 November 2009,  set
aside the judgment of the Division Bench of the High Court and restored  the
Award of the Tribunal granting reinstatement without backwages.

6     The above judgment of this  Court  cannot  come  to  the  aid  of  the
Appellant for the simple reason that in that case, the Union had  challenged
the judgment of the Division Bench of the High Court before this Court.   In
the present case,  the  judgment  of  the  High  Court  dated  18  May  2004
modifying the Award of the Industrial Tribunal attained finality.  In  fact,
in their writ petition of 2007 the  workmen  sought  implementation  of  the
judgment rendered on 18 May 2004.  The entitlement that  the  workmen  claim
must hence flow out of the judgment of the High Court by which  the  workmen
were entitled to the grant of a  preference  in  future  employment  by  the
management by relaxing conditions of  age  and  educational  qualifications.
This distinction has, in fact, been noted in a judgment  recently  delivered
by this Court on 3 October 2016, in Workmen Rastriya Colliery Mazdoor  Sangh
v. Bharat  Coking  Coal  Ltd.  (C.A.  13953  of  1015).   This  Court  while
declining to grant reinstatement allowed compensation  to  fourteen  workmen
whose services were in issue, each in the amount  of  Rupees  two  lakhs  in
full and final settlement of all  claims  for  compensation.   The  relevant
part of the judgment rendered by this Court on 3 October 2016  is  extracted
below :

“7 The basic grievance of the workmen is that as a result  of  the  position
which has ensued, the workmen governed by the present  proceedings  of  whom
only 14 are left in the fray, are virtually without any relief or remedy  in
practical terms.  The workmen were engaged between 1987  and  1989.   Nearly
27 years have elapsed since then.  Many of the 14 workmen would  be  on  the
verge of attaining the age of retirement.  There is no occasion  at  present
to grant them reinstatement since in any event, such relief has been  denied
in the judgment of the High Court dated 18  May  2004  which  has  not  been
challenged.   However, the predicament of the workmen is real.  Two sets  of
workmen in the same colliery under the same company  have  received  unequal
treatment.  The present group of workmen has faced attrition in numbers  and
has been left with no practical relief.  This situation should be  remedied,
to the extent that is now permissible in law, having  regard  to  the  above
background. In order to render full, final and complete justice, we  are  of
the view that an order for the payment of compensation in  final  settlement
of all the claims, dues and  outstandings  payable  to  the  14  workmen  in
question would meet the ends of justice.

8 We accordingly direct that the Respondents shall deposit with the  Central
Government Tribunal (No.2) at Dhanbad an  amount  of   Rs.  Two  lakhs  each
towards compensation payable to each one of  the  14  workmen.  This  amount
shall be in full and final satisfaction  of  all  the  claims,  demands  and
outstandings.  Upon deposit of the  amount,  the  Award  of  the  Industrial
Tribunal dated 9 September 1996, as modified by the High  Court  on  18  May
2004 shall be marked  as  satisfied.   The  Respondents  shall  deposit  the
amount as directed hereinabove, within a period of  two  months  from  today
before  the  Central  Government  Industrial  Tribunal  (No.2)  Dhanbad   in
Reference 26 of  1993.   The  amount  shall  be  disbursed  to  the  workmen
concerned  subject  to  due  verification  of  identity  by  the  Industrial
Tribunal”.



7       In the present case,  the  counter  affidavit  filed  by  the  first
respondent before this Court contains a specific admission that  the  eighty
eight workmen governed  by  the  reference  were  working  as  ‘Tyndals’  on
surface as well as in underground mines  through  contractors  at  Kenduadih
Colliery.  The counter affidavit states that the reliance  which  is  sought
to be placed by the workmen  on  replies  to  queries  under  the  Right  to
Information Act is misleading and  that  the  appointments  in  those  cases
were made by the first  respondent  in  category  I  whereas  ‘Tyndals’  are
appointed in category IV.  We may  note  at  this  stage,  that  during  the
pendency of these proceedings an order was passed on  11  December  2015  to
enable the  respondents  to  ascertain  the  position  with  regard  to  the
vacancies in the above category.  A Committee was constituted by  the  first
respondent which by its report dated 2 January 2016 has observed that  there
is no vacancy in the post of  Tyndal,  category  IV  either  in  respect  of
Kenduadih Colliery or the Pootkee  Balihari  area  as  a  whole.   Kenduadih
Colliery is stated to be a  closed  mine.   A  statement  has  been  annexed
indicating the existence of surplus manpower.

8     In the Judgment of this  Court  rendered  on  3  October  2016,  noted
earlier, reasons have been indicated as to why it would not  be  practicable
to grant reinstatement particularly since such  relief  was  denied  in  the
judgment  of  the  High  Court  dated  18  May  2004,  which  has  not  been
challenged.   The  workmen  in  that  case  were  engaged  between1987-1989.
Nearly twenty seven years had elapsed and many of  the  workmen  would  have
been on the verge of retirement.  However, while taking  note  of  the  fact
that two sets of workmen in the same colliery and  under  the  same  company
have received unequal treatment, this Court ordered payment of  compensation
each in the amount of Rupees two lakhs to the workmen.  The workmen in  that
case were employed as general mazdoors.  The workmen  in  the  present  case
belong to the skilled  category  of  Tyndals  which  as  noted  earlier  are
comprised in category IV.  Having  due  regard  to  this  position,  in  the
present case, it would be appropriate to direct that  the  first  respondent
shall in full and final settlement of all the  claims  and  outstandings  of
the eighty eight workmen concerned in the reference  deposit  an  amount  of
Rupees four lakhs each per workman before the Central Government  Industrial
Tribunal (No.2) Dhanbad in Reference  54  of  1993.   The  amount  shall  be
disbursed to the workmen concerned subject  to  due  verification  of  their
identity by the Industrial Tribunal.  This  amount  shall  be  in  full  and
final satisfaction of all claims, demands and outstandings  payable  to  the
workmen.

9     The Civil Appeal shall stand allowed in the above terms.  There  shall
be no orders as to costs.




.........................................CJI
                                                                 [T S
THAKUR]


              …..........................................J
                                                                [Dr D Y
CHANDRACHUD]



..............................................J
                                                           [L NAGESWARA
RAO]

New Delhi
November 21, 2016.

STATE OF U P AND ORS .....APPELLANTS VERSUS ALL U P CONSUMER PROTECTION BAR ASSOCIATION

                                                                  REPORTABLE


IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION


                        CIVIL APPEAL No. 2740 OF 2007



STATE OF U P AND ORS                            .....APPELLANTS



                                   VERSUS



ALL U P CONSUMER PROTECTION
BAR ASSOCIATION
  .....RESPONDENT


                                    With

                      WRIT PETITION (C) No. 164 OF 2002



                               J U D G M E N T



Dr D Y CHANDRACHUD, J

1     The deficiency of infrastructure in the adjudicatory fora constituted
under the Consumer Protection Act, 1986 has led to several directions of
this Court in the course of the proceedings in this case.  On 14 January
2016, this Court constituted a Committee presided over by Mr Justice Arijit
Pasayat, a former judge of this Court, to examine :
the infrastructural requirements of the State Commissions,  deficiencies  in
infrastructure and remedial measures;

the position of vacancies of members at the  national,  state  and  district
level;

the need for additional Benches at the national, state and district level;

conditions of eligibility for appointment of non-judicial members;

administrative powers  which  have  been  or  should  be  conferred  on  the
presiding officers of the state and district fora;

service conditions including pay scales  governing  the  presiding  officers
and members;

requirements of staff;

creation of a separate cadre of staff at the national,  state  and  district
level; and

other relevant issues.



The Committee was requested, while examining these  issues,  to  submit  its
recommendations.  The Committee has since the commencement of  its  work  in
February 2016 inquired extensively into the matters referred to it  and  has
made an assessment of the prevailing conditions in  the  States  of  Orissa,
Maharashtra, Punjab, Haryana, Andhra Pradesh, Telangana, Jammu and  Kashmir,
Tamil Nadu, Bihar  and  Jharkhand.  The  Committee  has  also  analysed  the
prevailing position at the National Consumer Disputes Redressal  Commission,
as well as the State Commission in New Delhi.

2     The facts which have emerged from the interim report submitted by  the
Committee on 17 October 2016 constitute a sobering  reflection  of  how  far
removed reality lies from the goals and objectives which Parliament  had  in
view while enacting the Consumer Protection Act, 1986.   The  Committee  has
observed that the fora constituted under the enactment do  not  function  as
effectively as expected  due  to  a  poor  organizational  set  up,  grossly
inadequate infrastructure, absence of  adequate  and  trained  manpower  and
lack of qualified members in the adjudicating bodies.  Benches of the  state
and district fora sit, in many cases for barely two  or  three  hours  every
day and remain non-functional for months due to a  lack  of  coram.   Orders
are not enforced like other orders passed by the civil  courts.   The  state
governments have failed to respond to the suggestions of the  Committee  for
streamlining the state of affairs.

3     The pathetic state of infrastructure is made evident in the  following
findings in the report of the Committee :

“The Committee, during its visits to states, has found  that  there  are  no
proper court-rooms with lights and fans, chairs and  tables.  The  condition
of Chambers of the Presiding Members is pathetic. They do not have  adequate
or trained staff. They do not have stenographers for taking  dictations.  At
some Consumer Fora, there are no  peons  to  retrieve  the  files  from  the
Record Room. The Record-Rooms are,  also,  either  too  small  and  have  no
almirah, shelves or compactors to keep the files.  The  files  are  kept  in
open and  get  misplaced  or  eaten  by  termites.  The  Central  Government
provides  funds  for  construction  of  the  new  buildings,  carrying   out
additions/alterations/renovations  of  existing  buildings  and  grant   for
acquiring non-building assets such as  furnitures,  office  equipments  etc.
The State Governments have to provide  the  land  for  construction  of  new
buildings for the Consumer Fora. The Committee  has  noted  that  the  State
Governments have not been quick enough to allot  land  for  construction  of
Consumer Fora in their respective States. It has, also, come to  the  notice
of the Committee  that  the  State  Governments  –  responsible  for  timely
filling up of the vacancies of the  Presidents  and  Members  in  the  State
Commissions and District Fora of the states, have failed to  keep  the  time
limit. The Committee has come across instances where the  State  Governments
have taken upto 7/10 months to approve the recommendations of the  Selection
Committee”.




The quality of presiding members, especially of non-judicial members at  the
state and district  levels  is  poor.   One  of  the  reasons  is  that  the
remuneration which is being paid to non-judicial members  of  consumer  fora
varies from state to state and is too meager to  attract  qualified  talent.
Most of the  non-judicial  members  are  not  even  capable  of  writing  or
dictating small orders.  At  certain  places  non-judicial  members  act  in
unison against the presiding officer, while passing orders contrary to  law,
damaging the reputation of the adjudicating body.  Presidents, as a  result,
prefer a situation where such non-judicial members  absent  themselves  from
work if only so that judicial work can  be  carried  out  by  the  presiding
judge  impartially  and  objectively.   Many  non-judicial  members  do  not
maintain punctuality and others attend to work sporadically once or twice  a
week.  The Committee has observed that  that  the  problem  lies  in  –  (i)
absence  of  proper  remuneration;  (ii)  appointment  of  former   judicial
officers who lack motivation  and  zeal;  (iii)  appointment  of  practicing
lawyers as presiding officers of  district  fora;  and  (iv)  political  and
bureaucratic  interference  in  appointments.   Many  of  the   non-judicial
members attend to the place of work only to  sign  orders  which  have  been
drafted by the presiding officer.

4     The Committee has furnished concrete examples of how bureaucratic  and
political influence has marred the selection process as a  result  of  which
the  functioning  of  consumer  fora  is  detrimentally   affected.    Three
instances furnished in the  Report  of  the  Committee  provided  a  telling
example of the state of affairs :

“15). The  Committee  could  make  out  that  there  has  been  considerable
bureaucratic  and  political  influence/interference   in   the   ‘selection
process’  and  functioning  of  the  Consumer  Fora.  Just  to  cite  a  few
instances, the Committee found that relatives  of  politicians,  bureaucrats
and judicial fraternity have been selected. A non-Judicial Member Mr.  Jamal
Akhtar  posted  at  District  Forum  Meerut  has  been   absenting   without
permission since 11.05.2015. The State Government has  failed  to  take  any
action against him. Even the plea of President, State  Commission  has  gone
unheeded. The result is that his post  has  not  been  declared  vacant  and
another non-Judicial Member  posted  elsewhere  has  been  attached  in  his
place.

16). One non-Judicial Member who had her first term at Lucknow and  has  now
been enjoying her Second Term, having  been  appointed  for  District  Forum
Barabanki but has been attached to Greater Noida and  as  per  the  reports,
comes to Forum once or twice a week. Another woman non-Judicial  Member  who
happens to be wife of a bureaucrat was appointed for District Forum  Baghpat
but was attached/posted at  Greater  Noida.  These  few  instances  make  it
crystal clear that there is definite political  influence  and  interference
and in such a scenario, the work of District Consumer Fora  is  affected  as
it results in lowering the morale of the President.

17). In Haryana,  a  non-Judicial  Woman  Member  did/does  not  attend  the
District Forum regularly, as she has to travel around 150/160  KM  everyday.
The President of one District Forum who happens to be  former  President  of
Bar Association has been serving the second term  as  President.  Such  non-
Judicial Members manage to get selected and then misuse  their  position  as
Members, as they call themselves ‘Judges’.”


The selection of persons as presiding officers and as members  of  the  fora
lacks transparency without a fixed criteria for  selection.   The  Committee
has, in our view with justification, proposed that a written test should  be
conducted to assess the knowledge of persons who  apply  for  posts  in  the
district fora.  Issues of conflict  of  interest  also  arise  when  persons
appointed from a local area are appointed to a district forum  in  the  same
area.

5     The position of the National Consumer  Disputes  Redressal  Commission
has emerged from the interactions of the Committee with  the  President  and
members of the Commission.  The serious deficiencies of  infrastructure  are
summarized below :

Sanctioned strength of personnel is far lower than  the  actual  requirement
and is not based on the pendency of cases or on objective norms  adopted  by
statutory organizations;

There are 118 sanctioned  posts  as  against  a  requirement  of  322  while
pendency of cases as on 30 September 2016 is 11,379;

Few personnel work on a regular basis  while  others  who  are  inducted  on
contract cannot be entrusted with work of a regular nature;

The sanctioned strength of six  Assistants,  ten  UDCs  and  eight  LDCs  to
attend on the administrative side to  judicial  filing,  establishment  work
and to the general administration is totally inadequate;

The strength of members has  increased  from  five  in  2003  to  twelve  at
present without a corresponding increase  in  supporting  staff  though  the
average monthly institution of original complaints has increased by 300  per
cent; and

Though the proposal for the creation of posts was sent to the Government  of
India in 2010, only a few posts for catering to the requirement of  a  sixth
Bench (presently there are five) have been sanctioned.   The  Committee  has
recommended that at least 51 posts be  created  immediately  as  an  interim
measure.



The Committee has  noted  that  while  the  salary  and  allowances  of  the
President of the National Commission are equivalent to those of a  Judge  of
the Supreme Court, the conditions of service  of  members  of  the  National
Commission are not at par with those of  the  sitting  judges  of  the  High
Court.  The National Commission hears appeals and revisions  against  orders
of the State Commissions, whose Presidents are treated at  par  with  judges
of the High Court. An  anomalous  situation  prevails  where  members  of  a
higher forum (the National Commission) have conditions of  service  inferior
to those applicable to members of a forum lower in hierarchy. The  Committee
has proposed that the members of the  National  Commission  should  get  the
same salaries, allowances and conditions of services  as  are  available  to
sitting judges of the High Court.

6     The Committee has opined that it  is  necessary  to  confer  upon  the
President of the National Commission  the  power  to  recruit  and  transfer
staff, to obviate delay in appointments.  Exemption from  consultation  with
the UPSC should, it is proposed, be granted as in the case of several  other
statutory tribunals, such as CAT, AFT and NGT.

7     The posts of President and members of the State  Commission  in  Tamil
Nadu and Jammu & Kashmir are lying vacant  for  more  than  one  year.   The
Committee was assured by the Principal Secretary,  Consumer  Affairs,  Tamil
Nadu on 31 May 2016 that these appointments would be cleared within a  short
period.  However, until the date of the report, no steps  have  been  taken.
The Government of Jammu & Kashmir has failed to  appoint  the  President  of
the State Commission.

8      The  Committee  has  formulated  its  suggestions  to   the   Central
Government in Annexure A and the directions  which  it  has  issued  to  the
state governments in Annexures B to M to the report.

9      The  interim  report  of  the  Committee  provides   an   unfortunate
reflection of the state of affairs in the consumer  fora  at  the  district,
state  and  national  level.   That  these  bodies  which  are  vested  with
important functions of a  judicial  nature  continue  to  work  despite  the
prevalence of such adverse conditions and in the face of the apathy  of  the
governments both at the national and state level is a matter which  requires
immediate intervention by this Court.  A systemic  overhaul  of  the  entire
infrastructure is necessary if the Consumer Protection Act, 1986 is  not  to
become a dead letter. With the proliferation of  goods  and  services  in  a
rapidly growing economy,  Parliament  envisaged  the  enactment  to  be  the
corner-stone of a vibrant consumer movement.  Reality has been distant  from
the aspirations of the law.  Since the  state  of  affairs  which  has  been
revealed  before  the  Court  warrants  systemic  changes,  we  propose   to
initially issue directions on certain specific issues in the  present  order
within a judicially manageable framework.  We will now take up each  of  the
issues seriatim so as to enable the court to focus on each  problem  and  on
the nature of the malady before proceeding to formulate the directions :

(1)   Administrative control :

One of the principal problems governing  the  functioning  of  the  district
fora on the one hand and the State Commissions on  the  other  hand  is  the
absence of   clarity  in  regard  to  the  exercise  of  administrative  and
disciplinary control.  Section 24B provides for administrative  control,  in
the following terms :

“24B. Administrative control. –  (1)  The  National  Commission  shall  have
administrative control over all  the  State  Commissions  in  the  following
matters, namely :-

calling   for  periodical  return  regarding  the   institution,   disposal,
pendency of cases;
issuance of instructions regarding adoption  of  uniform  procedure  in  the
hearing of matters, prior service of copies of  documents  produced  by  one
party  to  the  opposite  parties,  furnishing  of  English  translation  of
judgments written in any language, speedy grant of copies of documents;
generally overseeing  the  functioning  of  the  State  Commissions  or  the
District Fora to ensure that the objects and purposes of the  Act  are  best
served without in any way interfering with their quasi-judicial freedom.

(2) The State Commission shall have  administrative  control  over  all  the
District Fora within its jurisdiction in all matters  referred  to  in  sub-
section (1)”.                         (emphasis supplied)

Clause (iii) of sub-section (1) of Section 24B  confers  upon  the  National
Commission  the  power  of  administrative  control  over  all   the   State
Commissions to generally oversee the functioning of  the  State  Commissions
or the district fora to ensure that the objects and purposes of the Act  are
best served.  However, this is to be achieved without interfering  with  the
quasi-judicial freedom of the  State  Commissions  and  the  district  fora.
Under sub-section (2) the State Commission is conferred with  administrative
control over all the district fora within its jurisdiction  in  all  matters
referred to in sub-section (1), which will necessarily cover  clause  (iii).
The power of administrative  control  which  has  been  conferred  upon  the
National Commission in relation to the State Commissions and upon the  State
Commissions in relation to the  district  fora  is  an  entrustment  with  a
purpose; the object being to oversee the functioning of the forum, which  is
subject to its administrative  control  so  as  to  ensure  that  it  is  an
effective instrument  of  rendering  justice  to  consumers.  The  power  of
administrative control is couched in wide terms.  The  power  would  include
overseeing the functioning of the State Commissions and  the  district  fora
in all administrative  matters.  This  would  include  the  posting  of  and
control over members, appointment of and control  over  manpower,  provision
of adequate  infrastructure  and  the  streamlining  of  all  administrative
matters (except the exercise of the judicial power in  deciding  complaints,
appeals and revisions).  The difficulties which  have  been  encountered  in
the proper functioning of the district fora and the  State  Commissions  can
be obviated in a large measure  once  the  true  ambit  of  Section  24B  is
construed, by vesting  full  powers  of  an  administrative  nature  in  the
National Commission (in relation to the State Commissions) and in the  State
Commissions (in relation to district fora).   In  the  National  Commission,
the exercise of administrative authority over the  State  Commissions  shall
be vested in  the  President.   Similarly,  in  the  State  Commissions  the
exercise of administrative control over the district fora  shall  be  vested
in the President.

(2)   Rule making powers :

Rule making powers under the Consumer Protection Act, 1986 are  embodied  in
Section 30 which provides as follows :

“30. Power to make rules.-
(1) The Central

  Government  may,  by  notification,  make  rules  for  carrying  out   the
provisions contained in clause (a) of sub-section (1) of section  2,  clause
(b) of sub-section (2) of section 4, sub-section  (2)  of  section  5,  sub-
section (2) of section 12, clause (vi) of sub-section  (4)  of  section  13,
clause (hb) of sub-section (1) of section 14,  section  19,  clause  (b)  of
sub-section (1) and sub-section (2) of section 20, section  22  and  section
23 of this Act.

(2) The State Government may, by notification, make rules for  carrying  out
the provisions contained in clause (b) of sub-section  (2)  and  sub-section
(4) of section 7, clause (b) of  sub-section  (2)  and  sub-section  (4)  of
Section 8A, clause (b) of sub-section (1) and sub-section(3) of section  10,
clause (c) of sub-section (1) of section 13, clause (hb) of sub-section  (1)
and sub-section (3) of section 14, section 15 and clause (b) of  sub-section
(1) and  sub-section (2) of section 16 of this Act.”



The composition of the district fora is provided in  Section  10  while  the
composition of the State Commissions is  provided  in  Section  16.  Section
10(3) provides as follows :

“10.
        …

(3) The salary or honorarium and other allowances payable to, and the  other
terms and conditions of service of the members of the District  Forum  shall
be such as may be prescribed by the State Government:

[Provided that the appointment of a member  on  whole-time  basis  shall  be
made by the State Government on the recommendation of the President  of  the
State  Commission  taking  into  consideration  such  factors  as   may   be
prescribed including the work load of the District Forum.]

    The pension received by the presidents of the  District  Consumer  Forum
in respect of their previous services  as  District  Judges  is  subject  to
deduction  from  their  salary  as  president  of  the  Forum  fixed   under
provisions of the Act.”

In relation to the State Commissions sub-section (2) of Section 16  provides
as follows:

“16.

1      …


(2) The salary or honorarium and other allowances payable to, and the  other
terms and


conditions of service of, the members of the State Commission shall be  such
as may be prescribed by the State Government.

[Provided that the appointment of a member  on  whole-time  basis  shall  be
made by the State Government on the recommendation of the President  of  the
State  Commission  taking  into  consideration  such  factors  as   may   be
prescribed including the work load of the State Commission.]”



Hence, the state governments are required under sub-section (3)  of  Section
10 and under sub-section (2) of Section  16  to  prescribe  the  salary  or,
honorarium, allowances and the other terms and conditions of service of  the
members of the district fora and of the State Commission.

10    Section 10 provides for composition of the district forum. Clause  (b)
of sub-section (1) of Section 10 stipulates the appointment of  two  members
(apart from the President, who is to be or  should  have  been  or  must  be
qualified to be a district judge).  Section 10(1)(b) is as follows:

“Composition of the District Forum :

Each District Forum shall consist of …

(b). two other members, one of whom shall be a woman,  who  shall  have  the
following qualifications, namely:-

(i) be not less than thirty-five years of age,

(ii) possess a bachelor’s degree from a recognized university,

(iii) be persons of ability,  integrity  and  standing,  and  have  adequate
knowledge and experience of at least ten  years  in  dealing  with  problems
relating to economics, law, commerce, accountancy, industry, public  affairs
or administration.”

Section 16(1)(b) provides for  appointment  of  the  members  of  the  State
Commission (apart from the president who is to be  or  should  have  been  a
judge of the High Court).   Section  16(1)(b)  in  so  far  as  is  material
provides as follows :

“16. Composition of the State Commission :

(1) Each State Commission shall consist of –

       ...

16(1)(b) Each State Commission shall consist of not less than two,  and  not
more than such number of members, as may be  prescribed,  and  one  of  whom
shall be a woman, who shall have the following qualifications, namely :-

(i) be not less than thirty-five years of age;

(ii)possess a bachelor’s degree from a recognised university; and

(iii) be persons of ability,  integrity  and  standing,  and  have  adequate
knowledge and experience of at least ten  years  in  dealing  with  problems
relating to economics, law, commerce, accountancy, industry, public  affairs
or administration.”



11    The Central government is vested with rule making  power  in  relation
to Section 20(1)(b) – relating to appointments of members  of  the  National
Commission under Section 30. The rule making power  with  reference  to  the
provisions of Section 10(1)(b) and Section 16(1)(b) is vested in  the  State
government under Section 30.  The difficulty arises because the  vesting  of
the rule making power in the state governments in this manner may result  in
a lack of uniformity of rules across the country,  both  in  regard  to  the
terms and conditions of service as well as in regard to  the  modalities  to
be followed in ensuring  that  persons  appointed  as  members  fulfill  the
qualifications  which  are  prescribed.  Both  in  relation  to  the   State
Commissions and the district fora, a member must be a person of ability  and
standing with adequate knowledge and experience of at  least  ten  years  in
dealing with problems relating to  economics,  law,  commerce,  accountancy,
industry,  public  affairs  or  administration.   These  are  broad  general
categories.  There can be no gainsaying the importance of  adopting  unified
standards and objective processes of selection from a national  perspective.
This would ensure an  objective  formulation  of  norms  and  their  uniform
application in different states  in  the  country.   In  the  absence  of  a
uniform pattern, the result is a wide variation in  standards  and  a  great
deal of subjectivity, and bureaucratic  and  political  interference,  which
has been noticed in the reports submitted by the Committee  to  this  Court.
The Committee which has looked at the entire matter in perspective  consists
of a former judge of this Court, a former judge of  the  Delhi  High  Court,
and the Secretary to the  Union  Government  in  the  Ministry  of  Consumer
Affairs, Food and Public Distribution.  The findings  of  the  Committee  in
the interim report are entitled to deference.

12    In these circumstances, we hold that Section 24B vests  administrative
control over  the  State  Commissions  in  the  President  of  the  National
Commission and over the  district  fora  in  the  Presidents  of  the  State
Commissions.  The extent of the  administrative  control  shall  be  in  all
matters relating to the administrative functioning of  the  forum  concerned
including but not limited  to  assignment  of  judicial  and  administrative
work; posting, transfer and control  over  members;  selection,  appointment
and disciplinary matters relating to the staff  of  the  district  fora  and
State  Commissions  and   in   relation   provisioning   and   meeting   the
infrastructural  requirements  of  those  bodies.    The   requirements   of
infrastructure  shall  be  met  in  coordination  with  the  Departments  of
Consumer Affairs of the states concerned and, in relation  to  the  National
Commission in coordination with the  Union  Ministry  of  Consumer  Affairs,
Food and Public Distribution.

13    We also  direct  the  Union  Government  to  frame  model  rules  with
reference to the provisions  of  Section  10(1)(b)  and  Section  10(2)  and
Section 16(1)(b) and Section 16(2),  within  four  months  from  today.  The
model rules so framed shall be placed before this Court  for  its  approval.
After the model rules are approved by  this  Court,  the  state  governments
shall while exercising their rule making authority  with  reference  to  the
provisions of Section 10(1)(b) and Section 16(1)(b) and  with  reference  to
the provisions of Sections 10(3) and 16(2) frame rules  in  conformity  with
the model rules.  Existing rules, if  any,  shall  have  to  be  brought  in
conformity with the model rules.

14    Under Section 30(A)(1) the National Commission is empowered, with  the
previous approval of  the  Central  Government,  to  frame  regulations  not
inconsistent with the Act to provide for all matters for which provision  is
necessary or expedient for the purpose of giving effect  to  the  provisions
of  the  Act.   It  is  necessary  for  the  National  Commission  to  frame
regulations expeditiously to  give  effect  to  its  administrative  control
under Section 24B.  The Regulations shall inter alia extend to ensuring  the
effective exercise of administrative  control  by  the  National  Commission
over the State Commissions and by the latter over the district fora.

15    Under Section 24B the adjudicatory fora under the Consumer  Protection
Act, 1986 have been constituted to resolve complaints  of  consumers  about:
(i) unfair or restrictive trade practices by traders and service  providers;
(ii) defects in goods  purchased  or  agreed  to  be  purchased;  and  (iii)
deficiencies in the provision of services availed of or hired.

Against the decision of the district forum  upon  an  original  complaint  a
remedy of an  appeal  is  provided  to  the  State  Commission.   The  State
Commission also has jurisdiction where the amount claimed is  in  excess  of
Rupees twenty lakhs (complaints below that amount lie  before  the  district
fora) and  upto  Rupees  one  crore.   Appeals  from  orders  of  the  State
Commission lie to  the  National  Commission.    Apart  from  its  appellate
jurisdiction the National Commission has the power to  entertain  complaints
where the value of goods or services and compensation sought exceeds  Rupees
one crore.  The Committee has noted that in the  Consumer  Protection  Bill,
2015 the pecuniary jurisdiction of the district fora is to  be  enhanced  to
Rupees one crore.  The proposed expansion of pecuniary limits  requires  the
strengthening of the quality of adjudication in the district fora.   Members
of the forum  must  be  aware  of  the  responsibility  vested  in  them  as
adjudicating officers.  There is a need to ensure checks and balances.   The
work which is performed by the consumer fora constituted in the  three  tier
hierarchy provided under law is of a judicial nature.   The  district  forum
is vested with powers of a Civil Court under the Code  of  Civil  Procedure,
1908 while trying a suit in respect of various matters set  out  in  Section
13(4).  These provisions apply to the State Commission under Section 18  and
to the National Commission under Section 22.   Both  having  regard  to  the
significant  adjudicatory  powers  that  are   conferred   upon   the   fora
constituted  under  the  Act  and  particularly  in  the  context   of   the
observations contained in the interim report of the Committee, we have  come
to the conclusion that the above directions are  necessary  to  inculcate  a
sense of discipline and accountability  amongst  the  members  of  the  fora
constituted under the Act.

16    The Committee has sought the directions of this Court specifically  in
the following terms :

“a) The state of Tamil  Nadu  be  directed  to  appoint  the  President  and
Members of the State Commission at the earliest;
b) The State of Jammu & Kashmir be directed to  appoint  the  President  and
Member of the State Commission at the earliest; and
c) The State of Uttar Pradesh be directed to take  appropriate  disciplinary
action against Mr. Jamal Akhtar, non-judicial member of District  Forum  for
his unauthorized absence for over a year, forthwith.”



We find justification  in  this  request  of  the  Committee.   The  reliefs
mentioned in (a) and (b) above are allowed.  A copy of this order  shall  be
served on the Chief Secretaries respectively of the  States  of  Tamil  Nadu
and Jammu & Kashmir for compliance within a period of two  months  from  the
receipt of a copy.  As regards  prayer  (c),  the  President  of  the  State
Commission in Uttar Pradesh shall cause a notice  to  be  served  upon  Shri
Jamal Akhtar posted at the district forum, Meerut, who  has  been  absenting
himself without permission allegedly since 11 May 2015.  The  Committee  has
noted that the state government has failed to take action  against  him  and
even the plea of the President of the State Commission  has  gone  unheeded.
We order and direct that the President of the State  Commission  shall  upon
the issuance of a notice to show  cause  to  Shri  Jamal  Akhtar  and  after
furnishing him an opportunity of submitting his explanation submit a  report
to the state government, preferably within one month from the receipt  of  a
copy of this order. The state  government  shall  thereupon  pass  necessary
orders in accordance with law no  later  than  within  a  fortnight  of  the
receipt of the report of the President of the State Commission.

17    The Committee has annexed to its report at Annexures B to M copies  of
the letters issued by it to the Chief  Secretaries  to  the  governments  of
Orissa, NCT of  Delhi,  Haryana,  Punjab,  Union  Territory  of  Chandigarh,
Bihar, Jharkhand, Maharashtra, Tamil Nadu, Andhra   Pradesh  and    Telegana
on 14 October  2016 for rectification of deficiencies in infrastructure  and
resolution of various aspects.    By  the  order  of  this  Court  dated  14
January 2016 the Committee was permitted to forward its  recommendations  to
each state government concerned  for  appropriate  steps  in  a  time  bound
manner.  A copy of the recommendations was directed to be submitted to  this
Court to enable it to issue directions should  the  recommendations  not  be
implemented by the state governments. Since the  recommendations  have  been
made after a detailed inspection and in  the  interests  of  facilitating  a
proper implementation of the provisions of the Act, we  hereby  direct  each
of the state governments concerned to implement the recommendations  of  the
Committee within a period of three months. The Secretary  to  the  Committee
is requested to forward a copy  of  this  order  to  the  Chief  Secretaries
concerned to secure compliance as directed.

18    Hence in  terms  of  the  above  discussion  we  issue  the  following
directions :

(i)          The  Union  Government  shall  for  the  purpose  of   ensuring
uniformity in the exercise of the rule making power under Section 10(3)  and
Section 16(2) of the Consumer Protection Act, 1986  frame  model  rules  for
adoption by the state governments. The model rules shall  be  framed  within
four months and shall be submitted to this Court for its approval;

(ii)  The Union Government shall also frame within four months  model  rules
prescribing objective norms  for  implementing  the  provisions  of  Section
10(1)(b),  Section  16(1)(b)  and  Section  20(1)(b)  in   regard   to   the
appointment of members respectively of the District fora, State  Commissions
and National Commission;

(iii) The Union Government shall while framing  the  model  rules  have  due
regard to the formulation of objective  norms  for  the  assessment  of  the
ability, knowledge and experience required to be possessed  by  the  members
of the respective fora in the domain areas  referred  to  in  the  statutory
provisions mentioned above. The model rules shall provide  for  the  payment
of salary, allowances and for the conditions of service of  the  members  of
the consumer fora commensurate with the nature of  adjudicatory  duties  and
the need to attract suitable talent to the adjudicating bodies. These  rules
shall be finalized upon due consultation with the President of the  National
Consumer Disputes Redressal Commission, within the period stipulated above;

Upon the approval of the model rules by this Court,  the  state  governments
shall proceed to adopt the model rules by framing appropriate rules  in  the
exercise of the  rule  making  powers  under  Section  30  of  the  Consumer
Protection Act, 1986;

The  National  Consumer  Disputes  Redressal  Commission  is  requested   to
formulate regulations under Section 30A with the previous  approval  of  the
Central Government within a period of three months from today  in  order  to
effectuate the power  of  administrative  control  vested  in  the  National
Commission over the State Commissions under  Section  24(B)(1)(iii)  and  in
respect of the administrative control of  the  State  Commissions  over  the
District fora in terms of Section 24(B)(2) as explained in this Judgment  to
effectively implement the objects and purposes of  the  Consumer  Protection
Act, 1986.



19    The proceedings shall now be listed  before  this  Court  on  7  March
2017, for further directions and for reporting compliance.




.......................................CJI
                                                      [T S  THAKUR]


       ..........................................J
                                                      [Dr D Y  CHANDRACHUD]



...........................................J
                                                    [L NAGESWARA RAO]


New Delhi
November 21, 2016.

the Vidhayak Nidhi Scheme does not per se violate Article 243ZD or the U P Planning and Developmental Act, 1999.= LOK PRAHARI THR.ITS GNRL.SECY,S.N.SHUKLA Vs. STATE OF U.P.AND ORS. - 2016 Nov. http://judis.nic.in/supremecourt/imgst.aspx?filename=44319

                                                                  REPORTABLE


                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                    CIVIL APPEAL No    11004     OF 2016
                 [Arising out of SLP (C) No. 33119 of 2013]



LOK PRAHARI THR.
ITS GNRL. SECY, S N SHUKLA              .....APPELLANT


                                   Versus



STATE OF U P AND ORS
.....RESPONDENTS



                               J U D G M E N T



Dr D Y CHANDRACHUD, J

           Leave granted.

2     The appellant has failed  in  a  challenge  to  the  legality  of  the
Vidhayak Nidhi Scheme in the State  of  Uttar  Pradesh  which  provides  for
annual  budgetary  grants  to  Members  of  the  Legislative  Assembly   and
Legislative   Council   for   facilitating   development   work   in   their
constituencies.

The Allahabad High  Court  by  a  judgment  and  order  dated  13  May  2013
dismissed the writ petition under Article 226 of the Constitution. This  has
given rise to the institution of these proceedings.

3           In 1993, the Prime Minister of India announced a scheme,
popularly known by the acronym MPLADS (an abbreviation for Members of
Parliament Local Area Development Scheme). The Scheme provides for annual
budgetary grants by the Union Government to enable Members of Parliament to
recommend work of a developmental nature with an emphasis on creating
durable community assets based on local necessities in their
constituencies. The constitutional validity of the Scheme was adjudicated
upon and upheld in a judgment of a Constitution Bench of this Court
rendered on 6 May 2010 in Bhim Singh v. Union of India[1].
4           In the State of Uttar Pradesh, a scheme known as the Vidhayak
Nidhi Scheme was introduced in the State Budget in 1998-1999 with an
allocation of Rupees fifty lakhs for every Member of the Legislative
Assembly and Legislative Council. In the Budget of 2000-2001, the
allocation under the Scheme was enhanced to Rupees seventy five lakhs. The
appellant moved the High Court in its writ jurisdiction in 2004 seeking to
challenge the constitutionality of the Vidhayak Nidhi Scheme and for
obtaining an order restraining the state from enhancing the budgetary
outlay from Rupees seventy five lakhs to one crore per MLA/MLC, as was
proposed. The appellant submitted that if the challenge to the validity of
the Scheme is not accepted, then in the alternative, the moneys allocated
under the Scheme should be permitted to be utilized only for meeting the
expenditure on schemes which have been sanctioned under the district plan
pursuant to the provisions of Article 243ZD and the U P District Planning
Committee Act, 1999.
5     The primary submission of the appellant before the High Court (and  in
these proceedings under Article 136 of the Constitution  as  well)  is  that
the field of development plans for districts is occupied by  virtue  of  the
provisions contained in  Article  243ZD  and  the  enactment  of  the  state
legislature noted  above.  According  to  the  appellant,  it  is  only  the
District Planning Committee which can identify or approve of  a  development
plan. Hence,  it  was  urged  that  elected  representatives  of  the  state
legislature cannot be permitted to  select  a  scheme  other  than  what  is
within the purview of an approved development plan prepared by the  District
Planning Committees under the state legislation of  1999.  The  judgment  of
the Constitution Bench  of  this  Court  in  Bhim  Singh  (Supra)  had  been
rendered during the pendency of the writ petition in  the  High  Court.  The
appellant sought to make a distinction between  crucial  aspects  of  MPLADS
which  distinguish  from  the  Vidhayak  Nidhi  Scheme  in  Uttar   Pradesh.
Moreover, it was urged that the judgment of  the  Constitution  Bench  would
not conclude the issue since Article 243ZD and the provisions of  the  state
legislation of 1999 would apply to the state scheme (and not MPLADS).

6      The  Division  Bench  of  the  High  Court  held  that  there  is  no
distinction between MPLADS and the Vidhayak Nidhi Scheme  since  under  both
the central and the state schemes, the recommended work  has  to  relate  to
one district or the other within the country. The  High  Court  adopted  the
view that the power of identifying and recommending work of a  developmental
nature conferred upon the elected  representatives  –  be  they  Members  of
Parliament under MPLADS or MLAs/MLCs under the state scheme is  supplemental
to the power vested in the District  Planning  Committee  constituted  under
the state legislation. Hence, while dismissing the writ petition,  the  High
Court held that the judgment of the Constitution Bench  in  Bhim  Singh  was
dispositive of the controversy.

7     In the concluding part of its  judgment  and  order,  the  High  Court
dwelt on the grievance which was urged by  the  appellant  on  the  lack  of
accountability in respect of moneys disbursed under the scheme  and  certain
allegations of the misuse  of  funds  which  the  appellant  had  addressed,
primarily based  on  certain  newspaper  reports.  The  High  Court  granted
liberty to the appellant to formulate its suggestions for  consideration  by
the Principal Secretaries in the Department of Planning and Development  and
the Legislative Department  of  the  State  Government.  Dealing  with  that
aspect, the High Court observed as follows :

“Since the main prayer in this writ  petition  has  already  been  discussed
above and not found acceptable, the writ petition is dismissed  but  liberty
is granted to the appellant to formulate its  suggestion  for  consideration
by the Principal Secretary, Planning and  Development,  U.P.  Government  as
well as Principal Secretary, Legislative Department,  U.P.  Government.   We
are also of the view that suggestion should  receive  serious  consideration
of all the concerned authorities for the simple  reason  that  public  money
should always be accountable and State has  a  duty  to  take  all  possible
steps to prevent misuse of public money  particularly  when  murmur  against
perceived misuse of Vidhayak Nidhi is becoming more audible. We  expect  the
authorities to act in the matter with due sincerity and promptitude so  that
there is no occasion for any  further  public  interest  litigation  in  the
matter.”  (emphasis supplied)



Aggrieved by the inaction of  the  State  Government  in  dealing  with  the
representation submitted by it, the  appellant  moved  a  contempt  petition
before the High Court. Eventually, an order  was  passed  by  the  Principal
Secretary in the Rural Development Department of the State Government on  21
May 2014 and by the Principal Secretary in the  Planning  Department  on  17
June 2014.

8     Article 243ZD is in Part IXA of  the  Constitution  which  deals  with
Municipalities.  Parts  IX  (which  deals  with  Panchayats)  and  IXA  were
introduced  by  the  seventy  third  and   seventy   fourth   constitutional
amendments.  Article  243ZD   provides  for  the  constitution  of  District
Planning Committees for every district in each state for the preparation  of
a draft developmental plan for the district as a whole. The  provision  also
enables the legislature of each state to enact legislation setting down  the
composition of the District Planning Committees, the manner in  which  seats
on the Committees shall be filled up and the functions  of  the  Committees,
relating to district  planning  among  other  things  Article  243ZD  is  as
follows :

“243ZD. Committee for district planning
(1) There shall be constituted in  every  State  at  the  district  level  a
District Planning  Committee  to  consolidate  the  plans  prepared  by  the
Panchayats and the Municipalities in the district and  to  prepare  a  draft
development plan for the district as a whole;
(2) The Legislature of a State may, by law, make provision, with respect to-


(a) the composition of the District Planning Committees;
(b) the manner in which the seats in such Committees shall be filled:
Provided that no less than four-fifths of the total  number  of  members  of
such Committee shall be elected by, and from amongst,  the  elected  members
of the Panchayat at the district level and  of  the  Municipalities  in  the
district in proportion to the ratio between  the  population  of  the  rural
areas and of the urban areas in the district;
(c)   the functions relating to district planning which may be  assigned  to
such Committees;
(d)   the manner in which the  Chairpersons  of  such  Committees  shall  be
chosen.

(3)  Every  District  Planning  Committee  shall,  in  preparing  the  draft
development plan-

(a) have regard to-

(i)   matters  of  common  interest   between   the   Panchayats   and   the
Municipalities including  spatial  planning,  sharing  of  water  and  other
physical   and   natural   resources,   the   integrated   development    of
infrastructure and environmental conservation;

(ii)  the extent and type  of  available  resources  whether  financial  and
otherwise;

(b)   consult such institutions and organizations as the  Governor  may,  by
order, specify.

(4) The Chairperson of every District Planning Committee shall  forward  the
development plan, as recommended by such Committee,  to  the  Government  of
the State.”



9     In preparing  the  draft  development  plans,  the  District  Planning
Committee is to have regard  to  the  matters  of  common  interest  between
panchayats and municipalities including spatial planning, sharing  of  water
and other physical or natural resources and the  integrated  development  of
infrastructure and  environmental  conservation.  Moreover,  each  committee
must have due regard to the available resources, financial and otherwise.

10    In exercise of the power conferred by clause  (2)  of  Article  243ZD,
the state legislature of Uttar Pradesh enacted the  U  P  District  Planning
Act, 1999 to effectuate the constitutional provisions for the setting up  of
District Committees and for the preparation of  development  plans  for  the
districts. The importance of  the  provisions  of  Article  243ZD  has  been
noticed in a judgment of a Bench of two learned  Judges  of  this  Court  in
Rajendra Shankar Shukla v. State of Chhattisgarh[2] :

“17. After the insertion of Part IXA in the Constitution,  development  plan
for  a  district  can  only  be  drawn   by   the   democratically   elected
representative body i.e. DPC, by taking into account the  factors  mentioned
in clauses (3)(a)(i) and  (ii)of  Article  243ZD.   As  per  clause  (4)  of
Article         243ZD,  the  Chairman  of  other  DPC  shall   forward   the
development plan as recommended by the Committee to the  Government  of  the
State.”



Emphasising the importance of the role of the District  Planning  Committee,
this Court  held  that  it  is  not  open  to  a  development  authority  to
unilaterally prepare a development scheme resulting in a re-constitution  of
land without taking into consideration the  opinion  and  suggestions  of  a
democratically elected body such as the District Planning Committee.

11    Basing its submissions on the provisions  of  Article  243ZD  and  the
state legislation of 1999, the appellant  contends  that  the  entire  field
stands occupied by the law made by the state  legislature  pursuant  to  the
Constitution. Hence, it has been urged that it is  not  open  to  the  State
Government by means of executive action, as manifested  in  the  formulation
of the Vidhayak  Nidhi  Scheme  to  permit  elected  members  of  the  state
legislature to select development work in  their  constituencies  which  may
not accord with the development plans formulated by  the  District  Planning
Committees. To the extent that the scheme allows a departure,  it  has  been
urged that it would be ultra-vires. Alternatively,  it  has  been  suggested
that the scheme may be confined to allowing elected  members  of  the  state
legislature to recommend only such work as  is  duly  sanctioned  under  the
development plans prepared by the  District  Planning  Committees.  In  this
context, it has been submitted that the above issue, which was sought to  be
canvassed before the High Court in the present case, was not  considered  in
the judgment of the Constitution Bench in Bhim Singh,  since  it  would  not
arise in relation to MPLADS which was in question in that case.

12    In the judgment of Bhim  Singh,  the  Constitution  Bench  upheld  the
validity of MPLADS. The conclusions in the judgment are summarised below :

MPLADS is intra-vires Article 282 as it falls  within  the  meaning  of  the
expression  “public  purpose”  by   aiming   towards   the   fulfilment   of
developmental needs;

a mere allegation of the misuse of funds would not justify invalidating  the
scheme  especially  since  the  scheme  provides  for  several   layers   of
accountability;

there is no violation of the doctrine of separation of  powers  inasmuch  as
MPLADS  is  effectively  controlled  and   implemented   by   the   district
authorities with adequate safeguards under the applicable guidelines; and

the role of Members of Parliament under MPLADS is  limited  to  the  initial
choice of developmental work  in  the  area,  whereas  the  verification  of
eligibility and feasibility of the recommended work and its sanctioning  and
execution is carried out by local authorities or administrative  bodies.  It
is the district authorities  which  identify  the  agency  through  which  a
particular kind of work should be executed and Panchayati  Raj  Institutions
and Urban Local Bodies are preferred agencies  for  implementation  of  work
under MPLAD.

In Bhim Singh, the  Constitution  Bench  while  upholding  the  validity  of
MPLADS held that the scheme supplements the efforts of the states and  local
authorities. Moreover, the scheme was held not to be an interference in  the
functional or financial domain of the local planning  authorities.  In  that
context, the Constitution Bench observed thus :

“76. Further, the Scheme only supplements  the  efforts  of  the  State  and
other local authorities and does not seek to interfere in the functional  as
well as financial domain of the local planning authorities of the State.  On
the other hand, it only strengthens the welfare measures taken by them.  The
Scheme in its present form, does not  override  any  powers  vested  in  the
State Government or the local authority. The  implementing  authorities  can
sanction a scheme subject to compliance with the local laws.”



13    The impact of the provisions of the Seventy third and  Seventy  fourth
amendments to the Constitution by which Parts IX  and  IXA  were  introduced
also came up for deliberation in the course of the judgment.  The  grievance
of the appellants was that MPLADS introduced  a  decision  making  authority
which is extraneous to Parts IX and IXA. The submission  was  noted  in  the
following terms :

“91. It is also the grievance of the appellants that  with  the  passing  of
the  Seventy  third  and  Seventy  fourth  Amendments  to  the  Constitution
introducing Part IX in relation to the panchayat and Part  IXA  in  relation
to the municipalities, the entire area of  local  self-government  has  been
entrusted to the panchayats under Article 243-G read with  Schedule  11  and
the municipalities  under  Articles  243-W,  243-ZD  and  243-ZE  read  with
Schedule 12 of the Constitution. According  to  them  the  MPLAD  Scheme  is
inconsistent with Parts IX and IX-A insofar as  the  entire  decision-making
process in regard  to  community  infrastructure  of  works  of  development
nature for creation of durable community assets  including  drinking  water,
primary education, public health, sanitation and roads, etc is given to  the
Members of Parliament even though the decision-making process in  regard  to
these very same matters is conferred to the panchayats  and  municipalities.
The MPLAD Scheme, according to them, is in direct  conflict  with  Parts  IX
and IX-A of the Constitution. It was argued that  the  Scheme  introduces  a
foreign element which takes over part of the  functions  of  the  panchayats
and municipalities.”



14    However, in response to the submission, the  Constitution  Bench  held
that the function of a Member of Parliament under the applicable  guidelines
is merely to recommend a piece of work. The district authority is  entrusted
with the absolute authority to decide  upon  the  feasibility  of  the  work
recommended,  assess  to  the  funds  required  for  execution,  engage   an
implementing agency, supervise the work and  ensure  financial  transparency
by providing audit and  utilization  certificates.  The  Constitution  Bench
observed  that  a  major  role  is  assigned  under  MPLADS  to  panchayats,
municipalities and corporations. Rejecting the argument of invalidity,  this
Court observed as follows :

“93…The extracts of the Guidelines we have  produced  above  make  it  clear
that even though the district authority is given the power to  identify  the
agency through which a particular work  recommended  by  the  MP  should  be
executed, the Panchayati Raj  institutions  (PRIs)  will  be  the  preferred
implementing agency in the rural areas, through the Chief Executive  of  the
respective PRI, and the implementing agencies in the urban  areas  would  be
urban local bodies, through the Commissioners/Chief  Executive  Officers  of
Municipal Corporations, municipalities”.



The submission that the scheme  violated  the  constitutional  principle  of
separation of powers was accordingly repelled.

15    In the present case, relying upon the  judgment  in  Bhim  Singh,  the
High Court held that the Vidhayak Nidhi Scheme only supplements the  efforts
of the states and local authorities. In the view  of  the  High  Court,  the
power of identifying and recommending work of a developmental  nature  given
to elected  representatives,  be  they  Members  of  Parliament  or  of  the
Legislative Assembly or Legislative Council is  supplemental  to  the  power
conferred upon District Planning Committees and  cannot  be  invalidated  on
the ground that it cannot co-exist with the Act of 1999.  The   decision  of
the High Court on this aspect is in consonance  with  the  judgment  of  the
Constitution Bench. The Vidhayak Nidhi Scheme does not (in  its  true  scope
and purpose) supplant or  substitute  the  role  of  the  District  Planning
Committees constituted under the provisions  of  the  state  legislation  of
1999. The guidelines which were formulated by  the  State  Government  while
announcing the scheme in 1998 are material and have been adverted to in  the
order passed by the Secretary, Rural Development on 21 May 2014.   Para  1.1
of  the  guidelines  states  that  the  Chief  Minister  had  declared   the
constitution of a fund of Rupees two hundred and sixty crores to provide  an
outlay of Rupees fifty lakhs per year  to  elected  representatives  of  the
state legislature to facilitate development work within their areas to  meet
local requirements and in the interest of  balanced  development.  Para  2.2
provides that the construction work would be  developmental  in  nature  for
the creation of local assets and funds shall not  be  utilized  for  meeting
revenue expenditure. Para 4.2 envisages that  audit  of  the  amount  to  be
spent from the  MLA  fund  would  be  conducted  by  the  Rural  Development
Department. The technical audit of  construction  works  carried  out  every
year would be made  by  the  technical  audits  cell.  In  order  to  ensure
transparency, every citizen would be entitled to have information in  regard
to the particulars of work being carried out through  the  service  provider
agency/Rural   Development   Department.   Under   para   5.1,   the   Chief
Developmental  Officer  is  appointed   as   Nodal   Officer   to   maintain
coordination  between  the  State  Government  and  the  Rural   Development
Department. There are provisions for the inspection of the development  work
by the Chief Development Officer and by the  officers  at  the  sub-regional
and divisional levels. The Chief Development Officer who is appointed  as  a
Nodal Officer is also  associated  with  the  District  Planning  Monitoring
Committee. Consequently, the Chief Development  Officer  is  entrusted  with
the work of ensuring that there is no duplication of work.  The  examination
of the work recommended by the elected representatives is made by the  Chief
Development Officer. The fund  is  maintained  through  the  District  Rural
Development Agency which together with the technical committee  is  required
to inspect the work carried out  under  the  scheme.  A  further  government
order  has  been  issued  on  29  November  2012  for   clarifying   certain
ambiguities in the scheme.

16    The aspect which merits careful attention  is  the  grievance  of  the
appellant that the High Court failed to notice critical differences  between
MPLADS and the Vidhayak Nidhi Scheme though these were pleaded  specifically
in the affidavits filed. These differences have a bearing on the role  which
is assigned to the elected representatives in the decision making process.

17    In Bhim  Singh,  this  Court  had  upon  a  careful  analysis  of  the
guidelines framed under MPLADS noted  that  the  function  of  a  Member  of
Parliament under clause 3.1 is merely to “recommend a work”.  On  the  other
hand, the district authorities are assigned with  the  authority  to  decide
upon the feasibility of the work  recommended,  assess  the  requirement  of
funds, engage the implementation agency, supervise the work  and  to  ensure
financial transparency in the form of audit  and  utilization  certificates.
Moreover, though the district authority is given the power to  identify  the
implementing agency which would execute the work recommended by the  elected
representatives, panchayati raj institutions are the preferred  implementing
agencies in the rural areas while in urban areas it  would  be  urban  local
bodies who would have a preferred position for implementation under  MPLADS.
It was having due regard to these facets of the scheme that  this  Court  in
Bhim Singh rejected the submission  that  the  scheme  had  taken  over  the
functions of panchayats and municipalities under Parts IX  and  IXA  of  the
Constitution.

18    In the present case, the State Government filed  a  counter  affidavit
through its Special Secretary in the  Rural  Development  Department  before
the High Court. Dealing  with  the  grievance  in  the  writ  petition,  the
Special Secretary set  out  the  role  which  is  assigned  to  the  elected
representatives in the context of the Vidhayak Nidhi Scheme, thus :

“…..The role of Members of Legislative Assembly and Members  of  Legislative
Council is to identify the  priorities  of  developmental  works  for  their
constituencies and recommend the same to Chief Development  Officer  of  the
concerned  district,  who  implement  the  work  in  accordance   with   the
guidelines and Government Orders relating to the Vidhayak Nidhi.”



The appellant filed an affidavit on 10  October  2011  specifically  in  the
context of the judgment of this Court in Bhim Singh. The affidavit  makes  a
grievance of the fact that unlike  MPLADS,  where  urban  local  bodies  for
urban areas and panchayati raj institutions in rural areas  are  to  be  the
preferred implementing agencies, in the case of the  Vidhayak  Nidhi  Scheme
not only the implementing agency but the contractor is also usually  of  the
choice of the MLA/MLC. The grievance of the appellant is as follows :

   “Again, unlike the MPLAD Scheme,  (Para  97(7)  of  the  judgment)  under
Vidhayak Nidhi Scheme the Municipal and  Panchayati  Raj  institutions  have
been denuded of their role and jurisdiction.  Under Para 2.11 of  the  MPLAD
Scheme urban local bodies in the urban area and panchayati raj  institutions
in the rural areas have to  be  the  preferred  implementing  agency.   This
caveat is missing in the case of Vidhayak Nidhi.   Moreover,  Not  only  the
implementing agency but also the contractor is usually  the  choice  of  the
MLA/MLC leading to scope for wide spread corruption in the execution of  the
works                  under                  the                   scheme.”

                                             (emphasis supplied)



 Again, this was reiterated in the following extracts in the same  affidavit
:

   “The checks and  balances  stipulated  in  the  case  of  MPLAD  are  not
available in the case of Vidhayak Nidhi.  While under MPLAD Scheme the  role
of MP is theoretically limited to recommending a work,  under  para  3.1  of
the Vidhayak Nidhi scheme, consent of the MLA/MLC is required not  only  for
selection of the work but also for its sanction which includes the  location
and cost thereof, and the selection  of  implementing  agency.   This  makes
them the de facto sanctioning authority for the work.   Thus,  the  function
of sanctioning these works is performed by them as it is  subject  to  their
veto.”              (emphasis supplied)



19    The grievance of  the  appellant  is  also  that  unlike  MPLADS,  the
Vidhayak Nidhi Scheme has  been  used  to  finance  buildings  belonging  to
private organizations, which explains why there was a clamour to give  money
to schools controlled by the MLA/MLC  or  by  the  members  of  his  or  her
family. This, it was  submitted  was  resulting  in  a  misappropriation  of
public funds since the construction of school buildings can  be  implemented
through  the  principal/manager.   Hence,   it   was   asserted   that   the
accountability mechanism which this Court found to be existing in MPLADS  is
absent under the Vidhayak Nidhi Scheme.

20    The State  Government  has  not  dealt  with  this  grievance  of  the
appellant either in the pleadings filed in the  course  of  the  proceedings
before the High Court or in the  counter  affidavit  which  has  been  filed
before this Court. The  grievance  that  unlike  MPLADS,  the  role  of  the
elected  representatives  of  the  state  legislature  goes  beyond   merely
recommending the work has remained  uncontroverted.  The  judgment  of  this
Court in Bhim Singh emphasised that MPLADS merely  supplements  the  welfare
schemes of the states and other local authorities and does not interfere  in
the functional or financial domain of the  local  planning  authorities.  In
that context, it was noted on the basis of the guidelines that the  role  of
the elected representatives is confined  merely  to  recommending  the  work
which is  to  be  carried  out.  Thereafter,  the  decision  making  process
commencing from the assessment of the feasibility of  the  work,  estimation
of the funds required and selection of the implementing agency  as  well  as
the work of supervision is entrusted to the  competent  authorities  in  the
district levels. The provisions of Parts IX and IXA of the Constitution  are
duly observed since panchayati raj  institutions  in  the  rural  areas  and
urban local bodies in the urban areas are to be the  preferred  implementing
agencies under MPLADS. The State Government ought to have applied  its  mind
to these crucial aspects which distinguish MPLADS from  the  Vidhayak  Nidhi
Scheme. When the Division Bench of the High Court delivered its judgment  on
30 May 2013, it emphasised the need for ensuring  accountability  in  regard
to public moneys and to the duty of the state to take all possible steps  to
prevent their misuse. The Division Bench  noted  that  the  “murmur  against
perceived misuse of Vidhayak Nidhi is becoming  more  audible”.  It  was  in
this view, that a direction was issued to the Principal Secretaries  in  the
Planning and Development Department and in  the  Legislative  Department  to
take  heed  of  the  suggestions  of  the  appellants  with  “sincerity  and
promptitude”. The State Government in the two orders which have been  passed
by its Principal Secretaries on 21 May 2014 and 17 June 2014 paid  only  lip
service to the grievance of the appellant. The principles  which  have  been
formulated in the judgment of the Constitution Bench in Bhim Singh have  not
even been noticed nor has any attempt been made on the  part  of  the  State
Government to ensure that the guidelines which  govern  the  Vidhayak  Nidhi
Scheme are brought in consonance with the provisions of Parts IX and IXA  of
the Constitution and the observations contained  in  the  judgment  of  this
Court in Bhim Singh. Hence, while we are of the view that there  can  be  no
objection to the state implementing a scheme of the nature that  was  upheld
by the Constitution Bench in Bhim Singh, the safeguards which  form  a  part
of the MPLAD Scheme should be duly considered so as to ensure that the  role
which is ascribed to the district planning authorities and  institutions  of
local  self-governance  is  not  denuded.  The  safeguards  which  must   be
introduced shall include the following  :

the role of the elected representatives would be to recommend the work of  a
developmental nature in their  constituencies  within  the  budget  allotted
under the Scheme;

the  feasibility  of  the  work,  estimate  of  funds,  selection   of   the
implementing  agency  and  supervision  of  work   must   be   independently
determined by a nominated authority or body of the State government;

panchayati raj institutions in rural areas and  municipal  bodies  in  urban
areas may be considered as preferred implementing agencies having regard  to
the  entrustment  of  responsibilities  under  Parts  IX  and  IXA  of   the
Constitution;

the plans prepared by the District Planning Committees under  Article  243ZD
read with the U  P  District  Planning  Committee  Act,  1999  may  be  made
available by every district Collector to elected representatives  to  enable
them to decide  whether  any  developmental  work  which  has  already  been
identified in the above plan should be executed in pursuance  of  the  funds
made available under the Vidhayak Nidhi Scheme; and

sufficient safeguards should be provided  to  ensure  against  conflicts  of
interest such as the allocation of funds to institutions  controlled  by  an
elected representative or a member of his or her family; and

The  scheme  must  include  sufficient  safeguards   to   ensure   financial
transparency, such as proper supervision of  work,  monitoring  quality  and
timely completion besides procedures to ensure proper audit and  utilization
of funds.

 21   We are in agreement with the view of the High Court that the  Vidhayak
Nidhi Scheme does not per se violate Article 243ZD or the U P  Planning  and
Developmental Act, 1999.  Elected  representatives  have  a  vital  role  in
democracy.  They have an intrinsic connection with their constituencies  and
have a legitimate role to discharge in  meeting  the  development  needs  of
their constituencies.  Article 243ZD does not exclude their  role.   On  the
contrary, they perform a supplemental role by enhancing and  supporting  the
work of the institutions of local self-governance.   However, it is  in  our
view necessary that the guidelines which have been formulated by  the  State
Government are revisited and the directions set out above are complied  with
so as to ensure that the guidelines are in conformity with  the  spirit  and
underlying purpose of Parts IX and IXA of the Constitution in terms as  held
by the Constitution  Bench  of  this  Court  in  Bhim  Singh.   The  revised
guidelines shall apply to all projects to be undertaken hereafter under  the
Vidhayak Nidhi Scheme.  This  exercise  shall  be  completed  by  the  State
Government not later than a period of two months from  the  receipt  of  the
present judgment. The appeal shall accordingly  stand  disposed  of  in  the
above terms. There shall be no order as to costs.



                                   ..................................... CJI
[T S THAKUR]



                                  .........................................J
[A M KHANWILKAR]



                                ...........................................J
                                                        [Dr D Y CHANDRACHUD]

New Delhi
November 21, 2016.
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[1]         [2] (2010) 5 SCC 538

[3]

      [4]  (2015) 10 SCC 400