• [2012] 2 S.C.R. 258 A ZELIA M. XAVIER FERNANDES E. GONSALVES v. JOANA RODRIGUES AND ORS. (Civil Appeal No. 1544 of 2012) FEBRUARY 03, 2012 B [R.M. LODHA AND H.L. GOKHALE, JJ.] Goa Panchayat Raj Act, 1994 - s.10(f) - Disqualification from membership of panchayat - Appellant is a Panch .c member in a Village Panchayat in the State of Goa -Respondent no.2-village panchayat awarded contract to appellant's husband(respondent no.4) - Whether appellant can be said to have any indirect share or monetary interest in the contract of her husband with the Village Panchayat and D she incurred disqualification as a Panch member from (he Village Panchayat u/s. 1O(f) of the 1994 Act - Held: Respondent no. 4 and appellant are husband and wife and are governed by the Portuguese Code - By virtue of Article 1098 and Article 1108 thereof, in absence of any contract, marriage E between appellant and respondent no.4 is governed by the system 'Communiao Dos Bens' i.e. community of property whereunder, each spouse is entitled to one-half income of the other spouse unless contracted otherwise - On facts, no evidence of exclusion of appellant from her husband's assets and income - Money acquired by appellant's husband from F the contract with the Village Panchayat is 'community property'

- Provisions contained in Articles 1098 and 1108 of the Portuguese Code and s. 5A of the Income Tax Act give appellant a participation in the profits of the contract and advantages like apportionment of income from that contract G - Appellant's participation in the profits of the contract constitute an "indirect monetary interest" in the contract awarded to her husband - Consequently, appellant incurred disqualification u/s.10(f) of the 1994 Act - Portuguese Civil H 258 ZELIA M. XAVIER FERNANDES E. GONSALVES v. 259 JOANA RODRIGUES AND ORS. Code, 1860 - Arts. 1098 and 1108 - Income Tax Act, 1961 A - s.5A. Goa Panchayat Raj Act, 1994 - s. 1O(f) - Disqualification of member from panchayat in terms of s.10(f) - Purpose and interpretation of - Held: The purpose and object of providing for disqualification for membership of the Panchayat in clause B (f) of s. 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 - Prohibition in s. 1O(f) should not receive unduly narrow or restricted construction. C Words and Phrases - "Interest" - Meaning of- Held: The word 'interest' has a basic meaning of participation in advantage, profit and responsibility - 'Interest' is a right, title or share in a thing. D

The appellant was a Panch member in Raia Village Panchayat of Salcete Taluka, State of Goa. Respondent no. 2-Village Panchayat of Raia invited bids for collection of market fee within its jurisdiction. The bid of appellant's husband (respondent no.4) was accepted as his bid was E the highest and the contract for collection of market fee was awarded to him. Respondent no.1 filed election petition under Section 11 of the Goa Panchayat Raj Act, 1994 before the State Election Commission for disqualification of appellant on ground that she had F directly or indirectly a share or monetary interest in the contract given by respondent no.2 to her husband. The Commission 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 of the G Act. The appellant filed writ petition before the High Court which dismissed the same. In the instant appeal, the question which arose for consideration was whether the appellant can be said to H 260 SUPREME COURT REPORTS [2012] 3 S.C.R. A 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 incurred disqualification as a Panch member from Raia Village Panchayat of Salcete Taluka in South Goa District, B State of Goa under Section 10(f) of the 1994 Act.

Dismissing the appeal, the Court HELD: 1. The purpose and object of providing for disqualification for membership of the Panchayat in c clause (f) of Section 10 of the Goa Panchayat Raj Act, 1994 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. [Para 11] [265-E-F] D 2.1. Respondent no.4 and the appellant are husband and wife and are governed by the provisions of the Portuguese Civil Code, 1860. By virtue of Article 1098 and Article 1108 thereof, in the absence of any contract, the marriage between the appellant and the respondent no.4 E 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 F and each spouse is entitled to a one-half income of the other spouse. [Para 17] [269-H; 270-A-B]

2.2. 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 G 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 H wife and the income so apportioned shall be included ZELIA M. XAVIER FERNANDES E. GONSALVES v. 261 JOANA RODRIGUES AND ORS. separately in the total income of the husband and of the A wife respectively and the remaining provisions of the Income Tax Actshall apply accordingly. Sub-section (2) of Section SA 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 B be included in the total income of the spouse who has actually earned it. [Para 18] [270-C-E] Gu/am Yasin Khan v. Sahebrao Yeshwantrao Walaskar and another AIR 1966 SC 1339 - distinguished. c 3. The word 'interest' has a basic meaning of participation in advantage, profit and responsibility. 'Interest' is a right, title or share in a thing. [Para 20] [271-D] P. · Ramanatha Aiyar's The Law Lexicon, 2nd Edition D (reprint 1999) - referred to.

4.1. Section 1O(f) of the 1994 Act 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 E 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 F income of communion property. [Para 21] [271-E-F] 4.2. 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. It cannot be said that the appellant G 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. Money acquired by the appellant's husband from the contract with the Village Panchayat H 262 SUPREME COURT REPORTS [2012] 3 S.C.R.

A Raia is 'community property' and, therefore, the conclusion is inescapable that the appellant has ind~rect share, or, in any case, monetary interest in the contract awarded to her husband by the Village Panchayat Raia as the profits from the contract shall be apportioned equally between her and her husband. There is no8 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 th!'! Income Tax Act give the appellant a participation in the C 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 does0 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. [Para 22] [271-G~H; · 272-A-D] E 5. The prohibition in Section 10(f) should not receive unduly narrow or restricted construction. The answer to the first question must be in the affirmative and it must consequently be held that the appellant has incurred F disqualification under Section 10(f) of the 1994 Act. [Para 23] [272-F-G]

Gu/am Yasin Khan v. Sahebrao Yeshwantrao Walaskar and another AIR 1966 SC 1339 - followed. Case Law Reference: G AIR 1966 SC 1339 distinguished Para 14 AIR 1966 SC 1339 followed Para 23 CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1544 of 2012. H ZELIA M. XAVIER FERNANDES E. GONSALVES v. 263 JOANA RODRIGUES AND ORS. From the Judgment & Order dated 22.07.2009 of the High A Court of Bombay at Goa in Writ Petition No. 437 of 2009. R. Sundaravardhan, Vipin Nair, P.B. Suresh, (for Temple Law Firm) for the Appellant. Arun Francis (for Dua Associates) for the Respondets. B The Judgment of the Court was delivered by R.M. LODHA, J. 1. Leave granted. 2. The question which we have to consider is whether the appellant can be said to have any indirect share or monetary C 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 Salcete Taluka in South Goa District, State of Goa under Section 1O(f) of the Goa Panchayat D 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. E

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 F 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 · G 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 1O(f) of the 1994 Act. It appears H 264 SUPREME COURT REPORTS [2012) 3 S.C.R. A that the respondent no. 1 also made an application to the State Election Commission (for short, 'Commission}, State of Goa, on which th.e Commission 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 for8 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 C 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 D 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 E 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, F 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 1O(f). He heavily relied upon the decision of this Court in the case of Gu/am Yasin Khan vs. Sahebrao Yeshwantrao Wa/askar and another1• Mr. Arun G Francis stoutly supported the view of the High Court. 9. Gram Sabha - Constitution of Panchayats - is dealt with in Chapter 11 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 H 1. AIR 1966 SC 1339

ZELIA M. XAVIER FERNANDES E. GONSALVES v. 265 JOANA RODRIGUES AND ORS. [R.M. LODHA, J.] makes a provision for disqualification for membership. We are A concerned with Section 1O(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 B member of the Panchayat if,- )()()()()()()()()( (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, C the Panchayat; xxxxxxxxx" 10. Section 11 provides that if any question arises as to whether a member of a Panchayat has become subject to any D 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 E 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. F

· 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 G consideration before a 5-Judge Bench of this Court in the case of Gu/am 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 ML~nicipal Committee, Malkapur. They had filed their nomination papers. H 266. SUPREME COURT REPORTS [2012] 3 S.C.R.

A 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 B Municipal Committee, Gulam Yasin Khan had an interest in the Municipal Committee and so he was disqualified from standing for election under clause (I) of Section 15 of the Central Provinces and Berar Municipalities Act, 1922 (for short, 'CP Municipalities Act'). Gulam Yasin Khan disputed the validity of c the objection and he stated that his son was not staying with him and had no connection whatsoever. The SupeNising Officer overruled the objection raised by Sahebrao Yeshwantrao Walaskar. The order of SupeNising Officer was challenged by Sahebrao Yeshwantrao Walaskar in the writ petition before the High Court. The High Court allowed his writ petition and set0 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 E considered the question whether by virtue of his relationship with Khalildad Khan, Gulam Yasin Khan 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 F 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 G in Gu/am 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 (I) refers, includes employment, though unlike other similar statutes, the word "employment" is not specifically mentioned in the H said clause. In order to incur disqualification, what the ZELIA M. XAVIER FERNANDES E. GONSALVES v. 267 JOANA RODRIGUES AND ORS. [R.M. LODHA, J.]

clause requires is "interest or share in any contract"; it may A 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 B 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 C 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 D 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 be easy to ignore the existence of the last portion of the clause altogether. E

8. It is quite true that the purpose and the object of prescribing the several disqualifications enumerated in clauses (a) to (I) of s. 15 of the Act is to ensure the purity of the administration of Municipal Committees, and in that F 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(1), we cannot escape the conclusion that the interest or share has to be in the G 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 H 268 SUPREME COURT REPORTS [2012) 3 S.C.R. A 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 saidB to be either directly or indirectly interested in his employment. xxx xxx xxx xxx

c 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 D 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(1) of the Act. We are satisfied that this conclusion is erroneous in law." E 14. In Gu/am Yasin Khan1 while construing Section 15 (I) 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 F justify the inference that such a person has interest, direct or indirect. Ordinarily, there would not have been any difficulty in applying Section 1O(f) in the same manner but we think Gu/am Yasin Khan 1 is clearly distinguishable and cannot be applied to the present fact situation which concerns money affairs of G husband and wife governed by the provisions contained in Articles 1098 and 1108 of Portuguese Civil Code, 1860 ('1860 Code') and Section SA of the Indian Income Tax Act, 1961 {'Income Tax Act'). 15. Articles 1098 and 1108 of the 1860 Code which is H · applicable in the State of Goa read as under :

ZELIA M. XAVIER FERNANDES E. GONSALVES v. 269 JOANA RODRIGUES AND ORS. [R.M. LODHA, J.] 1098. - In the absence of any contract, it is deemed that A 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. B xxxxxx xxx 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. c

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 D 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 E 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 F 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 G 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 H 270 SUPREME COURT REPORTS [2012] 3 S.C.R.

A 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 and the respondent no. 4 is governed by the system 'Communiao Dos Bens' i.e. community B 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. C 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 D 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 E shall apply accordingly. Sub-section (2) of Section SA 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.

F 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 G 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 H the same meaning as the phrase "right title and interest" ZELIA M. XAVIER FERNANDES E. GONSALVES v. 271 JOANA RODRIGUES AND ORS. [R.M. LODHA, J.] but it has been said also to mean any right in the nature A 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. B 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 C 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. )()()( )()()( xx.X'. D

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. 21. Section 1O(f) speaks of monetary interest. The general Erule 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 F have a share in the corpus as well as the income of communion property. 22. There is no doubt that Section 1O(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 G 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 H 272 SUPREME COURT REPORTS [2012] 3 S.C.R.

A 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 contract shall be apportioned equally between her and her husband.8 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 SA of the Income Tax Act give the appellant a participation in the profits of the contract and advantages like the apportionment C 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 D contract for collection of market fee awarded to her husband within Section 1O(f) prohibiting the member of the Village Panchayat from having such an interest.

23. While considering Section 15(1) of the CP E Municipalities Act which provided for the disqualifications to the elections of the Municipal Committees, this Court in Gu/am 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 F receive unduly narrow or restricted 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 affirmativ17 and it must consequently be held that the G 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. B.B.B. Appeal dismissed. H

• [2012] 2 S.C.R. 258 A ZELIA M. XAVIER FERNANDES E. GONSALVES v. JOANA RODRIGUES AND ORS. (Civil Appeal No. 1544 of 2012) FEBRUARY 03, 2012 B [R.M. LODHA AND H.L. GOKHALE, JJ.] Goa Panchayat Raj Act, 1994 - s.10(f) - Disqualification from membership of panchayat - Appellant is a Panch .c member in a Village Panchayat in the State of Goa -Respondent no.2-village panchayat awarded contract to appellant's husband(respondent no.4) - Whether appellant can be said to have any indirect share or monetary interest in the contract of her husband with the Village Panchayat and D she incurred disqualification as a Panch member from (he Village Panchayat u/s. 1O(f) of the 1994 Act - Held: Respondent no. 4 and appellant are husband and wife and are governed by the Portuguese Code - By virtue of Article 1098 and Article 1108 thereof, in absence of any contract, marriage E between appellant and respondent no.4 is governed by the system 'Communiao Dos Bens' i.e. community of property whereunder, each spouse is entitled to one-half income of the other spouse unless contracted otherwise - On facts, no evidence of exclusion of appellant from her husband's assets and income - Money acquired by appellant's husband from F the contract with the Village Panchayat is 'community property'

- Provisions contained in Articles 1098 and 1108 of the Portuguese Code and s. 5A of the Income Tax Act give appellant a participation in the profits of the contract and advantages like apportionment of income from that contract G - Appellant's participation in the profits of the contract constitute an "indirect monetary interest" in the contract awarded to her husband - Consequently, appellant incurred disqualification u/s.10(f) of the 1994 Act - Portuguese Civil H 258 ZELIA M. XAVIER FERNANDES E. GONSALVES v. 259 JOANA RODRIGUES AND ORS. Code, 1860 - Arts. 1098 and 1108 - Income Tax Act, 1961 A - s.5A. Goa Panchayat Raj Act, 1994 - s. 1O(f) - Disqualification of member from panchayat in terms of s.10(f) - Purpose and interpretation of - Held: The purpose and object of providing for disqualification for membership of the Panchayat in clause B (f) of s. 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 - Prohibition in s. 1O(f) should not receive unduly narrow or restricted construction. C Words and Phrases - "Interest" - Meaning of- Held: The word 'interest' has a basic meaning of participation in advantage, profit and responsibility - 'Interest' is a right, title or share in a thing. D

The appellant was a Panch member in Raia Village Panchayat of Salcete Taluka, State of Goa. Respondent no. 2-Village Panchayat of Raia invited bids for collection of market fee within its jurisdiction. The bid of appellant's husband (respondent no.4) was accepted as his bid was E the highest and the contract for collection of market fee was awarded to him. Respondent no.1 filed election petition under Section 11 of the Goa Panchayat Raj Act, 1994 before the State Election Commission for disqualification of appellant on ground that she had F directly or indirectly a share or monetary interest in the contract given by respondent no.2 to her husband. The Commission 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 of the G Act. The appellant filed writ petition before the High Court which dismissed the same. In the instant appeal, the question which arose for consideration was whether the appellant can be said to H 260 SUPREME COURT REPORTS [2012] 3 S.C.R. A 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 incurred disqualification as a Panch member from Raia Village Panchayat of Salcete Taluka in South Goa District, B State of Goa under Section 10(f) of the 1994 Act.

Dismissing the appeal, the Court HELD: 1. The purpose and object of providing for disqualification for membership of the Panchayat in c clause (f) of Section 10 of the Goa Panchayat Raj Act, 1994 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. [Para 11] [265-E-F] D 2.1. Respondent no.4 and the appellant are husband and wife and are governed by the provisions of the Portuguese Civil Code, 1860. By virtue of Article 1098 and Article 1108 thereof, in the absence of any contract, the marriage between the appellant and the respondent no.4 E 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 F and each spouse is entitled to a one-half income of the other spouse. [Para 17] [269-H; 270-A-B]

2.2. 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 G 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 H wife and the income so apportioned shall be included ZELIA M. XAVIER FERNANDES E. GONSALVES v. 261 JOANA RODRIGUES AND ORS. separately in the total income of the husband and of the A wife respectively and the remaining provisions of the Income Tax Actshall apply accordingly. Sub-section (2) of Section SA 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 B be included in the total income of the spouse who has actually earned it. [Para 18] [270-C-E] Gu/am Yasin Khan v. Sahebrao Yeshwantrao Walaskar and another AIR 1966 SC 1339 - distinguished. c 3. The word 'interest' has a basic meaning of participation in advantage, profit and responsibility. 'Interest' is a right, title or share in a thing. [Para 20] [271-D] P. · Ramanatha Aiyar's The Law Lexicon, 2nd Edition D (reprint 1999) - referred to.

4.1. Section 1O(f) of the 1994 Act 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 E 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 F income of communion property. [Para 21] [271-E-F] 4.2. 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. It cannot be said that the appellant G 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. Money acquired by the appellant's husband from the contract with the Village Panchayat H 262 SUPREME COURT REPORTS [2012] 3 S.C.R.

A Raia is 'community property' and, therefore, the conclusion is inescapable that the appellant has ind~rect share, or, in any case, monetary interest in the contract awarded to her husband by the Village Panchayat Raia as the profits from the contract shall be apportioned equally between her and her husband. There is no8 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 th!'! Income Tax Act give the appellant a participation in the C 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 does0 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. [Para 22] [271-G~H; · 272-A-D] E 5. The prohibition in Section 10(f) should not receive unduly narrow or restricted construction. The answer to the first question must be in the affirmative and it must consequently be held that the appellant has incurred F disqualification under Section 10(f) of the 1994 Act. [Para 23] [272-F-G]

Gu/am Yasin Khan v. Sahebrao Yeshwantrao Walaskar and another AIR 1966 SC 1339 - followed. Case Law Reference: G AIR 1966 SC 1339 distinguished Para 14 AIR 1966 SC 1339 followed Para 23 CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1544 of 2012. H ZELIA M. XAVIER FERNANDES E. GONSALVES v. 263 JOANA RODRIGUES AND ORS. From the Judgment & Order dated 22.07.2009 of the High A Court of Bombay at Goa in Writ Petition No. 437 of 2009. R. Sundaravardhan, Vipin Nair, P.B. Suresh, (for Temple Law Firm) for the Appellant. Arun Francis (for Dua Associates) for the Respondets. B The Judgment of the Court was delivered by R.M. LODHA, J. 1. Leave granted. 2. The question which we have to consider is whether the appellant can be said to have any indirect share or monetary C 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 Salcete Taluka in South Goa District, State of Goa under Section 1O(f) of the Goa Panchayat D 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. E

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 F 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 · G 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 1O(f) of the 1994 Act. It appears H 264 SUPREME COURT REPORTS [2012) 3 S.C.R. A that the respondent no. 1 also made an application to the State Election Commission (for short, 'Commission}, State of Goa, on which th.e Commission 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 for8 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 C 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 D 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 E 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, F 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 1O(f). He heavily relied upon the decision of this Court in the case of Gu/am Yasin Khan vs. Sahebrao Yeshwantrao Wa/askar and another1• Mr. Arun G Francis stoutly supported the view of the High Court. 9. Gram Sabha - Constitution of Panchayats - is dealt with in Chapter 11 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 H 1. AIR 1966 SC 1339

ZELIA M. XAVIER FERNANDES E. GONSALVES v. 265 JOANA RODRIGUES AND ORS. [R.M. LODHA, J.] makes a provision for disqualification for membership. We are A concerned with Section 1O(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 B member of the Panchayat if,- )()()()()()()()()( (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, C the Panchayat; xxxxxxxxx" 10. Section 11 provides that if any question arises as to whether a member of a Panchayat has become subject to any D 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 E 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. F

· 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 G consideration before a 5-Judge Bench of this Court in the case of Gu/am 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 ML~nicipal Committee, Malkapur. They had filed their nomination papers. H 266. SUPREME COURT REPORTS [2012] 3 S.C.R.

A 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 B Municipal Committee, Gulam Yasin Khan had an interest in the Municipal Committee and so he was disqualified from standing for election under clause (I) of Section 15 of the Central Provinces and Berar Municipalities Act, 1922 (for short, 'CP Municipalities Act'). Gulam Yasin Khan disputed the validity of c the objection and he stated that his son was not staying with him and had no connection whatsoever. The SupeNising Officer overruled the objection raised by Sahebrao Yeshwantrao Walaskar. The order of SupeNising Officer was challenged by Sahebrao Yeshwantrao Walaskar in the writ petition before the High Court. The High Court allowed his writ petition and set0 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 E considered the question whether by virtue of his relationship with Khalildad Khan, Gulam Yasin Khan 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 F 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 G in Gu/am 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 (I) refers, includes employment, though unlike other similar statutes, the word "employment" is not specifically mentioned in the H said clause. In order to incur disqualification, what the ZELIA M. XAVIER FERNANDES E. GONSALVES v. 267 JOANA RODRIGUES AND ORS. [R.M. LODHA, J.]

clause requires is "interest or share in any contract"; it may A 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 B 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 C 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 D 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 be easy to ignore the existence of the last portion of the clause altogether. E

8. It is quite true that the purpose and the object of prescribing the several disqualifications enumerated in clauses (a) to (I) of s. 15 of the Act is to ensure the purity of the administration of Municipal Committees, and in that F 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(1), we cannot escape the conclusion that the interest or share has to be in the G 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 H 268 SUPREME COURT REPORTS [2012) 3 S.C.R. A 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 saidB to be either directly or indirectly interested in his employment. xxx xxx xxx xxx

c 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 D 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(1) of the Act. We are satisfied that this conclusion is erroneous in law." E 14. In Gu/am Yasin Khan1 while construing Section 15 (I) 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 F justify the inference that such a person has interest, direct or indirect. Ordinarily, there would not have been any difficulty in applying Section 1O(f) in the same manner but we think Gu/am Yasin Khan 1 is clearly distinguishable and cannot be applied to the present fact situation which concerns money affairs of G husband and wife governed by the provisions contained in Articles 1098 and 1108 of Portuguese Civil Code, 1860 ('1860 Code') and Section SA of the Indian Income Tax Act, 1961 {'Income Tax Act'). 15. Articles 1098 and 1108 of the 1860 Code which is H · applicable in the State of Goa read as under :

ZELIA M. XAVIER FERNANDES E. GONSALVES v. 269 JOANA RODRIGUES AND ORS. [R.M. LODHA, J.] 1098. - In the absence of any contract, it is deemed that A 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. B xxxxxx xxx 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. c

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 D 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 E 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 F 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 G 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 H 270 SUPREME COURT REPORTS [2012] 3 S.C.R.

A 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 and the respondent no. 4 is governed by the system 'Communiao Dos Bens' i.e. community B 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. C 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 D 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 E shall apply accordingly. Sub-section (2) of Section SA 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.

F 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 G 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 H the same meaning as the phrase "right title and interest" ZELIA M. XAVIER FERNANDES E. GONSALVES v. 271 JOANA RODRIGUES AND ORS. [R.M. LODHA, J.] but it has been said also to mean any right in the nature A 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. B 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 C 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. )()()( )()()( xx.X'. D

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. 21. Section 1O(f) speaks of monetary interest. The general Erule 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 F have a share in the corpus as well as the income of communion property. 22. There is no doubt that Section 1O(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 G 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 H 272 SUPREME COURT REPORTS [2012] 3 S.C.R.

A 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 contract shall be apportioned equally between her and her husband.8 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 SA of the Income Tax Act give the appellant a participation in the profits of the contract and advantages like the apportionment C 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 D contract for collection of market fee awarded to her husband within Section 1O(f) prohibiting the member of the Village Panchayat from having such an interest.

23. While considering Section 15(1) of the CP E Municipalities Act which provided for the disqualifications to the elections of the Municipal Committees, this Court in Gu/am 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 F receive unduly narrow or restricted 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 affirmativ17 and it must consequently be held that the G 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. B.B.B. Appeal dismissed. H