Zelia M.Xavier Fernandes E.Gonsalves vs Joana Rodrigues & Ors

Zelia M. Xavier Fernandes E. Gonsalves .... Appellant

Versus

Joana Rodrigues & Ors. .... Respondents

JUDGMENT

R.M. Lodha, J.

Leave granted.

2. The question which we have to consider is whether the

appellant can be said to have any indirect share or monetary interest

in the contract of her husband with the Village Panchayat of Raia

and if the answer is in the affirmative whether she has incurred

disqualification as a Panch member from Raia Village Panchayat of

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Salcete Taluka in South Goa District, State of Goa under Section

10(f) of the Goa Panchayat Raj Act, 1994 (for short, `1994 Act').

3. The appellant was declared as a returned candidate

from Ward No. 9 of Raia Village Panchayat of Salcete Taluka, State

of Goa at the election held in May 2007 for a period 2007-2012.

4. On or about March 18, 2008, the respondent no. 2--

Village Panchayat of Raia -- invited bids for the collection of

market fee within its jurisdiction for 2008-09. Mrs. Joana Rodrigues

(respondent no. 1), Xavier Fernandes (appellant's husband) and one

Bernard Mario Fernandes submitted their bids. On March 28, 2008,

the tender forms were opened in the office of the respondent no. 2

and the bid of the appellant's husband was accepted as his bid was

the highest. Her husband, on acceptance of his bid, paid the first

installment of 1/4th part of the bidding amount collection.

5. On March 31, 2008, the respondent no. 1 made a

representation to the Deputy Director of Panchayat, Madgaon, Goa

bringing to his notice that the appellant was liable for disqualification

under Section 10(f) of the 1994 Act. It appears that the respondent

no. 1 also made an application to the State Election Commission (for

short, `Commission), State of Goa, on which the Commission

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directed the respondent no. 1 to file a formal election petition

seeking disqualification of the appellant. Accordingly, the

respondent no. 1 filed an election petition under Section 11 before

the Commission for disqualification of the appellant on the ground

that she has directly or indirectly a share or monetary interest in the

above contract given by the respondent no. 2 to her husband.

6. The Commission, on hearing the parties, vide its order

dated July 3, 2009 held that the present appellant had indirectly a

share or monetary interest in the contract executed by the Village

Panchayat of Raia with her husband and ordered that the appellant

was disqualified as a Panch Member of Village Panchayat of Raia in

Salcete Taluka in terms of clause (f) of Section 10.

7. The appellant, aggrieved by the above order of the

Commission, filed a writ petition before the High Court of Bombay at

Goa. The Single Judge of that Court on July 22, 2009 dismissed the

writ petition. It is from this order of the High Court that this appeal,

by special leave, has arisen.

8. We have heard Mr. R. Sundaravardhan, learned senior

counsel for the appellant and Mr. Arun Francis, learned counsel for

the respondent no. 1. The contention of Mr. Sundaravardhan,

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learned senior counsel for the appellant is that mere relationship of

husband and wife will not create that type of interest which is

contemplated by Section 10(f). He heavily relied upon the decision

of this Court in the case of Gulam Yasin Khan vs. Sahebrao

Yeshwantrao Walaskar and another1. Mr. Arun Francis stoutly

supported the view of the High Court.

9. Gram Sabha -- Constitution of Panchayats - is dealt

with in Chapter II of the 1994 Act. Section 7, inter alia, provides that

all the members of panchayat shall be elected. Section 9 provides

for qualification for membership while Section 10 makes a provision

for disqualification for membership. We are concerned with Section

10(f) and the said provision reads as follows:

"S. 10. Disqualification for membership.-- A person shall

be disqualified for being chosen as, and for being, a

member of the Panchayat if,--

xxx xxx xxx

(f) he has directly or indirectly any share or monetary

interest in any work done by or to the Panchayat or

any contract or employment with, under or by or on

behalf of, the Panchayat;

xxx xxx xxx"

1 AIR 1966 SC 1339

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10. Section 11 provides that if any question arises as to

whether a member of a Panchayat has become subject to any

disqualification referred to in Section 10, it shall be referred to the

State Election Commission for decision and its decision thereon shall

be final.

11. The purpose and object of providing for disqualification for

membership of the Panchayat in clause (f) of Section 10 is to ensure

that there is no conflict between the private interest of the member

and his duty as a member of the Panchayat. It is based on general

principle of conflict between duty and interest.

12. Insofar as the present matter is concerned, we have to

consider the applicability of clause (f) of Section 10 to the extent, "he

has.....indirectly any share or monetary interest in .....any contract ....

by or on behalf of the Panchayat" in the fact situation noticed above.

A similar provision came up for consideration before a 5-Judge Bench

of this Court in the case of Gulam Yasin Khan1. That was a case

where the appellant and the respondent No. 1 therein, namely,

Gulam Yasin Khan and Sahebrao Yeshwantrao Walaskar

respectively were candidates for election as members to the

Municipal Committee, Malkapur. They had filed their nomination

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papers. At the stage of scrutiny, Sahebrao Yeshwantrao Walaskar

objected to the validity of the candidature of Gulam Yasin Khan on

the ground that Gulam Yasin Khan's son Khalildad Khan was a

Moharir on Octroi Naka employed by the Committee and on account

of the employment of Gulam Yasin Khan's son by the Municipal

Committee, Gulam Yasin Khan had an interest in the Municipal

Committee and so he was disqualified from standing for election

under clause (l) of Section 15 of the Central Provinces and Berar

Municipalities Act, 1922 (for short, `CP Municipalities Act'). Gulam

Yasin Khan disputed the validity of the objection and he stated that

his son was not staying with him and had no connection whatsoever.

The Supervising Officer overruled the objection raised by Sahebrao

Yeshwantrao Walaskar. The order of Supervising Officer was

challenged by Sahebrao Yeshwantrao Walaskar in the writ petition

before the High Court. The High Court allowed his writ petition and

set aside the order of the Supervising Officer and declared Sahebrao

Yeshwantrao Walaskar elected to the Municipal Committee. It is from

this controversy that the matter reached this Court. This Court in the

backdrop of the above facts considered the question whether by

virtue of his relationship with Khalildad Khan, Gulam Yasin Khan

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could be said to have any indirect share or interest in the employment

of Khalildad Khan with the Municipal Committee. The provision under

consideration read, "no person shall be eligible for election, selection

or nomination as a member of a committee, if such person has

directly or indirectly any share or interest in any contract with, by or

on behalf of the committee, while owning such share or interest".

13. In light of the above factual and legal position, this Court

in Gulam Yasin Khan1 (Pgs. 1341-1342) held as under :

"7. .........We are assuming for the purpose of dealing with

this point that the contract to which clause (l) refers,

includes employment, though unlike other similar statutes,

the word "employment" is not specifically mentioned in the

said clause. In order to incur disqualification, what the

clause requires is "interest or share in any contract"; it may

either be a share or an interest; and if it is an interest, the

interest may be direct or indirect. But it is plain that the

interest to which the clause refers, cannot mean mere

sentimental or friendly interest; it must mean interest which

is pecuniary, or material, or of a similar nature. If the

interest is of this latter category, it would suffice to incur

disqualification even if it is indirect. But it is noticeable that

the clause also requires that the person who incurs

disqualification by such interest must "own such share or

interest". It is not easy to determine the scope of the

limitation introduced by this last sub-clause. Mr. Gauba for

respondent No. 1 urged that the clause "owning such

share or interest" is tautologous when it refers to direct

interest or share, and is meaningless when it refers to

indirect share or interest. Prima facie, there is some force

in this contention; but whatever may be the exact

denotation of this clause, it does serve the purpose of

limiting the character of the share or interest which incurs

disqualification prescribed by the clause and it would not

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be easy to ignore the existence of the last portion of the

clause altogether.

8. It is quite true that the purpose and the object of

prescribing the several disqualifications enumerated in

clauses (a) to (l) of s. 15 of the Act is to ensure the purity of

the administration of Municipal Committees, and in that

sense, it may be permissible to hold that the different

clauses enumerated in S.15 should not receive an unduly

narrow or restricted construction. But even if we were to

adopt a liberal construction of S. 15(l), we cannot escape

the conclusion that the interest or share has to be in the

contract itself. When we are enquiring as to whether the

appellant is interested directly or indirectly in the

employment of his son, we cannot overlook the fact that

the enquiry is not as to whether the appellant is interested

in the son, but the enquiry is whether the appellant is

interested in the employment of the son. The distinction

between the two enquiries may appear to be subtle, but,

nevertheless, for the purpose of construing the clause, it is

very relevant. Considered from this point of view, on the

facts proved in this case, we find it difficult to hold that by

mere relationship with his son, the appellant can be said to

be either directly or indirectly interested in his employment.

xxx xxx xxx xxx

12. It would, we think, be unreasonable to hold that mere

relationship of a person with an employee of the Municipal

Committee justifies the inference that such a person has

interest, direct or indirect, in the employment under the

Municipal Committee. In the circumstances of this case,

what is proved is the mere relationship between the

appellant and his son who is the employee of the Municipal

Committee; and on that relationship the High Court has

based its conclusion that the appellant is disqualified under

S. 15(l) of the Act. We are satisfied that this conclusion is

erroneous in law."

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14. In Gulam Yasin Khan1 while construing Section 15 (l) of

the CP Municipalities Act, this Court held that the interest or share

has to be in the contract itself; mere relationship of a person with an

employee of the Municipal Committee shall not justify the inference

that such a person has interest, direct or indirect. Ordinarily, there

would not have been any difficulty in applying Section 10(f) in the

same manner but we think Gulam Yasin Khan1 is clearly

distinguishable and cannot be applied to the present fact situation

which concerns money affairs of husband and wife governed by the

provisions contained in Articles 1098 and 1108 of Portuguese Civil

Code, 1860 (`1860 Code') and Section 5A of the Indian Income Tax

Act, 1961 (`Income Tax Act').

15. Articles 1098 and 1108 of the 1860 Code which is

applicable in the State of Goa read as under :

1098. - In the absence of any contract, it is deemed that the

marriage is done as per the custom of the country, except

when it is solemnized in contravention of the provisions of

Article 1058 clause 1 and 2; because in such a case it is

deemed that the spouses are married under the simple

communion of acquired properties.

x x x x x x x x x

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1108. - The marriage as per the custom of the country

consists in the communion between the spouses of all their

properties, present and future, not excluded by law.

16. Section 5A of the Income Tax Act is as follows :

5A. Apportionment of income between spouses

governed by Portuguese Civil Code. - (1) Where

the husband and wife are governed by the system of

community of property (known under the Portugese

Civil Code of 1860 as "COMMUNIAO DOS BENS") in

force in the State of Goa and in the Union territories of

Dadra and Nagar Haveli and Daman and Diu, the

income of the husband and of the wife under any

head of income shall not be assessed as that of such

community of property (whether treated as an

association of persons or a body of individuals), but

such income of the husband and of the wife under

each head of income (other than under the head

"Salaries") shall be apportioned equally between the

husband and the wife and the income so apportioned

shall be included separately in the total income of the

husband and of the wife respectively, and the

remaining provisions of this Act shall apply

accordingly.

(2) Where the husband or, as the case may be, the

wife governed by the aforesaid system of community

of property has any income under the head "Salaries",

such income shall be included in the total income of

the spouse who has actually earned it.

17. There is no dispute that the respondent no. 4 and the

appellant are husband and wife and are governed by the provisions

of the 1860 Code. By virtue of Article 1098 and Article 1108 thereof,

in the absence of any contract, the marriage between the appellant

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and the respondent no. 4 is governed by the system `Communiao

Dos Bens' i.e. community of property. Accordingly, on marriage, the

property of the spouses gets merged. Each spouse, by operation of

law, unless contracted otherwise, becomes 50% shareholder in all

their properties, present and future and each spouse is entitled to a

one-half income of the other spouse.

18. Section 5A(1) of the Income Tax Act provides that where

the husband and wife are governed by the system of "Communiao

Dos Bens" in force in the State of Goa the income of the husband and

the wife under any head of income shall not be assessed as that of

such community of property but such income of the husband and the

wife from all sources, except from salary, shall be apportioned equally

between the husband and the wife and the income so apportioned

shall be included separately in the total income of the husband and of

the wife respectively and the remaining provisions of the Income Tax

Act shall apply accordingly. Sub-section (2) of Section 5A provides

that where the husband or the wife governed by system of community

of property has any income under the head `salaries', such income

shall be included in the total income of the spouse who has actually

earned it.

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19. In P. Ramanatha Aiyar's The Law Lexicon, 2nd Edition

(reprint 1999) the term `interest' is explained thus:

"Interest. Legal concern, right, pecuniary stake the legal

concern of a person in the thing or property or in the right

to some of the benefits or use from which the property is

inseparable ; such a right in or to a thing capable of being

possessed or enjoyed as property which can be enforced

by judicial proceedings. The word is capable of different

meanings, according to the context in which it is used or

the subject-matter to which it is applied. It may have even

the same meaning as the phrase "right title and interest"

but it has been said also to mean any right in the nature of

property, but less than title. The word is sometimes

employed synonymous with estate, or property.

Interest means concern, advantage, good ; share, portion,

part, or participation.

A person interested is one having an interest ; i.e. a right of

property or in the nature of property, less than title.

The word `interest' is the broadest term applicable to

claims in or upon real estate in its ordinary signification

among men of all classes. It is broad enough to include

any right, title, or estate in or lien upon real estate. One

who holds a mortgage upon a piece of land for half its

value is commonly and truly said to be interested in it.

xxx xxx xxx".

20. The word `interest' has a basic meaning of participation in

advantage, profit and responsibility. `Interest' is a right, title or share

in a thing.

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21. Section 10(f) speaks of monetary interest. The general

rule that the wife's interest is not necessarily the husband's interest

has no application where the husband and the wife are governed by

the system `community of property' because under that system, on

marriage, each spouse is entitled to a one-half income of the other

spouse unless contracted otherwise. During the subsistence of

marriage, the husband and the wife each have a share in the corpus

as well as the income of communion property.

22. There is no doubt that Section 10(f) contemplates that

share or monetary interest (direct or indirect) has to be in the

contract itself. The expression `in any contract' means in regard to

any contract. Could it be said that the appellant had no indirect share

or monetary interest in regard to her husband's contract with the

Village Panchayat Raia when, by operation of law, she is entitled to

the profits of that contract? The answer has to be in the negative.

Money acquired by the appellant's husband from the contract with

the Village Panchayat Raia is `community property' and, therefore,

the conclusion is inescapable that the appellant has indirect share,

or, in any case, monetary interest in the contract awarded to her

husband by the Village Panchayat Raia as the profits from the

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contract shall be apportioned equally between her and her husband.

There is no evidence of exclusion of the appellant from her

husband's assets and income. The provisions contained in Articles

1098 and 1108 of the 1860 Code and Section 5A of the Income Tax

Act give the appellant a participation in the profits of the contract and

advantages like the apportionment of income from that contract. The

appellant, by operation of law, becomes entitled to share in the

profits of the contract awarded to her husband by the Village

Panchayat. From whatever way it is seen, the appellant's

participation in the profits of the contract does constitute an "indirect

monetary interest" in the contract for collection of market fee awarded

to her husband within Section 10(f) prohibiting the member of the

Village Panchayat from having such an interest.

23. While considering Section 15(l) of the CP Municipalities

Act which provided for the disqualifications to the elections of the

Municipal Committees, this Court in Gulam Yasin Khan1 held that the

purpose and the object of prescribing several disqualifications in that

provision is to ensure the purity of the administration of the Municipal

Committees and in that sense the different clauses of

disqualifications should not receive unduly narrow or restricted

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construction. We also hold the view that the prohibition in Section

10(f) should not receive unduly narrow or restricted construction. In

what we have considered above, the answer to the first question

must be in the affirmative and it must consequently be held that the

appellant has incurred disqualification under Section 10(f) of the 1994

Act. We hold accordingly.

24. Civil Appeal is dismissed with no order as to costs.

............................. J.

(R.M. Lodha)

.............................

J.

(H. L. Gokhale)

NEW DELHI

FEBRUARY 3, 2012.

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