ORDER
Kumar Rajaratnam, J.
1. Writ petition is taken up with the consent of parties.
2. Issue rule.
3. The petitioner was elected to the Gulbarga Zilla Panchayat from Gobbur constituency in the elections held in March 1995. The result of the election was published on 30-3-1995 in the Official Gazette. The petitioner's election was not challenged in any Court of law.
4. The petitioner received a show-cause notice dated 13/17-7-1998 issued by the 2nd respondent. By the said show-cause notice, the petitioner was called upon to show cause as to why he should not be disqualified under the Karnataka Panchayat Raj Act (hereinafter referred to as the 'Act') for holding an office of profit. The petitioner gave his reply to the 2nd respondent.
5. The petitioner submitted in his reply that he was working as Junior Clerk in Mahboob Shahi Gulbarga Mills, which was a private textile mill. Thereafter, the mill became the subsidiary unit of the National Textile Corporation (NTC), but the petitioner was not governed by the NTC Rules. The petitioner's service conditions were continued to be governed by the rules of the private mill. The petitioner produced all the necessary records to substantiate his submission. The petitioner also submitted in his reply that the 2nd respondent did not have the authority to disqualify the petitioner and the proper forum was only a Court of law in an election petition.
6. Notwithstanding all this, the 2nd respondent by his communication dated 6-4-1999 communicated an order dated 17-3-1999 informing the petitioner that he was disqualified to hold the office as an elected member of the Gulbarga Zilla Panchayat since he was holding an office of profit. Aggrieved by this the petitioner has preferred this writ petition.
7. In this writ petition two questions arises or consideration:
(i) Whether the petitioner is disqualified to be a member of theZilla Panchayat since at the relevant time he held an officeof profit under a local or other authority subject to the control of the Central Government, State (sic) or Government of any other State?
(ii) If so, whether the election of a member of the Panchayat Raj can be set aside by the State Election Commissioner suo motu other than by an election petition?
8. To understand the first proposition of law and to determine whether the petitioner is disqualified because he holds an office of profit it would be necessary to deal with the petitioner's case and on the basis of the facts it would be appropriate to hold whether the petitioner holds an office of profit or not.
9. Let me deal with the facts very briefly. On 30-3-1995 the petitioner was elected to the Gulbarga Zilla Panchayat from Gobbur constituency reserved for Scheduled Caste. On 13-6-1996 the 3rd respondent-the Chief Executive Officer suo motu sent a report to the State Election Commissioner stating that the petitioner was gainfully employed as a clerk in Mahboob Shahi Gulbarga Mills, Gulbarga, which is a subsidiary of NTC and that NTC was a Central Government's public undertaking.
10. On the basis of the report of the Chief Executive Officer a showcause notice was issued by the 2nd respondent stating why the petitioner should not be disqualified for holding an office of profit at Annexure-A, dated 13/17-7-1998. The petitioner sent a detailed reply on 29-7-1998 at Annexure-B. On 17-3-1999 the 2nd respondent disqualifies the petitioner as the Member of the Zilla Panchayat on the ground that he was holding an office of profit. What is challenged in this writ petition is the order at Annexure-D disqualifying the petitioner.
11. The 2nd respondent proceeded to hold that the petitioner is holding an office of profit on the basis that the mill in which he was working was a subsidiary of NTC and that NTC was a Central Government public undertaking and therefore the petitioner was disqualified under Section 167(1)(g) of the Karnataka Panchayat Raj Act (hereinafter referred to as the Act). Section 167(1)(g) of the Act reads as follows:
'if he holds any office of profit under any local or other authority subject to the control of the Central Government, the State Government or the Government of any other State, other than such office as are declared by rules made under this Act not to disqualify the holder;
Explanation.--For the purpose of this clause a person shall not be deemed to hold an office of profit under the Zilla Panchayat, Taluk Panchayat or Grama Panchayat by reason only that he is an Adhyaksha or Upadhyaksha of Zilla Panchayat, Taluk Panchayat or Grama Panchayat'.
12. The learned Counsel for the respondent 3 Mr. Ramachandrappa relied on a Full Bench judgment of this Court in M. Kumar v Bharat Earth Movers Limited, Bangalore and Others.
13. The Full Bench of the Karnataka High Court was dealing with amongst other things whether a person is disqualified from contesting elections to the Municipal Corporation under Section 26(1)(c) of the Karnataka Municipal Corporations Act (hereinafter referred to as the 'KMC Act'), if he holds an office of profit.
Section 26(1)(c) of the KMC Act reads as follows:
'26. General disqualification for becoming a Councillor.--(1) A person shall be disqualified for being chosen as and for being a Councillor-
(c) if he holds any office of profit under the Government of India or the Government of any State specified in the First Schedule to the Constitution of India, or under any local or other authority subject to the control of any of the said Government other than such offices as are declared by rules made under this Act not to disqualify the holder'.
14. In the matter before the Full Bench the petitioners were working as workmen or either as Senior Office Assistants or as an Accountant in Accountant category as such in the Indian Telephone Industries and the Bharat Earth Movers Limited. The Full Bench on the facts and circumstances of that case held that the petitioners who were holding office in Bharat Earth Movers Limited and Indian Telephone Industries Limited are disqualified from contesting elections to the Municipal Corporation under Section 26(1)(c) of the KMC Act. The Full Bench of this Court also held that Bharat Earth Movers Limited and Indian Telephone Industries Limited, Bangalore are Authorities within the meaning of Article 12 of the Constitution of India. The learned Counsel for the respondent 3 relied on the Full Bench judgment of this Court in M. Kumar's case, supra, and submitted that the petitioner is disqualified to be a member of the Zilla Panchayat since he held an office of profit.
15. The learned Counsel for the petitioner strenuously submitted that the Mahboob Shahi Gulbarga Mills, Gulbarga (hereinafter referred to as the 'Mills') is not a subsidiary of NTC. The Memorandum and the Articles of Association indicate that the mill is a private company formed by the NTC. It was submitted that although NTC is a public sector company the mill in which the petitioner works is a private company with a separate legal entity incorporated under the Companies Act. The shares of the company are not held by the Central Government. The appointment, removal and remuneration are not under the control of the NTC. The petitioner's service conditions are also not governed by NTC.
15-A. The learned Counsel for the petitioner Miss. Geetha Menon took me through the Memorandum and Articles of Association of the Mahboob Shahi Gulbarga Mills, Gulbarga and submitted that the mill in which the petitioner is working is not a Central Government public undertaking. The mill is not a subsidiary of NTC and that it is a private company. The shares of the mill are not owned by the Central Government. The appointment, removal and remuneration are not under the control of the Corporation. The petitioner's service conditions are also not governed by the NTC.
16. In this case, admittedly, at the relevant time the petitioner was working as a Junior Clerk in the Mahboob Shahi Gulbarga Mills, Gulbarga. The mill is a separate legal entity and cannot be considered as an Authority under the control of the Central Government. The petitioner was only holding a non-executive post.
17. The learned Counsel for the petitioner Miss. Geetha Menon relied on the judgment of the Supreme Court in Aklu Ram Mahto v Rajendra Makto . The Supreme Court dealt with Article 191 of the Constitution. Article 191 deals with disqualification for being chosen as a Member of the Legislative Assembly or Legislative Council of the State. Article 191 reads as follows:
'191. Disqualification for membership.--(1) A person shall be disqualified for being chosen as, and for being a Member of the Legislative Assembly or Legislative Council of a State-
(a) if he holds any office of profit under the Government of India or the Government of any State specified in the First Schedule, other than an office declared by the Legislature of the State by law not to disqualify its holder;
(b) if he is of unsound mind and stands so declared by a competent Court;
(c) if he is an undischarged insolvent;
(d) if he is not a citizen of India, or has voluntarily acquired the citizenship of a foreign State, or is under any acknowledgment of allegiance or adherence to a foreign State;
(e) if he is so disqualified by or under any law made by Parliament.
Explanation.--For the purposes of this clause, a person shall not be deemed to hold an office of profit under the Government of India or the Government of any State specified in the First Schedule by reason only that he is a Minister either for the Union or for such State.
(2) A person shall be disqualified for being a Member of the Legislative Assembly or Legislative Council of a State if he is so disqualified under the Tenth Schedule'.
18. The Supreme Court held after dealing with various cases that the Bokaro Steel Plant is under the management and control of Steel Authority of India. The company is incorporated under the Companies Act. Although the shares of the company are wholly owned by the Central Government, the appointment and removal of workers in the Bokaro Steel Plant is under the control of the Steel Authority of India. The remuneration is also determined by the Steel Authority of India. The functions discharged by the Steel Authority of India or by the Bokaro Steel Plant cannot be considered as essential functions of the Government. The Supreme Court further held in this context that the worker holding a post of Khalashi or Meter Reader is not subject to the control of the Central Government nor is the power of his appointment or removal exercised by the Central Government. The Supreme Court ultimately held that the workmen were not holding an office of profit under the Central Government. The Supreme Court held as follows:
'8. Can either of the two respondents be considered as holding any office of profit under the Government of India? In the case of Guru Gobinda Basil v Sankari Prasad Ghosal, the Court after examining earlier authorities enumerated various factors which enter into the determination of the question whether a person holds an office of profit under the Government. He holds an office of profit under the Government if the Government is:
(1) the appointing authority;
(2) the authority vested with power to terminate the appointment;
(3) the authority which determines the remuneration;
(4) the source from which the remuneration is paid; and
(5) the authority vested with power to control the manner in which the duties of office are discharged.
All factors need not be present. Whether stress will be laid on one factor or the other will depend on the facts of each case. But where several elements are present in a given case then the officer in question holds the office under the authority so empowered. This Court pointed out that the Constitution itself makes a distinction between 'the holder of an office of profit under the Government' and 'the holder of a post or service under the Government' (see Articles 309 and 314). The Constitution has also made a distinction between 'the holder of an office of profit under the Government' and 'the holder of an office of profit under a local or other authority subject to the control of the Government' (see Articles 58(2) and 66(4)). In Guru Gobinda Basu's case, supra, the appellant was a Chartered Accountant. He was a partner of a firm of Auditors. This firm acted as Auditors of two companies amongst others. One of the companies was wholly owned by the Union of India and the second company was wholly owned by the West Bengal Government. The Court was required to consider whether the Chartered Accountant could be said to hold an office of profit under the Government. In this context this Court said that an office of profit under the Government need not imply that the person holding the office should be in the service of the Government. There need not be any relationship of master and servant. However, in that case the Chartered Accountant was appointed as an Auditor of the two companies by the Central Government; he was removable by the Central Government; the Comptroller and Auditor General of India exercised full control over him and his remuneration was fixed by the Central Government although it was paid by the companies concerned. In this situation the Court said that he was holding an office of profit under the Government.
9. The same test was reiterated by this Court in the case of D.R. Gurushanthappa v Abdul Khuddus Anwar and Others. The tests spelt out m Guru Gobinda Basil's case, supra, were relied upon in this case. This Court further said that an indirect control by the Government of the Company in which the office of profit was held was not contemplated under Article 191. In the case of Gurushanthappa, supra, a Government undertaking was transferred to a company registered under the Companies Act. The shares of the Company were held by the Government. The candidate was working as a Superintendent in the Company. The power to appoint and dismiss an employee working as a Superintendent did not vest in the Government. The power to control and give directions as to the manner in which duties of office were to be performed by that workman also did not vest in the Government. Even the power to determine the question of remuneration payable to the workman was not vested in the Government. In these circumstances, in indirect control exercisable by the Government because of its power to appoint Directors and to give general directions to the Company could not make the post of Superintendent, Safety Engineering Department of the Company an office of profit under the Government.
10. The Court dealt with Article 191(1)(a) of the Constitution along with Section 10 of the Representation of the People Act, 1951. It said that the disqualification laid down under Article 191(1)(a) of the Constitution is not intended to apply to the holder of an office of profit of a company under the control of the Government. It is Section 10 of the Representation of the People Act, 1951, which deals with the holding of an office of profit in a company in the capital of which the Government has not less than 25% shares. Otherwise this section will be redundant. Also, Parliament when passing the Act did not consider it necessary to disqualify every person holding an office of profit under a Government Company. It limited the disqualification to persons holding the office of Managing Agent, Manager or Secretary of such a company. Therefore, the fact that the entire share capital in a company is owned by the Government does not obliterate the distinction between Article 191(1)(a) of the Constitution and Section 10 of the Representation of the People Act, 1951.
11. However, in the later case of Biharilal Dobray v Roshan Lal Dobray (SCC at p. 569), this Court said that even though the incorporation of a body corporate may suggest that the statute intended it to be a statutory corporation independent of the Government, it is not conclusive on the question whether it is really so independent. Sometimes the form may be that of a body corporate independent of the Government. But in substance it may be just the alter ego of the Government itself. The true test of determination of the said question depends upon the degree of control the Government has over it, the extent of control exercised by several other bodies or committees over it and their composition, the degree of its dependence on the Government for its financial needs and its functional aspect, namely, whether the body is discharging any important governmental function or just some function which is merely optional for the Government. In Biharilal Dobray's case, supra, a teacher who was employed by the Board of Basic Education under the U.P. Basic Education Act, 1972 was considered as holding an office of profit under the State on the ground that the U.P. Basic Education Act discharged an important responsibility of the Government to provide primary education in the State. The Act enabled the State Government to take over all basic schools which were being run by the local bodies in the State and to manage them as provided under Act; as also to administer all matters pertaining to the entire basic education in the State through the Board. The teachers and other employees were to be appointed in accordance with rules by officers who were themselves appointed by the Government. The disciplinary proceedings in respect of the employees were subject to the final decision of the State Government. In these circumstances, the post of a teacher under the U.P. Basic Education Act was an office of profit under the Government.
12. In the case of Satrucharla Chandrasekhar Raju v Vyricherla Pradeep Kumar Dev, however, the post of a teacher of a school run by the Integrated Tribal Development Agency (ITDA) which was a registered society, was held not to be an office of profit under the Government. The Government by its order had directed that all the educational institutions in ITDA shall be brought under the unified control of the Education Department. The Government accorded sanction for creation of posts and funds for meeting the expenditure. The Project Officer of ITDA who was also the District Collector alone appointed teachers and had the power to remove them. The Court said that the degree and extent of control of the Government had to be examined on the facts of each case. Although the Government had some control over ITDA, it was a registered society having its own constitution. The Project Officer and not the Government had the power to appoint and remove teachers. The whole scheme was set up for the welfare for tribals and it was entrusted to ITDA, an authority by itself, subject to the control of the Government in certain respects just like any other local authority. Therefore, taking a practical view it could not be said that the teacher was holding an office of profit under the Government.
13. We need not examine more authorities, since the principles for applying Article 191(1)(a) appear to be well-settled.
14. The appellant, however, relied upon State of Gujarat v Raman Lal Kesha v Lal Soni, which was a decision of a Constitution Bench of this Court. This decision was not concerned with Article 191(1)(a). This Court, however, was required to decide whether ex-municipal employees who were allotted to the Panchayat Service of the State Government had the status of Government servants. The Court examined the provisions of the Gujarat Panchayats Act, 1961 and held that the Panchayat Service constituted under Section 203 of the Gujarat Panchayats Act is a civil service of the State and the members of the Service are Government servants. We fail to see how this judgment can be applied to the facts of the present case.
15. The Bokaro Steel Plant is under the management and control of Steel Authority of India Limited. This is a company incorporated under the Companies Act. Undoubtedly, its shares are owned by the Central Government. The Chairman and the Board of Directors are appointed by the President of India. However, the appointment and removal of workers in the Bokaro Steel Plant is under the control of Steel Authority of India Limited. Their remuneration is also determined by Steel Authority of India Limited. The functions discharged by Steel Authority of India Limited or by the Bokaro Steel Plant cannot be considered as essential functions of the Government. Amongst the object of Steel Authority of India Limited set out in the Memorandum of Association are to carry on in India or elsewhere the trade or business of manufacturing, prospecting, raising, operating, buying, selling, importing, exporting, purchasing or otherwise dealing in iron and steel of all qualities, grades and types. These objects also include rendering consultancy service to promote and organise an integrated and efficient development of iron and steel industry and to act as an agent of the Government/public sector financial institutions in the manner set out in the Objects clause. In this context a worker holding the post of a Khalashi or a Meter Reader is not subject to the control of the Central Government nor is the power of his appointment or removal exercised by the Central Government. Control over his work is exercised not by the Government, but by Steel Authority of India Limited. The respondents cannot, therefore, be considered as holding an office of profit under the Central Government.
(emphasis supplied)
16. The High Court, therefore, was right in holding that the nomination papers of the two respondents were wrongly rejected and hence the election of the appellant was required to be set aside under Section 100 of the Representation of the People Act, 1951. In the premises the appeals are dismissed with costs'.
19. In this case it is clear that the petitioner, who is a Junior Clerk in the Mill is not under the control of the NTC. The service conditions of the petitioner are also not governed by the Corporation. The petitioner was only holding a post of a Junior Clerk and did not hold any office as such. The Karnataka Panchayat Raj Act makes a reference to a person holding any office of profit under any authority subject to the control of the Central Government. The position which the petitioner is holding was neither an office of profit nor was it under the control of the Central Government.
20. The learned Counsel for the petitioner relying on the Supreme Court judgment made a distinction between holding any office of profit as distinct from the post of a clerk. The distinction was made between an office of profit and a mere post. It may not be necessary to deal with this distinction since on the facts of this case it is clear that the petitioner did not hold any office of profit subject to the direct control of the Central Government. The first question raised by me is answered accordingly.
21. The second question was whether a person can be unseated by the State Election Commissioner suo motu other than by an election petition. Miss. Geetha Menon, the learned Counsel for the petitioner strenuously submitted that no election petition was filed challenging the election of the petitioner. She relied on Article 243-O(b) of the Constitution which states that no election to any Panchayat shall be called in question except by an election petition.
22. Section 171 of the Karnataka Panchayat Raj Act provides that Sections 15, 16, 17, 18, 19, 20, 21, 22, 23 and 24 apply mutatis mutandis in respect of election to Zilla Panchayat. Section 15 of the Act in particular provides that no election to fill a seat or seats to Taluk Panchayat shall be called in question except by an election petition presented on one or more grounds specified in sub-section (1) of Sections 19 and 20. Section 19(1)(a) having stated the law it may be necessary to refer to two judgments of the Supreme Court:--
(i) Inderjit Barua and Others v Election Commission of India and Others .
(ii) Mohinder Singh Gill and Another v Chief Election Commissioner, New Delhi and Others.
The ratio of the decisions would clearly indicate that there is a bar in setting aside an election by the Election Commissioner suo motu except by filing an election petition.
23. In these circumstances, the impugned order at Annexure-D is set aside. Rule made absolute. No order as to costs.