REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL  APPEAL NO.    1544            OF 2012 (Arising out of SLP (Civil) No. 26568 of 2009)

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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