Holding

The Government's order appointing an Authorized Controller was valid as the authority had applied its mind to the material facts and recorded sufficient reasons, and the High Court's interference was a manifest error of law.

Summary

The State of Uttar Pradesh, through the Director of Education, issued a show‑cause notice to the Committee of Management of S.K.M. Inter College under Section 16‑D(2) and (3) of the U.P. Intermediate Education Act, 1921, alleging mismanagement, misappropriation of funds and other irregularities. The Committee's explanation was deemed unsatisfactory, leading the Director to recommend a takeover, and the Government issued an order on 19 July 1986 appointing an Authorized Controller to assume management. The Committee challenged the order in the Allahabad High Court, which quashed it on the ground that the Government had not recorded detailed reasons and had not applied its mind to the facts. On appeal, the Supreme Court held that administrative authorities need only record short reasons showing that they have considered the material facts, and that the High Court cannot act as an appellate body under Article 226. The Court found that the Government had satisfied clauses (v) and (vi) of Section 16‑D(3) and validly exercised its power under Section 16‑D(4). Consequently, the appeal was allowed, the takeover order upheld, and the writ petition dismissed.

Issues considered

Whether the High Court erred in quashing the Government's takeover order on the ground of insufficient reasons.
Whether an administrative authority must record elaborate reasons under Section 16‑D(4) of the U.P. Intermediate Education Act.
Whether a court exercising jurisdiction under Article 226 can act as an appellate authority to re‑evaluate the merits of the order.
Whether the facts established satisfied clauses (v) and (vi) of Section 16‑D(3).

Legislation cited

Constitution of Indias. Article 226
U.P. Intermediate Education Act, 1921s. 16-D(2), s. 16-D(3), s. 16-D(4), s. 16-D(8)

Subjects

Administrative lawShow cause noticeTakeover orderReasons for administrative actionArticle 226 jurisdictionMismanagement of educational institutionAuthorized Controller

Judgment

A STATE OF U.P. AND ORS.
v. ~

A
COMMITIEE OF MANAGEMENT OF
S.K.M. INTER COLLEGE AND ANR.

APRIL 6, 1995
B
[K. RAMASWAMY AND B.L. HANSARIA, JJ.]
~

U.P. lntennediate Education Act, 1921 : {._
c Section 16-D(2)(3)(4). College-Management Committee-Mis-
management-Director's Notice for removal of deficiencies-Unsatisfactory
explanation by ma.~agement-Director's recommendation to takeovei-Con-
sideration of report by Govt. and passing of takeover ordei-Order held valid.

Constitution of India, 1950:
D
Article 226-While exercising its power lfigh Court cannot act as appel-
late authority. >-
I
Administrative Law :
E Administrative Authority-Duty to give reasons-Administrative
authority is not required to record its reason as elaborately as Court :

The Director of Education, Government of U.P. issued a show cause
notice under section 16-D(3) of the U.P. Intermediate Education Act, 1921
to the respondent Committee calling upon it to remove certain ir-
F
regularities and deficiencies highlighted in the Inspection Report and
}
Audit Report submitted by the auditors - one departmental and another
Government Audit Department. Since the respondent's explanation was
found no-satisfactory and the Director was satisfied that the respondent·
committee has committed misfeasance and malfeasance of the nature
-...
G specified in Section 16·D(3), he referred the matter to the State Govern·
ment recommending take over of the College. The Government on cm1·
sideration of the Director's report found that the respondent-Committee
1
bas committed Irregularities and consequently it passed an order dated
July 19, 1986 appointing an Authorised Controller to take over the
H .11anagement or the respondent-college.
210
STATE v. S.K.M. INTER COLLEGE 211

The respondents challenged this order before the High Court which A
held that the Government had not applied its mind to the fact and that
the charges have not been established by reasoned order and therefore, the
impugned order was vitiated by manifest error apparent on the face of the
record. Against the decision of the High Court State preferred an appeal
to this Coor!.
B
On behalf of the respondent-committee, it was contended that the
requirement of recording reasons mentioned in sub- section (4) of section
HiD has not been complied with. Recording of reasons is to lie preceded
by consideration of the explanation followed by agreement or disagreement
with the explanation submitted by the Management. c
Allowing the appeal, this Court

HELD : 1. The administrative authorities are not required to record
reasons as elaborately as an order by a Court. What is required is
application of mind to the relevant facts placed before the administrative D
authority; short reasons that weighed with it to take action need to be
--\.\ recorded. The order at hand is an elaborate one and from the record it is
seen that the Director had culled out material facts that emerged from the
record. [215-A, BJ

2. The High Court while exercising the power under Article 226 of E
the Constitution is not like an appellate authority to consider the dispute.
It has to see whether the impugned order is based on records or whether
the authorities have applied their own mind to the relevant facts. It is seen
that clauses (v) and (vi) of sub-section (3) of Section 160 specifically
"\. enumerate the grounds which clearly applied to the facts in this case. F
Therefore, when the facts do exist on record and Government have applied
their mind to those facts and came to the conclusion that from the facts
so collected they were satisfied that the committee had contravened clauses
(v) and (vi) of sub-section (3) of Section 16D, they have rightly exercised
the power under sub-section (4) of section 16D. The High Court has
traversed the controversy as a court of appeal and committed manifest
G
error oflaw in interfering with the order. [215-F to HJ
).
3. It could be seen from the explanation offered by the respondents
that the properties were not properly managed and they set up title to the
properties in themselves and mismanaged the properties, committed mal- H
212 SUPREME COURT REPORTS (1995] 3 S.C.R.
A feasance and misfeasance and did not account for the funds collected.
Under these circumstances, the Committee should not be allowed to be in _,
the management of the Institution. [216·A, CJ

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4851 of
1995.
B
From the Judgment and Order dated 7.8.92 of the Allahabad High
Court in C.M.W. No. 11217/86.

D.V. Sehgal, Nalin Tripathi and R.B. Misra for the Appellants.

c Raju Ramchandran, Aseem Mehrotra and A.P. Medh for the
Respondents.

The following Order of the Court was delivered :

Leave granted.
D
The Director of Education, Government of U.P. issued on April 2,
1985 a show cause notice to the respondents under s.16-D(2) of the U.P. }
Intermediate Education Act, 1921 (for short 'the Act') calling upon the
respondent to remove the defects and deficiencies found in the Inspection
Reports and Audit Reports given by the Assistant Examiner, Local Fund
E
Accounts and Audit Officer made during October 3, 1982, October 7, 1980
and December 1, 1981 to December 10, 1981 respectively. Since they had
not been complied with notice under sub-section (3) thereof was issued on
January 9, 1986 calling upon the management for the reasons mentioned

F
therein, thus :

"It is evident from above that there are serious irregularities in the
>
school and hence notice is given under section 16D(3) of Inter·
mediate Education Act. You are requested to remove these ir-
regularities and submit your report in triplicate to Dist!. Inspector
of Schools, one copy direct to this office and one copy to Deputy
G Director of Education, Bareilly within 15 days of the receipt of this
letter. If your reply is not received within the time prescribed, it r
will be considered that you have nothing to say and further action \

will be taken in the absence of your reply."

H Pursuant thereto, the respondents had furnished the explanation by his
STATE v. S.K.M. INTER COLLEGE 213
·letter dated February 11, 1986. The Government on consideration of the A
)~ report submitted by the Director, found that the respondent had com-
mitted irregularities and for special and exceptional reasons, mentioned
therein the Institution needed to be taken over for better management and
to appoint an Authorised Controller for its management. Accordingly, an
order came to be made on July 19, 1986. The Respondents filed writ
petition in the High Court and the order was suspended. When writ B
petition came up for bearing, it was dismissed as withdrawn. Th~reafter,
another writ petition No. 11217 of 1986 was filed and the Court stayed the
taking over the management. The writ petition was, ultimately, allowed by
the High Court on August 7, 1992. Thus this appeal by special leave.

The High Court evaluated the evidence and held that the Govern-
c
ment had not applied their mind to the facts and the charges have not been
established by reasoned order and that, therefore, the order was vitiated
by manifest error apparent on the face of the record. On that basis, it
quashed the impugned order.
D
The question, therefore, is whether the High Court was right in its
~
' conclusion that the impugned Government order was vitiated by error
apparent on the face of the record. Section 16D(3) provides, inter alia, thus:

"fhe Director on receipt of the information or otherwise, if is
satisfied that the Committee bas substantially diverted, misapplied E
or misappropriated the property of the institution to its detriment
or the affairs of the institution are being otherwise managed.'

Where the Committee of management of the Institution fails .to show
"\ case within the time allowed under s.3 or within such extended time as the F
Director may from time to time allow, or where the Director is, after
considering the cause shown by the Committee of Management, satisfied
that any of the grounds mentioned in sub-section (3) exists, he may,
recommend to the State Government lo appoint an Authorised Controller
for that institution, and thereupon, the State Government may, by order
for reasons to be recorded, authorise any person (bereina.'ter referred to G
as the Authorised Controller) to take over, for such period not exceeding
I two years, as may be specified, the Management of such institution and its
properties. Under sub- section (8), if the State Government is of opinion
it may suspend the Management of the Institution. Under Explanation I,
for removing doubts in that behalf, the statute declared that in computing H
214 SUPREME COURT REPORTS [1995) 3 S.C.R.
A the period of time specified in sub-section (4) or sub-section (6), the time
during which the operation of the order was suspended by the High Court .\
in exercise of the powers under Article 226 of the Constitution shall be
excluded.

B Thus it could be seen that the Director is required to satisfy himself
that if the Committee commits any of the misfeasance or malfeasance
enumerated in sub-section (3) of s.16D, the Director is empowered to issue
show cause notice and on consideration of the material, together with any
reply to the show cause notice, if the Director satisfied that the Manage-
ment of the Institution requires to be taken over and needs an appointment
C of an Authorised Controller, he is required to refer the matter to the
Government. The Government has to consider the matter and for reasons
recorded for its satisfaction in that behalf is empowered to authorise an
officer called Authorised Controller to take over the management of his
College. The maximum period during which Authorised Controller is
D empowered to manage the Institution is five years. The period during which
the order of take over is suspended by the High Court is to be excluded
in computation of the maximum period of five years. Admittedly, in this ,l
case, period of five years has not been expired because of the suspension '
of the operation of the order right from its inception by the High Court.

E The question is whether clauses (v) and (vi) to sub-s. (3) of Section
16D have been satisfied on the facts of the case. We have seen that the
Director had issued show cause notice on seven charges for diverse
reasons stated in the reports submitted by the Auditors-one departmental
and another of the Government Audit Department. The explanation given
F by the respondents was found to be not satisfactory. He submitted the }
report lo the Government who on consideration of the facts emerged from
the record and for special and exceptional reasons enumerated in the
order, appointed the Authorised Controller to take over the Institution.

Shri Raju Ramchandran, learned counsel for the respondents, has
G contended that the requirement of recording reasons mentioned in sub-s.
(4) of s.16D has not complied with. Recording of reasons is preceded by
consideration of the explanation followed by agreement or disagreement
with the explanation submitted by the Management. Reasons recorded in
that behalf would not constitute compliance of sub-s. (4) of s.16D. We are
H afraid that we cannot agree with the contention. It is settled law that
--
' v. S.K.M. INTER COLLEGE
STATE 215
administrative authorities are not required to record reasons as elaborately A
as an order by a Court. What is required is application of mind to the
relevant facts placed before the administrative authority; short reasons that
weighed with them to take action need to be recorded. It is seen that the
order at hand is an elaborate one and from the record it is seen that the
Director had culled out material facts that emerged from the record. In B
fact it was specifically stated about misappropriation of the funds; non-ac-
counting of the poor boys fees collected from the students; fee collected
for construction of the Science Block. The collections spread over six to
seven years and yet the building was not completed. Failure to account the
money and depositing it into the account, amounts to misappropriation.
The existence of the properties is not disputed. C
Section 2(d) of U .P. Educational Institutions (Prevention of Dissipa-
tion of Assets) Act, 1974, defines 'property' in relation to an institution and
it includes all immovable properties belonging to or endowed wholly or
purely for the benefit of the institution, including lands, buildings and all D
other rights and interests arising out of such property as may be in the
ownership, possession, power or control of the Management. It is not in
dispute that the extensive land of about 52 bighas, 15 bighas, 11 bighas and
six acres belong to the institution and the income said to have been derived
from the vast land appears to be very meagre which would indicate that
the management thereof does not appear to be on sound lines. Non- E
realisation of proper income derivable from the properties and their mis-
management would call for action.

It is settled law that the High Court exercising the power under
Article 226 of the Constitution is not like an appellate authority to consider F
the dispute. It has to see whether the hnpugned order is based on records
or whether the authorities have applied their own mind to the relevant
facts. It is seen that clauses (v) and (vi) of sub-s.(3) of s.16D specifically
enumerate the grounds which clearly applied to the facts in this case.
Therefore, when the facts do exist on record and Government have applied
their mind to those facts and came to the conclusion that from the facts sCl G
collected they were satisfied that the Committee had contravened clauses
(v) and (vi) of sub-s.(3) of s.16D, they have rightly exercised the power
under sub-section (4) of s.16D. We are of the view that the High Court has
traversed the controversy as court of appeal and committed manifest error
of law in interfering with the order. H
216 SUPREME COURT REPORTS [1995) 3 S.C.R.

A It could be seen from tbe explanation offered by the respondents !bat
tbe properties were not properly managed and !bey set up title to the
properties in themselves and mismanaged tbe properties, committed mal- ,\
feasance and misfeasance and did not account for the funds collected. It
is true that in 1991, fresh elections were held pursuant to which new
management came into office and its term also has expired by afflux of
B time. As no new elections were conducted, old one is continuing the
management. In 1986 when show cause notice was issued, Onkar Singh was
the Manager. After the elections, his son Munedra Pal Singh is continuing
as the Manager. In other words, the family is in tbe management of the
Committee.
c Under these circumstances, we are of the view that the Committee
should not be allowed to be in tbe management of the Institution. Accord-
ingly the Authorised Controller is directed to immediately take over the
management of the Institution and set right tbe running of the Institution
on proper lines; then conduct the elections within the period prescribed
D under tbe Act and hand over the management to the newly elected body.

The appeal is accordingly allowed, the writ petition stands dismissed.
~~ ~
'
T.N.A. Appeal allowed.

(