022 - 1981 - Administrative Law PDF

22
ADMINISTRATIVE LAW
M.P. Jain*
I GENERAL
A STUDENT of administrative law can legitimately regard 1981 as a
fruitful and productive year from the point of view of development and
growth of administrative law in India. During the year, there have not only
been a large number of court cases in administrative law, but the Supreme
Court has also broken some new ground by rendering some landmark
decisions, to wit, S. L. Kapoorv. Jagmohan,1 Swadeshi Cotton Mills v.
Union of India* Som Prakashv. Union of India? Ajay Hasia v. Khalid
Majid,4 Fertilizer Corporation,5 etc. In these cases, the judges have display
ed a creative attitude and have given a new orienation to the course of
development of administrative law in India in several directions, such as,
expansion of the right of hearing in administrative process, expansion of
judicial review of administrative action, and greater judicial control over
public enterprises. These cases have notable law-creative value and have
had a liberal and expansive impact on administrative law and have ex
panded its frontiers somewhat. It is hoped that these judicial pronounce
ments will exert further beneficial and liberalising impact on the future
growth of administrative law in India and the trends generated by these
decisions will be consolidated, "and not dissipated, in course of time.
Another trend visible during the year is that the courts are increasingly
relying on article 14 of the Constitution to control discretionary decisions
by the administration. Any decision which is arbitrary, unreasonable or
discriminatory may be quashed by the courts by invoking article 14.e Its
use has become very pronounced after the landmark Maneka Gandhi case.7
From time to time the courts impress on the administration the need
* Professor of Public Law, University of Malaya; formerly Professor of Law, Banaras

Hindu University and University of Delhi.
1
A.I.R. 1981 S.C. 136; see infra, sec. Ill under "Natural Justice".
2
A.I.R. 1981 S.C. 818; see infra, sec. III.
3
A.I.R. 1981 S.C. 212; see infra, sees. V & VI under "Judicial Review".
* A.LR. 1981 S.C. 487; infra, sees. V & VI.
6
Fertilizer Corporation, Kamgar Union v. Union of India, A.I.R. 1981 S.C. 344; infra,
sees. V & VI.
• Infra, sec. IV. Also see sec, II, notes 35-38.
7
Maneka Gandhi v. Union of India, A.LR 1978 S.C. 597. For comments on this case
see, XIV A.S I.L. 364-368 (1978); M.P. Jain, "Justice Bhagwati and the Indian Ad
ministrative Law", Banaras L.J. 1-49 (1980).
www.ili.ac.in The Indian Law Institute

Vol. XVII] Administrative Law 463
to follow general standards of democratic behaviour. In 1981, the Supreme

Court has done so several times. For example, in Gulshan Kallu v. Zila
Parishad, Etawah,8 the Supreme Court had directed the state government
and the zila parishad of Etawah to furnish it with some information
concerning a government model scheme for carcass utilisation at village
panchayat level. This information was needed by the court to dispose of a
special leave appeal in which this scheme was in question. For more than
three months, the State of Uttar Pradesh supplied no information to the
court. The court expressed 'surprise' at this failure of the government and
made the following pungent remarks :9
It is surprising that though a period of more than three months has
elapsed, the State of Uttar Pradesh has not supplied this informa
tion to us. We fail to understand this inaction on the part of the
State Government in complying with the order of the Court. The
only inference which we can draw from the failure of the State Go
vernment to give us this information is that the Model Scheme for
Carcass Utilisation at Village Panchayat level has remained merely
a paper scheme and it has not been implemented in the Etawah
district. If this be the correct situation, it is a matter of regret that
the Model Scheme... should not have been implemented. We fail to
appreciate why any scheme of social welfare should be put forward
by a Government unless it is intended to be implemented, because
otherwise an impression may be created in the public mind that the
scheme is put forward only in order to beguile the masses and that
would be injurious to democracy and the rule of law.
The court, however, gave one more opportunity to the state govern
ment to supply the information before it drew any adverse inference
against the government. Commenting on the failure of the zila parishad
to supply the required information, the court expressed 'regret' that the
zila parishad "should not bother to carry out the order of this court and
should not even show the ordinary courtesy of expressing regret to the
court for not complying with the order". The court emphasized :10
The State Government and the local self governing authorities
should in fact set the standard for other litigants in the matter of
compliance with the orders of the court, because otherwise the rule
of law will remain merely a meaningless phrase and an empty for
mality.
In Hindustan Sugar Mills v. State of Rajasthan,11 the court impressed
• A.I.R. 1981 S.C. 1668.

• Id. at 1969
" Id. at 1669/70.
» A.I.R. 1981 S.C. 1681.

464 Annual Survey of Indian Law [1981
on the central government the need to honour its contractual obligation.

The court said : 12
[W]e hope and trust that the Central Government will honour its
legal obligation and not drive the appellant to file a suit for recovery
of the amount of such sales tax. We hopefully expect that the
Central Government will not try to shirk its legal obligation by re
sorting to any legal technicalities.
The court went on to say :13
[I]n a democratic society governed by the rule of law, it is the duty

of the State to do what is fair and just to the citizen, and the State
should not seek to defeat the legitimate claim of the citizen by ado
pting a legalistic attitude but should do what fairness and justice
demand.
At times, the Supreme Court has expressed "serious dissatisfaction"
with the litigious mentality on the part of public corporations set up to
achieve goals enumerated in the Constitution.1* In this case, the corpora
tion filed an appeal under article 136 on pure questions of fact and the
Supreme Court dismissed the appeal as there was no question of law
involved.
In Som Prakash v. Union of India,15 Krishna Iyer J. emphasized upon
the administration (including the public sector) not always to take a purely
technical or legalistic view but also temper the same with justice. He ex
pressed these sentiments in these ringing words :16
Social justice is the conscience of our Constitution, the State is the
promoter of economic justice, founding faith which sustains the Con
stitution and the country is Indian humanity. The public sector is
a model employer with a social conscience not an artificial person
without soul to be damned or body to be burnt .. Law and justice
must be on talking terms and what matters under our constitu
tional scheme is not merciless law but humane legality. The true
strength and stability of our polity is society's credibility in social
justice, not perfect legalese.
The court wondered whether "the highest principle of our constitu

tional culture is not empathy with every little individual".
13
Id. at 1683 per Bhagwati J.
13
Ibid.
14
Employees' State Ins. Corp. v. Ameer Hasan, A.I.R. 1981 S.C. 174. Also see, The
Rajasthan State Road Transport Corp. v. Narain Shankar, A.I.R. 19S0 S.C. 695.
15
Supra note 3.
16
M a t 234.

By these words, the Supreme Court has tried to impress on the bureau
cracy that it be more humane and democratic in its approach to the people.
II DELEGATED LEGISLATION
Judicial control
Theoretically the courts can adjudge the validity and legality of delegat
ed legislation by applying the doctrine of ultra vires11 This means that
delegated legislation made beyond the authority conferred by the parent
law is not valid. The effectiveness of the ultra vires principle, however,
depends on how broad is the formula conferring power of delegated legis
lation on the administration, what mandatory procedural safeguards have
been stipulated by the law in question,18 and how scrutinising an attitude
do the courts adopt ? Usually, in practice, the application of the ultra vires
principle is not very effective to impose any worthwhile judicial control
over delegated legislation because the powers are conferred on the ad
ministration in very broad language and, further, the courts themselves
interpret the enabling provision rather broadly and they also adopt a
deferential, rather than a critical, attitude towards delegated legislation. It
is, therefore, rare to come across examples of judicial invalidation of
delegated legislation on the ground of ultra vires. In practical terms,
judicial review of delegated legislation has more of a symbolic value.
Judicial review can be effective only if powers are delegated not in too
broad a language, substantive and procedural safeguards are interwoven in
the delegating provision, and the courts do not give an unduly broad inter
pretation to the delegating provision. To some extent, these purposes are
sought to be achieved through the doctrine of excessive delegation. It is
this that is envisaged by the doctrine of excessive delegation19 but the lax
manner in which it is applied by the courts fails to achieve any of the
purposes in view.20
The liberal judicial attitude towards delegated legislation is very
tellingly typified by the Supreme Court pronouncement in State of Tamil
Nadu v. Mis Hind Stone.21 Section 15 of the Mines & Minerals (Regula
tion and Development) Act, 1957 empowers the state government to make
rules for 'regulating' the grant of quarry leases, mining leases and other
mineral concessions in respect of minor minerals. Under this statutory
provision, the Tamil Nadu Government promulgated a rule banning leases
for quarrying black granite in favour of private persons and laying down
*7 For details see Jain & Jain, Principles of Administrative Law 55-69 (1979); (herein
after referred to as Jain & Jain).
18
A statutory requirement for publication of rules is usually held to be mandatory.
See, Govindlal v. Agriculture Produce Market Committee, A.LR. 1976 S.C. 263; XII
A.S.I.L. 480 (1976).
i» See XVI A.S.I.L. 364 (1980).
» On this topic see, Jain & Jain 32-38; XI A.S.I.L. 457 (1975); X A.S.LL. 507 (1974).
» AJ.R. 1981 S.C. 711,

that in future such leases can only be granted to government-owned corpo

ration. Thus, by using its rule-making power, the government abolished
private enterprise in, and effectively nationalised, quarrying of black granite.
Undoubtedly the rule was of a drastic nature and affected private enterprise
very adversely. Its validity was challenged on several grounds. The court,
however, upheld the validity of the rule. The court argued that the rule had
been made for conserving and prudent exploitation, of mineral with a
view to securing the maximum benefit to the community. The court inter
preted the word 'regulating' in section 15 broadly, so as to include
'prohibition* as well therein. Justifying such a liberal approach, the court
stated:22
In modern statutes concerned as they are with economic and social
activities, 'regulation' must, of necessity, receive so wide an inter
pretation that, in certain situations, it must exclude competition
to the public sector from the private sector.
The court rejected the argument that the rule in question changed the
policy of the parent Act and that this could be done only by the legisla
ture. The court argued in counter that the rule referred only to one
mineral, viz., black granite, and not to all the minerals and this, therefore,
did not represent any change of policy. If, however, a complete and
general ban is imposed on private mining of all minor minerals, then it
may invoke a reversal of a major policy and this may need legislative
sanction. The court also rejected the challenge to the rule under articles
302-305 of the Constitution.23 The court also held that the rule was not
invalid because it created a monopoly in favour of the state.
The courts have consistently taken the view that delegated legislation
can have prospective operation only and that it cannot be given retrospec
tive effect unless the parent statute expressly or by necessary implication
gives power to the delegate to do so.24 The reason is that retrospective
rules may prejudicially affect vested interest and rights and so it is proper
that only a representative body like the legislature, and not the delegate,
makes such a law.25 This proposition has been reiterated by the Supreme
Court in Accountant General v. S. Doraiswamy2* and was applied to the
interpretation of article 148(5) of the Constitution where rule-making
power has been given, subject to any law made by Parliament, to the
President (in consultation with the Comptroller and Auditor-General) to
22
Id. at 719.
23
Jain, Indian Constitutional Law 353-369.
«* See XIII A.S.I.L. 452 (1977); XII A.S.I.L. 482-483 (1976).
28
In R.T.O.Chittoorv. Associated Transport Madras (P) Ltd., AJ.R. 1980 S.C. 1872
the court ruled that the statutory provision in question did not confer power on the
government to make retrospective rules. Also see Sri Vijaylakashmi Rice Mills v.
State of Andhra Pradesh, A.I.R. 1976 S.C. 1471; Bangalore Univ. Vf Sf, fghn*s
Medical College, A.I.R. 1980 Kant. 142.
"A.I.R. 1981 S.C. 78?.

prescribe the conditions of service of persons serving in the Indian Audit

and Accounts Department.27 The Supreme Court has ruled in Doraiswamy
that article 148(5) confers power on the President to frame rules operating
prospectively only and, therefore, the rules made thereunder cannot have
retrospective operation.
But, in this respect, the Supreme Court has taken a broader view of
article 309 because of its different phraseology.28 Article 309, in the first
place, authorises the concerned legislature to frame laws to regulate the
conditions of service of public servants. Pending such legislation, the
President or the Governor, as the case may be, can make such rules until
the necessary legislation is passed by the respective legislature. The
Supreme Court has taken the view that under article 309 the executive
can make retrospective rules.*9 The court has thus given an expansive
interpretation to the rule-making power under article 309. The reason
for taking this liberal view is that under article 309 rules fill a 'hiatus' until
the concerned legislature enacts a law. The President or the Governor thus
steps in when the legislature does not act. So, the President's or the Gover
nor's and the legislature's power to make rules for the civil service are on
all fours and, thus, the President's or the Governor's power has to be as broad
as that of the legislature. Rules made by the executive are only "transient
in nature" and are effective only until legislation is enacted and, therefore,
these rules should have the same range of operation as the law made by
a legislature which can make prospective as well as retrospective laws.
Such is not the case with article 148(5). It does not say that rules framed
thereunder are intended to serve until Parliament enacts its legislation.
Thus, article 148(5) has been interpreted to confer power on the Compt
roller and Auditor-General to frame rules operating prospectively only.
Rules made under it cannot have retrospective eifect. The diiference in
the phraseology of the two articles (148(5) and 309) have led to different
results as regards retrospectivity of the respective service rules.30
The extreme breadth of the rule-making power under article 309
appears to have been curtailed to some extent by the Supreme Court in
B.S. Yadav v. Haryana?1 Regarding the amending of service rules with
retrospective effect, the court has now said that the retrospectiye operation
of a rule will be struck down if there existed no reasonable nexus between
the concerned rule and its retrospectivity. This nexus may be shown either
27
Jain, supra note 23 at 42.
18
Id. at 616.
»• B.S. Vadera v. Union of India, A.I.R. 1969 S.C. 118; State of Andhra Pradesh v.
DJ. Rao, A.I.R. 1977 S.C. 451.
30
Swpranote26. In State of Andhra Pradesh v. D.J. Rao, supra note 29 the Supreme
Court interpreted a service rule so as to authorise the relaxation of general service
rules by the Governor with retrospective effect in the interest of 'justice and
equity'.
» A.I.R. 1981 S.C, 561. See comments on the case by S.N, Jain in 2 3 / , LL. ff
102 (1981),

from the face of the rules or by extrinsic evidence. In the instant case,
the court refused retrospective operation to the rule as it found no nexus
between the rule and its retrospectivity. It appears that the court has been
moved to somewhat curb the unbridled rule-making power of the govern
ment because it felt that the power is not being exercised properly,
particularly by the state governments. Rules are amended by these
governments with long retrospective effect, at times, as long as seven
years; the rules are changed with every change in government as if they
*'are a play-thing in the hands of the government". The court has also
advised the government against making retrospective service rules as it
causes frustration, discontent and demoralisation among the civil servants
since the just expectations of the officers are falsified. The principle
enunciated in Yadav comes very close to the one that unreasonable rules
are ultra vires.%* %
Strictly speaking, rules under articles 148(5) and 309 do not constitute
delegated legislation. Here the rule-making power has been given to the
executive by the Constitution itself and not by the legislature. But since
administrative rule-making is involved in both these constitutional
provisions, the courts have applied the same principles to these rules as
are applied to delegated legislations33
In India, courts may also invalidate delegated legislation on the ground
of its non-conformity with a constitutional provision.34 From this point of
view, the most pithy constitutional provision is article 14 which guarantees
right to equality before law.35 This article has been used to invalidate any
provision of law which is arbitrary or unreasonable. Therefore, in India, the
doctrine of unreasonableness of delegated legislation is founded on a more
solid foundation, viz., article 14, rather than on a common-law principle
like in England.36 The courts in India thus have flexibility, if they so desire,
to expand the concept of unreasonableness rather than to confine it to the
extremely narrow and restrictive concept of unreasonableness prevailing in
England.37 To take a recent example, in Nergesh Meerza,3* according
32
Jain & Jain, supra note 17 at 62, 63. Also see infra, sec. IV.
M
Jain, supra note 23 at 43, 616.
3
* Prag Ice & Oil Mills v. Union of India, A.LR. 1978 S.C. 1296.
85
For article 14 see Jain, supra note 23 at 410-428.
8ft
Krusev. Johnson, (1898) 2 Q.B. 91. Also, Alan Wharm, "Judicial Control of
Delegated Legislation : The Test of Reasonableness," 36 Mod. L.R. 611 (1973).
37
The English concept of unreasonableness of bye-laws has been expounded by Lord
Russell C.J. in Kruse v. Johnson, supra note 36 as follows :
If, for instance they (bye-laws) were found to be partial and unequal in their
operation as between classes; if they were manifestly unjust; if they disclosed
bad faith; if they involved such oppressive or gratuitous interference with the
rights of those subject to them as could find no justification in the minds of
reasonable m e n . . . "
Also see, Jain <& Jain, supra note 17 at 61, 62.
•• Air Imiia v. N*rt*sh Mmta% AJ.R, 1981 S.C 1829.

to service regulations made by Air India (a statutory corporation), services
of an air-hostess would be terminated if she marries within four years of
service or on the first pregnancy. The Supreme Court found nothing
wrong with the first condition (no marriage within four years) but held the
second condition (no pregnancy) to be "most unreasonable and arbitrary
provision which shocks the conscience of the court". An air-hostess can
marry after four years of service and if she then becomes pregnant, there is
no reason why pregnancy should stand in the way of her continuing in
service. The court said that the regulation amounts to compelling the air-
hostesses not to have any children and thus it interferes with, and
diverts, the ordinary course of human nature. The Supreme Court con
demned the said regulation in very strong language:39
It seems to us that the termination of the services of an air-hostess
under such circumstances is not only a callous and cruel act but an
open insult to Indian womanhood—the most sacrosanct and cherished
institution. We are constrained to observe that such a course of action
is extremely detestable and abhorrent to the notions of a civilised
society. Apart from being grossly unethical, it smacks of a deep
rooted sense of utter selfishness at the cost of all human values.
The regulation was thus held to be not only "manifestly unreason
able and arbitrary" but also that it "contains the quality of unfairness
and exhibits naked despotism" and was, thus, held to be violative of
article 14.40
Where the state government has power to make delegated legislation
only with the prior concurrence of the central government, an order made
by the state government without such concurrence is invalid. The central
government's order of concurrence need not be authenticated under article
77(2) of the Constitution,41 but such an order must be in writing. An
order made by the state government under section 3 of the Essential
Commodities Act, 1955 without centre's concurrence was held to be invalid
and ultra vires.42
Laying
Under section 3 (6) of the Essential Commodities Act an order made

by the central government or any officer or authority of the central
government is required to be placed before Parliament. The Supreme
39
Id. at 1850.
*° Id. at 1853.
41
Jain, supra note 23 at 89.
<* Shib Shankar Dokania Oil, Rice and Flour Mills v. State, A.I.R. 1981 Pat. 355. The
power to make orders under s. 3 of the Essential Commodities Act, 1955 is vested
in the central government which can delegate such powers to the state government.
In the instant case, the state government was authorised to make orders subject to
the approval of the central government.

Court has held that an order made by the state government in exercise of
the powers delegated to it by the central government under section 5 is not
required to be placed before Parliament under section 3 (6).4S
Right of consultation
As stated last year, a weakness of delegated legislation is that there is

no "minimum formalized consultative procedure" to be resorted to by a
rule-making agency and the Supreme Court has held that a rule-making
body is not required to observe natural justice.44 During the year 1981,
this proposition has been reiterated. In a number of cases, the Supreme
Court has ruled that no natural justice can be claimed in case of exercise
of legislative function by the administration.
The Uttar Pradesh Government issued a notification under the
Sugarcane (Control) Order, 1966 directing that no power crusher of a
khandsari uuit in the reserved area of a sugar mill could be worked during
the period 9.10.1980 to 1.12.1980. It was argued that this control order
was bad as it was passed without hearing the petitioners whose valuable
rights were involved. Rejecting the contention, the court upheld the
validity of the order and adduced the following reasons in support of its
view in Laxmi Khandsari v. State of U.P. :45
(i) Section 3 of the Essential Commodities Act, really covers an
emergent situation so as to meet a national crisis involving the availability
and distribution of any essential commodity which may make it necessary
to restrict or control the business carried on by a citizen. In the instant
case, there was an acute shortage of sugar. Therefore, immediate and
emergent measures were needed to solve the sugar crisis.
(ii) A large number of power crushers were involved. If hearing
were to be given to them all, it would have completely defeated and
frustrated the very object of the notification and the Act resulting in a
serious situation.
(IK) The order was legislative in character and so natural justice was
not called for. In this context, the court mentioned the analogy of price
fixing.46
Nevertheless, the court did suggest certain guidelines if any such
action were to be taken in future. The court emphasized upon the need
and desirability of giving a bare minimum of hearing, if not to all owners
*3 Sarkari Sasta Ana} Vikreta Sang v. State ofM.P., A.LR. 1981 S.C. 2030, 2034. Also
see XV A S.LL. 321 (1979)-
" Tulsipur Sugar Co. v. The Notified Area Committee, A.I.R. 1980 S.C. 882. Also see
XVI A.S.I.L. 366-370 (1980).
« A.I.R. 1981 S.C. 873.
" Saraswati Industrial Syndicate v. Union of India, A.I.R. 1975 S.C. 460; Jain, supra note
23 at 483. Also see, Bates v. Lord Hailsham, [1972] 1 W.L.R. 1372; for details of this
case, see XVI A.S.I.L., 367, notes 25 and 26.

of khandsari units, at least to a representative of the association represen

ting them and getting his views on the subject. Even if the government
thinks that an emergent situation has arisen it may at least call for a
representation against the proposed action from such association and
consider the same after giving the shortest possible notice. The court
said:47 "Not that such action is a legal requirement but it will generate
greater confidence of the persons who may be affected by any order to be
passed against them."
While it is by now a well established proposition that no natural justice
can be claimed as a matter of right in case of making of a legislative
order, nevertheless, the court has advised the Administration to adopt suo
motu without any mandatory legal requirement a procedure of consulting
the representatives of the interests affected by the measure proposed to be
taken by way of banning power crushers for a time. This advice, be it
noted, is relevant not only to the fact situation of the instant case (tempo
rary banning of power crushers) but for a number of other situations as
well where the administration seeks to proceed through a legislative order.
Even where no formal consultative procedure is prescribed, the administra
tion can still resort to informal consultation with the affected interests. If
this judicial advice is heeded to by the administration, a voluntary consulta
tive procedure in making delegated legislation will come into vogue, and
it will democratise administrative process in India to some extent. But the
more effective solution would be to incorporate a statutory requirement to
this effect in the delegating statute.
To the same effect is R.K Porwal v. State of Maharashtra.48 Under the
Maharashtra Agricultural Produce Marketing Act, 1963 the state govern
ment issued a notification declaring an area as a marketing yard. Consequ
ently, all wholesalers, commission agents and others dealing in agricultural
produce had to shift to the specified marketing yard. One of the objections
raised against the notification was that before issuing it, the concerned
authority should have invited and heard objections against it. It was
argued that failure to do so was a violation of the principles of natural
justice and so the notification was bad.
The Supreme Court did not agree with this contention. The court
emphasized that it was not a judicial or quasi-judicial function "where the
very nature of the function involves the application of the rules of natural
justice, or of an administrative function affecting the rights of persons,
wherefore, a duty to act fairly".49 The court ruled that the function
involved was "legislative". The court was concerned here with "the
making of a legislative instrument". Upon the declaration by the notifica
tion of the government that a certain place shall be a^ principal market
yard for a market area, "certain statutory provisions at once spring into
47
Supra note 45 at 896,
** A.I.R. 1981 S.C. 1127.
*• Id. at 1142.

action and certain consequences prescribed by statute follow forthwith".

The making of the declaration, in the context, being an act legislative in
character, it does not oblige the observance of the rules of natural justice.60
In Sarkari Sasta Anaj,51 referring to a control order issued under
section 3 of the Essential Commodities Act, the court said that since it
was a legislative function there was "no question of affording an oppor
tunity to those who were affected by it."
Directions
The distinction between 'rules' and 'directions' has become rather

blurred over time,52 but some dichotomy between the two still exists. For
example, directions are less formal than the rules and are made in exercise
of administrative power under articles 73 and 162 of the Constitution.53
Rules are made under statutory legislative powers conferred by the legisla
ture. A 'direction' can be amended by issuing another direction, but a
rule can be amended only by issuing a rule and not by a direction. Thus
directions are inferior to rules as a direction cannot amend a rule. But
no stable principle appears to emerge from the case-law as to how to
distinguish directions from rules or when directions are to be regarded as
unenforceable or when as enforceable. This aspect of the matter is not
carried any further by the judicial pronouncements during the year under
review.
In Accountant General v. Doraiswamy5* a provision made by the Comp
troller and Auditor-General concerning giving of weightage to the length
of service in fixing seniority and contained in the Manual of Standing
Orders was held to be only an administrative instruction having no statu
tory force. Such an instruction could be amended by another deparmental
instruction. The writ petition of the petitioners was dismissed as their
case did not fall within the amended instruction.
In Sachdev,55 an administrative direction regarding promotion of the
upper division clerks to higher grades was quashed. The court said: "It
is difficult to appreciate the logic or the principle behind the direction..."
It resulted in injustice in specific cases. The classification made for the
purpose of determining the promotional opportunities were held to be
"unreasonable and arbitrary". The direction was thus held to be
unconstitutional.56 Thus, a direction, like a rule, can be quashed as being
50
Ibid. The court referred to Bates v. Lord Hailsham, supra note 46; Tulsipur Sugar,
supra note 44 and British Railways Board v. Pickin, [1974] A.C. 765.
51
Supra note 43.
54
See XIII A.S.I.L. 455-458 (1977). Also, Jain and Jain, supra note 17 at 87-101.
58
Jain, supra note 23 at 106, 185, 309, 312, 314, 616, 701, 702.
14
Supra note 26.
a* S.L Sachdev v. India, A.LR. 1981 S.C. 411.
56
In Santoshi Education Trust v. State, A.I.R. 1981 Guj. 85, a resolution of the state
government was quashed by the High Court as unconstitutional.

Vol. XVII] Administrative Law 41$
discriminatory. Also, the impugned directive sought to amend the recruit

ment rules made under article 309. The directive superimposed a new
criterion on the rules. This was held to be bad as "lacking in jurisdiction".
"No one can issue a direction which, in substance and effect, amounts to
an amendment of the Rules made by the President under Art. 309. This is
elementary." The court refused to accept the argument that the impugned
directive was aimed at
[FJurther and better implementation of the Recruitment Rules.

Clearly, it introduces an amendment to the Rules by prescribing
one more test for determining whether U. D. C.s drawn from the
Audit offices are eligible for promotion to the Selection grade/Head
Clerks Cadre.56*
An army instruction regarding release of commissioned officers was

held to be having a statutory force in Virendra Kumar v. Union of India.S1
In this case, however, termination of service of the appellant on
medical grounds was held to be invalid as the procedural requirements laid
down in the rules were not complied with. The court emphasized, "In
Service Jurisprudence, procedural safeguards are of prime significance".58
In State of Maharashtra v. Chandrakant,™ the court reiterated the
proposition that a rule framed under article 309 cannot be modified by an
executive order. In Baleshwar Dass v. Uttar Pradesh,60 an office
memorandum regarding seniority in certain government posts was held
binding as the government had been following the same for nearly two
decades. The court stated further that rules regulating conditions of
service were within the executive power of the state or within its legislative
power under article 309, even so such rules have to be < 'reasonable, fair
and not grossly unjust if they are to survive the test of Arts. 14 and 16".61
In Gujarat v. Lai Singh** the Supreme Court ruled that administrative
instructions or administrative rules cannot abridge, or run counter to the
statutory provisions.
Ill NATURAL JUSTICE
When can a person claim a right of hearing before an administrative

decision affecting him is taken ? This question arises perennially before the
courts. Over the years, the courts in India have helped in the expansion of
™a Supra note 55 at 415.

67
A.I.R. 1981 S.C. 947.
88
Id. at 948.
5
» A.I.R. 1981 S.C. 1990.
M
A.I.R. 1981 S.C. 41.
61
Id. at 48.
" A.I.R. 1981 S.C. 368.

4?4 Annual Survey of Indian Law [1981
the right of hearing.63 This trend has continued during the year 1981 as
well. There have been some crucial judicial pronouncements during
the year which have further expanded the right of hearing. It may
be noted that in India, the terms'right of hearing','natural justice'and
'fairness' are regarded as synonymous and are used interchangeably without
drawing any distinction.
An outstanding pronouncement of the Supreme Court on the question
of applicability of natural justice to administrative process is S. L. Kapoor
v. Jagmohan.** The Lt. Governor of Delhi superseded the New Delhi
Municipal Committee under section 238(1) of the Punjab Municipal Act,
1911. In the preamble to the order of supersession, it was stated that the
committee was incompetent to perform, and had made persistent default in
performing its duties and that it had abused its powers resulting in the
wastage of funds. The committee had not been given any opportunity of
defending itself before passing the order. This order was challenged by two
members of the superseded municipal committee on the ground of denial
of natural justice.
Chinnappa Reddy J. ruled on behalf of the court that natural justice
had to be resorted to before passing the order of supersession. The court
reiterated the proposition that for application of natural justice, there is
no longer any need to distinguish between administrative and quasi-judicial
functions. In this connection, reference was made to the statement in
State of Orissa v. Dr. (Miss) Binapani*5 that "even an administrative order
which involves civil consequences...must be made consistently with the
rules of natural justice." To define'civil consequence,' the court referred
to what was said by the court earlier in Mohinder Singh Gill v. The Chief
Election Commissioner :66
'Civil consequence' undoubtedly cover infraction of not merely
property or personal rights but of civil liberties, material depriva
tions and non-pecuniary damages. In its comprehensive connotation,
everything that affects a citizen in his civil life inflicts a civil
consequence.
The court referred to some English cases to support this thesis, viz.,
Schmidt*7 and Durayappah*8 and stated :
The old distinction between a judicial act and an administrative act
has withered away and we have been liberated from the pristine
incantation of 'administrative action'.
« XIV A.S.I.L. 358-370 (1978) ; XVI A.S.LL. 370-389 (1980).

•* A.I.R. 1981 S.C. 136.
" A.I.R. 1967 S.C. 1269.
•• AJ.R. 1978 S.C. 851 ; XIV A.S.I.L. 358-361 (1978).
•7 Schmidt v. Secretary of State for Home Affairs, [1969] 2 Ch. D. 149.
•8 A.T. Durayappah v. W.L Fernando, 11967] 2 A.C. 337.

The court held that the dissolution of the committee unceremoniously

results in several civil consequences to the committee, e.g., fall in its public
esteem, loss of status and office and public rights and responsibilities
attached to the committee ; loss of expectation of the committee to serve
its full term. Accordingly, the court ruled that before the passing of the
order in question, it was incumbent on the concerned authority to afford
to the municipal committee an opportunity of defending itself against the
allegations made against it. The court emphasized that omission to
mention the right of hearing in the statutory provision under which the
impugned action is being taken, does not ipso faeto exclude hearing.
It was argued before the court in support of the order of supersession
that when the question is one of disqualification of an individual member,
the Act expressly provides for an opportunity of hearing to be given to the
concerned member and, therefore, omission to mention the same in section
238 means, by necessary implication, that the principle of audi alteram
partem is excluded in case of dissolution of the committee. The court
rejected the argument and countered it with the following observation :
It is not always a necessary inference that if opportunity is expressly
provided in [one provision and not so provided in another,
opportunity is to be considered as excluded from that other provi
sion. It may be a weighty consideration to be taken into account but
the weightier consideration is whether the administrative action
entails civil consequences.
The court thus ruled, "The silence of a statute has no exclusionary
effect except where it follows from necessary implication."69
The decisive consideration for excluding hearing is : Does the
administrative action entail civil consequences 7 If so, hearing must be
afforded to it.
The court also negatived the argument of emergency. On behalf of the
government it was argued that there may be emergent situations calling
for swift action to avert a disaster and natural justice would frustrate such
action. To this argument, the court's reply was that even when an
emergency action is to be taken, the right of hearing may not be excluded.
The court's argument in support of this thesis was threefold :
(i) It is difficult to visualise the sudden and calamitous situations where
there would not be enough breathing time to observe natural justice, at
least in a rudimentary way. A municipal body being a public body
consisting of officials and non-officials, one cannot imagine anything
momentous being done in a matter of minutes and seconds.
(ii) Natural justice is aflexibleconcept. It can always be tailored to
the situation at hand. The question to consider will be whether or
not "minimal natural justice", "the barest notion and the 'littlest'
•9 See Mohinder Singh Gill, supra note 66.

opportunity, in the shortest time", cannot be afforded to the concerned

party.
(Hi) If a grave situation really arises, the public interest can be suffici
ently protected by appropriate prohibitory and mandatory action
under other relevant statutory provisions.
The court, however, took the precaution of not being Understood as
laying down "any proposition of universal application" as there may be
other statutes providing for speedy action to meet emergent situations
which may well be construed as excluding the principle of audi alteram
partem.
Preceding the order of supersession being passed by the Lt. Governor,
there was some correspondence between the Government of India and the
municipal committee. The court held that for several reasons this could
not be construed as giving hearing to the committee :
(i) The correspondence in question had passed between the committee
and the Government of India, whereas the action in question against the
municipality was taken by the Delhi Administration and not by the
Govenment of India.
(II) The Delhi Administration never gave any opportunity to the
committee to make any representation about this matter.
(Hi) None of the grounds on which the action by way of supersession
was taken had emerged in the said correspondence.
(iv) NO hint was ever given in this correspondence that the committee's
supersession was being contemplated. All these circumstances prove that
the committee was never put on notice of any proposed action by the
Delhi Administration. Information furnished by the committee in the
course of an exploratory or fact-finding expedition could not be regarded
as an answer to an action-inspired notice.
The court insisted that the requirements of natural justice are met only
if opportunity to represent is given in view of the proposed action. The
demands of natural justice are not met even if the very person proceeded
against has furnished the information on which the action is based, "if it
is furnished in a casual way or for some other purpose." What is impor
tant is that the person proceeded against must know that he is being
required to meet the allegations which might lead to a certain action being
taken against him.
The Supreme Court considered another interesting question which is
often raised before the courts in cases concerning natural justice viz.,
whether failure to observe natural justice does at all matter if the observ
ance of natural justice would have made no difference, the admitted or
indisputable facts speaking for themselves? The court characterised such
an argument as 'pernicious' and rejected it. It said that where on admitted
or indisputable facts only one conclusion is possible, and under the law
only one penalty is permissible, then the court may not compel the observ
ance of natural justice, "not because it approves the non observance of

Vol. XVII] Administrative Law All
natural justice but because courts do not issue futile writs". But, in other
situations, "where conclusions are controversial, however slightly, and
penalties are discretionary", natural justice must be applied. Reference
was made in this connection to what was said in Ridge v. Baldwin,10 by
Megarry J. in John v. Rees,71 and by Lord Denning in Annamunthodo v.
Oilfields Workers' Trade Union.72 A similar view has been taken in the
U.S.A.73 and also by the Supreme Court in India in Chintapalli Agency
Taluk Arrack Sales Coop. Society Ltd. v. Secretary (Food & Agriculture)
Govt, of Andhra Pradesh.7* The court pointed out that there is also the
general principle that justice should not only be done but should be
seen to be done. This maxim is applicable precisely when the court is
concerned not with a case of actual injustice but with the appearance of
injustice, or possible injustice. Chinnappa Reddy J. thus observed :75
In our view the principles of natural justice know of no exclusionary
rule dependent on whether it would have made any difference if
natural justice had been observed. The non-observance of natural
justice is itself prejudice to any man and proof of prejudice indepen
dently of proof of denial of natural justice is unnecessary. It ill
comes from a person who has denied justice that the person who
has been denied justice is not prejudiced.
Even if facts are admitted, it could not necessarily lead to the inference
of incompetence or abuse of powers by the committee. It could plead
an honest error of judgment on its part, or some misapprehension about
the state of facts or state of the law. It could plead that in the circum
stances, the drastic action of supersession was not called for. Therefore,
merely because facts were admitted or were indisputable it did not follow
that natural justice need not be observed. Thust the court ruled that the
said order was vitiated by the failure to observe the principle of audi
alteram partem.
Ordinarily the court would have quashed the order and reinstated the
committee leaving the Delhi Administration free to take action anew if
70
[1964JA.C.40
71
[1970] 1 Ch. 345. Megarry J. says: "As everybody who has anything to
do with the law well knows, the path of the law is strewn with examples
of open and shut cases which, somehow, were not of unanswerable charges
which, in the event, were completely answered; of inexplicable conduct which
was fully explained; of fixed and unalterable determinations that, by discus
sion, buffered a change. Nor are those with any knowledge of human nature
who pause to think for a moment likely to underestimate the feelings of
resentment of those who find that a decision against them has been made without
their being afforded any opportunity to influence the course of events."
" [1961] 3 AH E.R. 621 (H.L.).
" Margarite Fuentes et al v, Robert L. Shevin, (1972) 32 L Ed. 2d 556, 574.
'* A.LR. 1977 S.C. 2313; XIII A.S.LL. 460-462 (1977).
" S«pra note 64 at 147.

it so liked. But, in the instant case, no further relief other than the
declaration was given to the appellants because of two reasons :
(i) the normal term of the committee was due to expire within the
next few days and the reinstatement of the committee at this stage would
lead to confusion and even chaos in the affairs of the municipality.
(ii) The appellants themselves were only interested in having the stigma
cast on them by the order removed and not for any farther relief.
Another notable pronouncement during the year under review on
natural justice is Swadeshi Cotton Mills v. Union of India7* Under the
Industries (Development and Regulation) Act, 1951 the government can
take over the management of an industrial undertaking under certain
circumstances. Under section 18,4(6), this can be done if after an
investigation under section 15, the government forms the opinion that the
undertaking is being managed in a manner highly detrimental to public
interest. It is already settled through several cases that the government must
observe natural justice before passing an order of take-over under section
1% A(b).77 There is another provision, section 18/4/4, newly added, under
which the government can take over an industrial undertaking in certain
circumstances without an investigation under section 15 on the ground
that production has been or is likely to be affected and, thus, immediate
preventive action becomes necessary. The circumstances for taking action
under section 18,44 are restricted as compared to under section 184. The
significant question for consideration in Swadeshi was whether the manage
ment ought to be given a hearing before the undertaking was taken over
under section IS A A ?
The government argued against implying any right of hearing in
section IS A A because (/) action undertaken under this provision was
urgent and that excluded natural justice; (//) the fact that the take-over under
section ISA was pre-conditioned by investigation procedure but not under
section ISAA(1) showed that Parliament had excluded hearing in such a
case. The Allahabad High Court had held earlier that natural justice
was not necessary under section ISA A because under it the government
is to take prompt action.78 But the Supreme Court negatived the govern
ment's contention and ruled that the government cannot take action under
section IS A A without observing natural justice at the pre-decisional stage.
The court stated that it would be extremely reluctant to exclude hearing
when the statute conferring power is silent with regard to the giving of
a hearing and the administrative decision involves civil consequences of
a grave nature. The court emphasized that the "rule of fair play must
not be jettisoned save in very exceptional circumstances, where compulsive
necessity so demands. The court must make every effort to salvage this
M
A.I.R. 1981 S.C. 818.
" Kesava Mills Co. v. India, A.I.R. 1973 S.C. 389.
" Janki Sugar Mills v. Union of India, A.I.R. 1976 Ali. 99.

cardinal rule to the maximum extent possible, with situational modifica

tions". The court emphasized that "immediate action" under section
18 A A means without investigation under section 15, but it does not
exclude natural justice at the pre-decisional stage.
The court also emphasized the point that urgency may not always
exclude natural justice. Urgency is a matter of degree. There may be
cases of extreme urgency where administration brooks no delay but such
cases are rare. Where urgency is not so extreme, natural justice has to
be applied, adapting it to the needs of the situation—"to adjust and
strike a balance between the competing claims of hurry and hearing".
Natural justice is a flexible concept. Section \SAA(\) does not exclude
the application of the audi alteram partem rule at the pre-decisional stage—
"a short measure fair hearing adjusted, attuned and tailored to the exigency
of the situation". To what extent natural justice applies at the pre-
decisional stage will depend upon the degree of urgency, if any, evident
from the facts and circumstances of the particular case. The power
under section \SAA is drastic and the consequences of take-over are
far-reaching and its effect on the rights and interests of the owner grave
and deprivatory.
There is a provision in the statute (section 18F) under which the
government has power to cancel the order on an application of the owner
if it appears to the government that such an order is no longer necessary.
The court refused to accept the hearing under section 18F as a good
substitute for hearing before passing the order. "The so-called right of
post-decisional hearing available to the aggrieved owner of the under
taking under section 18F is illusory as the operation and effect of the power
of review is 'prospective' and not 'retroactive' "—being strictly restricted to
and dependent upon the post-take-over circumstances". The cancellation
of the order under section ISF cannot have the effect of "annulling,
rescinding or obliterating the order of take-over with retroactive force;
it can only have a prospective effect". The court emphasized that the
post-decisional hearing to an aggrieved owner is not an "appropriate
substitute for a fair-hearing at the pre-decisional stage". The Act in
question provides no adequate remedial hearing to the aggrieved
party even where his undertaking has been taken over arbitrarily on
insufficient grounds. Even when facts "speak for themselves", and denial
of natural justice may not cause any prejudice to an affected person,
natural justice has to be applied as "non-observance of natural justice is
itself prejudice to any man and proof of prejudice independently of proof
of denial of natural justice is unnecessary."79
The consistent view of the Supreme Court had been that a decision
made without natural justice makes tfye decision null and void.80 But the
79
S.L. Kapoor v. Jagmohan, supra note m. Also see, CATA Sales Co-op. Society v.
A.P. Govt., supra note 74.
80
XIII A.S.I.L. 467 (1977); XI A.S.I.L, 466-468 (1975); X A.SJ.L. 523-528 (1974).

court did not quash the decision of take-over in Swadeshi. It agreed with
the government suggestion that while considering the matter under section
1SF (in exercise of its curial function) it would give a full and effective
hearing on all aspects touching the validity and/or correctness of the order
of take-over. Accordingly, the court referred the case back to the central
government to give a full, fair and effective hearing to the aggrieved
owner within three months, without however quashing the original
order.
Some of the significant points made by the court in the above-mention
ed judgment as regards the concept of natural justice are as follows :
(/) In India, great strides have been made in the area of natural justice.
Before Dr. Bina Pani DeVs case,81 right of hearing was available only in
those cases where the administration exercised quasi-judicial power. Bina
Pani held that even an administrative order or decision in matters involving
civil consequences has to be made in accordance with natural justice. This
trend has since been strengthened through other judicial pronouncements.88
(ii) Natural justice can be excluded either specifically or by inevitable
implication. Whether or not natural justice has been excluded depends
upon the language and basic scheme of the provision conferring the power,
the nature of the power, the purpose for which it is conferred and the
effect of the exercise of that power.83
(in) Natural justice may be disregarded "in an emergent situation
where immediate action brooks no delay to prevent some imminent danger
or injury or hazard to paramount public interests".84 Similarly, action on
grounds of public safety or public health may justify disregard of the rule
of prior hearing.
(iv) The concept of urgency was restricted somewhat in Mohinder GilVs
case.85 As natural justice is flexible, the competing claims of hurry and
hearing are to be reconciled by making situational modifications. In such
a case, a brief hearing may be given. In extreme situation of urgency, a
post-decisional hearing may be given. The court observed in this connec
tion in Swadeshi :
[S]uch cases where owing to the compulsion of the fact situation
or the necessity of taking speedy action, nopre-decisional hearing
is given but the action is followed soon by a full post-decisional
hearing to the person affected, do not, in reality, constitute an
'exception' to the audi alteram partem rule. To call such cases an
'exception' is a misnomer because they do not exclude 'fair-play in
81
Supra note 65.
82
A. K. Kraipakv. India, A.I.R. 1970 S.C. 150; Mohinder Singh Gill's case, supra note
66; Maneka Gandhi's case, supra note 7.
S3 Union of India v. / . N. Sinha, A.I.R. 1971 S.C. 40.
94
Examples of such action are : s. 133, Code of Criminal Procedure; s. 17 of the Land
Acquisition Act.
88
Supra note 66,

action', but adapt it to the urgency of the situation by balancing the
competing claims of hurry and hearing.86
(v) Whether the hearing is pre-decisional or post-decisional, the person

affected must have reasonable opportunity of being heard and the hearing
must be a genuine hearing and "not an empty public relations exercise".
The ultimate remedy given by the court in Swadeshi, however, comes
as an anticlimax. Having established that there should be a pre-decisional
hearing under section IS A A of the Act, the only logical course for the
court was to void the order of take-over of the undertaking. There is the
well-established principle of administrative law—and the Supreme Court
has itself acceped it in a number of cases,87 the latest of which is Kapoor
v. Jagmohan88 that failure of natural justice makes an order void. The
court did not apply this principle in Swadeshi to its logical conclusion.
After having ruled that a post-decisional hearing could not be a proper
substitute for a pre-decisional hearing,89 and also that there ought to be a
pre-decisional hearing under section \%AA, at the end of the day, the
court in effect compromised its position on principle by accepting a post-
decisional hearing instead and by not vacating the order in the first
instance as being void. It is not very clear from the decision as to why
the court did not follow the logic of its reasoning. The most proper and
logical course would have been to quash the order and let the government
initiate proceedings for take-over afresh according to law if it so desired.
Swadeshi is one more example of dichotomy between precept and practice
on the part of the judiciary.90
It is now clearly established that cancellation of a licence is a quasi-
judicial function and that the licensee deserves a hearing before his licence
is cancelled by the concerned authority. In State of Punjab v. Ajudhia
Nath,91 the Supreme Court applied this principle to the cancellation of a
liquor licence.
Licences to liquor vendors in various parts of Punjab during the year
1965-1966 were sold by public auction. Each licensee was to lift his quota
of liquor each month or deposit still-head duty realisable thereon. When
the licensee did not lift the entire minimum quantity of liquor which he
86
*S7//?/*anote76at831.
87 Supra n o t e 79.
8
* Supra n o t e 64.
99
In this connection may be noted the following statement of the Allahabad High
Court in M.E S. Co. v. State : "There is a world of difference between a hearing
given before the determination is made by an authority and a hearing given after
such determination has been made. Rules of natural justice require a hearing
before the determination is made." A.LR. 1975 All. 29, 34.
•° Also see the comments of the author at XI A.S.I.L. 468 (1975) on this aspect of the
matter.
91
A.I.R 1981 S.C, 1974. Also see, North Bihar Agency v. State of Bihar, A.I.R. 1981
S.C. 1758, infra.

was required to lift as agreed by him in the contract, the state sent a
demand notice to him to pay the still-head duty on the entire
minimum quantity of liquor. The question was whether the state should
have given a hearing to the licensee before giving him the said notice.
The Supreme Court in Ajudhia Nath?2 answered the question in the
negative. The court maintained that hearing was essential for cancella
tion of a licence but "the same principle of natural justice does not come
into play when the demand is merely for payment of a sum becoming
due under the conditions subject to which the licence was granted". The
still-head duty had become due under the contract; it had not been paid
by the respondents; no hearing was necessary when demands were made
for payment of the said duty.93
A modern administrative technique is to * blacklist' a person and thus
disqualify him for certain purposes. That means he cannot enter into
any gainful relationship with the concerned authority in the area in
question. This is usually done because in the opinion of the authority, he
is guilty of some lapse or misconduct and so the authority does not want
to have any dealings with him in future. This step may cause great
economic loss to the person blacklisted. It is now well established that
before an authority blacklists a person, he should be afforded natural
justice.9* This proposition has been recently reiterated by the Delhi High
Court in Bhim Sain v. Union of India95
The Andhra Pradesh High Court has distinguished between * black
listing' and rejection of a tender of an individual on the basis of
unsatisfactory past performance.96 A, B and others submitted tenders
for some construction work. A's tender was the lowest and B's was the
next lowest. The tender was awarded to B and not A. A's tender was
rejected because his past performance with the deparment did not inspire
sufficient confidence to entrust work of the present magnitude to him. The
grievance against him was that in the past he had never adhered to the
time-schedule and had always delayed completion of the work entrusted
to him. It was also said that in the past he had executed small works and
had no previous experience of doing any construction work of such a
magnitude. On the other hand, B's performance in the past had always
been satisfactory. The court rejected A's argument that B was shown a
favoured treatment. "Able and efficient people must have their rewards.
Promotion of excellence is one of the constitutional ideals we swear by."
** Supra note 90.

,3
Reference was made to Punjah v. Balf>ir Singh, A.I.R. 1977 S.C. 1717; Punjab v.
Mulkh Raj, A.I.R. 1977 S.C. 1550.
** Eurasian Equipment & Co. Ltd. v. State oj West Bengal, A.LR. 1975 S.C. 266;/.
Vitangandanv. Executive Engineer, AJ.R. 1978 S.C. 930; XIV A.S.I L. 361(1978);
XI A.S.I.L. 469(1975).
9S
A.I.R. 1981 Del. 260.
98
Sri Rama Eng Contractors v. Dept. of Space, Govt, of India, A.T R„ 1981 A,Pf J 65,

A's main argument, however, was that his tender had been rejected on
the basis of his past performance reports without affording him any
opportunity to contradict or confirm the same and this was in violation of
natural justice, and that his exclusion on the basis of lack of experience
and past performance amounted to blacklisting him. The court rejected
this argument saying that there was a difference between rejection of a
particular tender and a general blacklisting of a contractor. Blacklisting
amounts to a general disqualification and denies to the person concerned
a civil right. So long as he remains blacklisted he loses his legal capacity
and status to act as a contractor for the concerned department. *'Blacklis
ting brings about disability not with reference to any particular contractual
venture but generally in relation to an occupation. It brings about a
practical metamorphosis of ineligibility over the contractor". This is
quite different from rejection of a specific tender after considering his
suitability for that particular work. He remains eligible to be considered
for other works. He loses no legal or social rights. The court also ruled
that the present case did not call for application of natural justice.
Rejection of a tenderer by the government on the ground of relative
unsuitability involves no forfeiture of his preexisting rights or interests
nor does it defeat any of his 'legitimate expectations' nor does it inflict on
him any civil consequences.
Under section 26, the government has power to exempt any building
from the operation of the Andhra Pradesh Buildings (Lease, Rent and
Eviction) Control Act, 1960. The Andhra Pradesh High Court decided in
A.N. Dyes Corpn. v. State97 that before granting exemption to a building,
its tenant must be heard. A pre-decisional opportunity must be given to
the tenant so that he may make his representation against granting
exemption. The order of exemption takes away the protection given and/or
benefit conferred on the tenant by the Act which results in certain
civil consequences. No distinction can be made on the ground that the
order is an administrative order or made bona fide in the exercise of
statutory power vested in the government. As the tenant is directly
affected by the order of the government, he must be given an opportunity
to submit the reasons or grounds which should also be taken into
account by the government before it exercises the power under section 26
of the Act.
A student in an educational institution was prosecuted under section
307, Indian Penal Code for stabbing a co-student. The principal passed
an order debarring the student from entering the premises of the institution
and from attending classes till the pendency of the criminal case against
him. The order was challenged on the ground of denial of natural justice
to the student. But the Delhi High Court in Abhay Kumar v.
K. Srinivasan98 rejected the contention and held the impugned order to
87
A.I.R. 1981 A.P. 386. See Indian Sugar & Refineries Ltd. v. Amaravathi Service Co-op
Society, A.I.R. 1976 S.C 775; XII A.SJ.L. 485 (1976).
M
A I.R. 1981 Del 381.

be "rational and judicious". It was a suspension order in the nature of a

preventive action and not a final order, the main object of which was to
maintain peace in the campus. Here, the order could be compared with
an order of suspension of an employee pending an inquiry against him.
In passing such an order, no hearing need be given to the concerned
employee. On the other hand, in Sushma v. Osmania University,99 an
order passed by the vice-chancellor cancelling an examination of certain
students without giving them a hearing was held bad. The reason was
that no allegation of malpractice at the examination was made against any
of these students. This feature distinguished the fact-situation in Sushma
from that in Subhas Chandra1*® where the examination held at a centre
was cancelled as a whole because of mass-copying without giving any
hearing to the concerned candidates. As the court observed:101
When, as in this case, nothing is alleged against the appellants

that they have indulged in any malpractices, it is all the more
imperative for the Vice-Chancellor to have issued them a show-cause
notice why the examination should not be cancelled.
In Sanjay Lobo v. Rajasthan University™2 the Rajasthan High Court

has declared unequivocally that before the examination of a candidate can
be cancelled by the university because of use of unfair means by him, he
must be given an opportunity of being heard by the committee appointed
to inquire into the matter. The principles of natural justice require that
the candidate must be given an opportunity of presenting his case before
that organ of the university which has to award the punishment. It shows
that there is a difference between the fact situation in Subhas Chandra and
the one in Sanjay Lobo. When examination of all the candidates at a
particular centre is cancelled, there is no stigma attached to any particular
candidate. But when the examination of a specific candidate is cancelled
on the ground of use of unfair means by him, then a stigma is attached
to him affecting his future career and so such a student deserves to have an
opportunity to clear his name if he can.
The impact of the above-mentioned judicial pronouncements is to
make natural justice a very general and broad procedural concept in
modern Indian administrative process. The Supreme Court has scotched
a number of heresies which are usually raised to deny natural justice. But
still there are several situations where natural justice cannot be claimed.
One such situation arises when an order passed by the administration is
characterised as 'legislative'. It is accepted generally that no hearing need
be given when a 'legislative' order is being made by the administration.
99
A.I.R. 1981 A.P. 373.
100
Bihar SE. Board v. Subhas Chandra, A.I.R. 1970 S.C. 1269; VI A.SJ^L, 87 (1970),
101
Supra note 99 at 379.
*M AI.R, 1981 Raj. 69,

An order of a general nature, and not one applying to a single person or
a few specified persons, may be regarded as 'legislative'. Several cases
during the year have reiterated the proposition that a legislative order
excludes natural justice.103
Bias
The question of bias has been considered by the Supreme Court in
SKP. Kapoor v. State of Himachal Pradesh.™ Dr. G. made annual con
fidential reports relating to several doctors working under his administrative
charge. In a promotion exercise, G. was himself a candidate competing
with several of those doctors. The selection committee took into
consideration the confidential reports made by G. concerning the other
doctors. The court held that it was not "fair" for the selection committee
to take into account the reports made by G. in respect of other doctors
who were competing with him for promotion.
From the circumstances of the case, the court further concluded that
the whole selection exercise was made in post-haste completing the entire
selection process in one day. It was clear that some influential person
(such as the chief minister) was interested in expediting the matter through
in undue haste. There was no urgency about the promotion exercise and
such rush is "not usual" in any state government. The court thus
required that the matter of selection for promotion be considered
afresh.
Norms of fair hearing

In North Bihar Agency v. Bihar,105 the drug licence of the appellants
was cancelled without giving them a proper opportunity of hearing. Also,
certain charges were not mentioned in the show cause notice initially
served on the appellants but later on the appellate authority did take
those charges into consideration and confirmed the order of cancellation
of the appellants' licence. In the circumstances, the order was quashed
as the authority had relied upon certain additional material without
furnishing an opportunity to the licensees to meet the same. The material
ought to have been furnished to the appellants before reliance was placed
thereon for the purpose of confirming the cancellation order passed by the
licensing authority in the first instance. There was thus a denial of
natural justice.
While considering objections to a scheme framed under section 68C of
the Motor Vehicles Act, 1939 the state government refused to summon
witnesses and to enforce the production of documents at the request of
the appellants. It was argued that in this way, the government acted
1M
Supra sec. II.
*o* A.LR. 1981 S.C. 2181, 2196.
"• A.I.R. 1981 S.C. 1758.

illegally in shutting out evidence and thus really denied to the appellants
any real opportunity of being heard. In Saraswati Devi v. State of Uttar
Pradesh10* the Supreme Court rejected this argument. The court found
that when the case was at the evidence stage, the appellants had submitted
applications requesting summoning of certain witnesses with certain
documents. These applications were rejected by the concerned authority
with the remark that it was not necessary to issue letters of request to
witnesses or to send for any records. "The objectors can only examine
those witnesses whom they themselves brought". The argument of the
government was that under the relevant rules, no power to summon
witnesses had been conferred on the government and, therefore, the order
refusing the appellant's request was correct. The court found substance
in this contention. The government was acting in a quasi-judicial capacity
and so it could devise its own procedure to discharge its functions
effectively. The court laid down the following proposition in this
connection:107
[W]hen the statute gives the power to the State Government to afford
to the objectors a reasonable opportunity of being heard and to
take evidence, oral as well as documentary, in support of their
objections, the power to send letters of request to witnesses to
appear and give evidence or to produce documents is inherent in
the situation and needs no statutory sanction, although the power
to enforce their attendance or compel them to produce documents
is lacking on account of absence of conferment thereof by a
statute.
To support the above proposition, the court referred to the Nehrulm

case where it was said that the authority might help the objector to secure
the attendance of the witnesses by issuing summons to them. But there
was no coercive power in the authority to compel the attendance of the
witnesses in the absence of any provision made for the purpose in the
rules. It would be up to the witnesses to appear or not to appear in
answer to the summons.
But then the court answered in the negative the question: Was an
order of the government rejecting a prayer for issuance of summons
illegal? Referring to the Capital Multi-purpose109 case for the purpose,
the court referred to the following remark of Wanchoo J. there:
But in the absence of such power (to compel the attendance of
witnesses) all that the authority can do is to issue letters and it is
108
A.LR. 1981 S.C. 660.
10
? Id. at 669.
108
Nehru Motor Transport Co-operative Society Ltd. v. Rajasthan, A.I.R. 1963 S.C.
1098.
10
» AJ.R. 1967 S.C. 1815.

Vol. XVII] Administrative Law 48?
open to those persons to appear or not. In this situation if an

authority decides not to issue such letters it cannot be said that
there was no effective hearing.
The court now concurred with Wanchoo J.'s observation. It thus
ruled that no right of the appellants was infringed when their applications
for summoning witnesses and production of documents were rejected.110
A detenu is not entitled to claim as of right to be represented by a
lawyer before an advisory board.111 This was also the Supreme Court's
interpretation of section 11(4) of the Prevention of Blackmarketing and
Maintenance of Supplies of Essential Commodities Act, 1980. But the
court went further to say that the detenu is entitled to make such a
request to the board, and the board is bound to consider such a request
when so made. In Nandlal v. Punjab112, the detenu made the request but
it was denied by the board. At the same time, the board allowed the
detaining authority to be represented by lawyers. The court held the denial
as according "differential treatment" to him based on no "rational basis".
The detaining authority was allowed to be represented by a counsel but
the detenu was not afforded legal assistance. The court said that although
the detenu has no right to legal assistance in the proceedings before the
board, it is not precluded from allowing such assistance to the detenu,
particularly when it allowed the state to be represented by an array of
lawyers. The procedure of the board was held to be arbitrary vitiating
the impugned order. The court emphasized that the board must act in a
manner which is just and fair to both the parties before it.113
In Kavita111 the court emphasized that "as often than not adequate
legal assistance may be essential for the protection of the Fundamental
Right to life and personal liberty guaranteed by Art. 21 of the Constitu
tion"115 as well as the statutory provision giving a right to be heard to a
detenu. This valuable right may be jeopardized and reduced to mere
nothing without adequate legal assistance, in the light of the intricacies
of the problems involved and other relevant factors. Therefore, whether
or not legal assistance should be afforded by the advisory board must
necessarily depend on the facts and circumstances of each case. The court
observed, "...Where a detenu makes a request for legal assistance, his
request would have to be considered on its own merit in each individual
110
See on this point XI A.S.I.L. 475 (1975).
111
Smt. Kavita v. Maharashtra, A.I.R. 1981 S.C. 1641 dealing with s. 8 of the
Conservation of Foreign Exchange and Prevention of Smuggling Activities Act,
1974.
ua
A.I.R. 1981 S.C. 2041.
118
On legal representation in quasi-judicial proceedings see, A.S.I.L. 473 ; XII A.S.I.L.
493-494(1976).
1X
* Supra note 111.
118
On art. 21, the most significant case is Maneka Gandhi v. Union of India, supra note 7
XIV A.S.I.L. 364(1978).

"116
case
The court further ruled that it was for the advisory board and not for
the government to afford legal assistance to the detenu. Request for the
purpose should be made to the board for permission to be represented by
a lawyer. These observations of Chinnappa Reddy J. in Kavita have now
been endorsed by the Supreme Court in Nandlal.
It appears to be well established now that a quasi-judicial body is to
give reasons for its decision and that the reasons have to be adequate.117
This is because giving a reasoned decision is regarded as a substantial
check upon misuse of power by the decision-maker. Parties can know
why they lost the case and it facilitates appeal by them to a higher body
and, ultimately, to invoke judicial review. An application for registration
as "registered user" of a trade mark by a company was refused by the
government on the grounds of "interests of general public and the
development of indigenous industry in India." This was nothing more than
merely reciting the words of the relevant section of the statute. The Delhi
High Court ruled in Imperial Chemical Industries Ltd. v. Registrar of Trade
Marks11* that these reasons were no reasons. The government should
state why it was against public interest and how it would hinder and not
help the development of industry. The government should give "facts,
circumstances and reasons in their order so that the petitioners are able to
know the official view point and counter them by placing before the
government the industries' case".
The question of impact of failure of natural justice on the order made
by the concerned authority has been coming before the courts on and off,
but the position does not appear to be crystal clear.119 Although the
general rule is that failure of natural justice makes an order void, the
courts do not apply this principle in each case as a matter of course but
at times do whittle down this principle in practice. Ultimately what remedy
would be given by the court when failure of natural justice is established
appears to be a matter of judicial discretion in the circumstances of the
case. A reason for this judicial attitude may be judicial apathy to void
government decisions. But this case to case approach does make
administrative law uncertain, confused, illogical and unscientific. A recent
example of this equivocal judicial attitude is the Swadeshi case.120 In
Kapoor121 also, the order was not voided but there were convincing reasons
for not doing so. The reasons have hardly been articulated in Swadeshi
for compromising the principle of voidability for non-compliance with
natural justice. Another illustration of this judicial strategy is furnished
114
A.I.R. 1981 S.C. 1641 at 1645.
111
XII A.S.I.L. 496 (1976) ; XIII A.S.I.L. 464 ; XVI A.S.I.L. 382 (1980).
118
A.I.R. 1981 Del. 190.
»• XIII A.S.I.L. 467 (1977) ; XI A.S.I.L. 466-8 (1975) ; X A.S.I.L. 523-8 (1974).
120
Supra note 76.
1U
Supra note 64.

by P. Kasilingam v. P. S. G. College of Technology.x%% In this case, the
government acting as a tribunal set aside an order made by the manage
ment of a college without hearing the management. It thus acted in
breach of the rules of natural justice. The court accepted that there was
considerable force in the contention that a duty was cast on the government
to hear the management before deciding the matter. In the words of Sen J.
on behalf of the court :123
It is needless to stress that ordinarily the Government must, in all
such cases, as a matter of course, give the parties the opportunity of
making their representation before making a decision.
Ordinarily, an order passed without observing natural justice (when it
is necessary to do so) would be void. But in this particular case, the court
did not set aside the government's order and did not send the case back
for rehearing for the court took the view that no useful purpose would be
served as the government would make a similar order again. This, to
say the least, is an unsatisfactory position to take and seeks to dilute the
concept of natural justice. There was no inevitability about the government
order and after hearing the management, the government could have
modified its position.
In Sarjoo Prasad v. General Manager,12* on the other hand, the court
took a strict view of the failure of natural justice. Appellant's date of birth
once accepted by the respondent was unilaterally changed and the appellant
retired from service without being given an opportunity to sustain the
original date of birth. The court (per D. A. Desai J.) referred to the
Binapani125 case where it was held that the date of birth without notice
and without giving opportunity to the concerned employee cannot be altered
to his disadvantage and prejudice because "an administrative order which
involves civil consequences must be made in conformity with the rule of
natural justice..." In the instant case, the appellant was not afforded any
natural justice and on this ground the order of retirement of the appellant
from service as well as the order correcting the date of birth were set aside.
The court ordered that he be continued in service. The respondent, if he
so desired and considered it necessary, could hold an inquiry about the
correct date of birth afresh after giving notice and opportunity of hearing
and producing evidence on either side. Similarly, in Virendra Kumar v.
Union of India1** an order of termination of service from the army on
grounds of health was set aside for failure to observe procedural rules and
he was held to come back to his service. The court further ordered
payment of his salary from the date of termination.
»a A.I.R. 1981 S.C. 789.

i43
Id. at 793.
L
« AXR. 1981 S.C. 1481.
L
" Supra riots 65.
*6 Supra note 57.

Communication of an order
Dara Singh v. State through Director of Enforcement1*1 is an important
judicial pronouncement underlining the need of communication of orders
made by quasi-judicial bodies to the concerned persons. The Director of
Enforcement, Foreign Exchange Regulation, by an ex parte order held the
appellant guilty of contravening the provisions of section 9 of the Foreign
Exchange Regulation Act, 1947 and imposed a fine on him. He was
directed to pay the fine within 45 days of the issue of the order. As the
appellant did not pay the fine as directed, criminal prosecution was
launched against him by the director. The appellant denied that any copy
of the order in question had been served on him. He also denied that he
had any knowledge of the order requiring him to pay the fine.
Holding the appellant not guilty of any offence, the Supreme Court
referred to rule 5 of the Adjudication Proceedings and Appeal Rules, 1957
which requires that a copy of the order made by the director be supplied
free of charge to the person against whom the order is made. The court
said that the service of a copy of the order on the concerned person is not
an "empty formality". In the absence of any legal provision requiring
the director to pronounce his order in the presence of the affected person,
the only date on which the order can be deemed to have been effectively
made is the date on which he gets the knowledge of the order either by
supply of a copy of the order or by any other means. Under the statute,
the concerned person has a right of appeal to the appellate board. Also
the non-compliance of the order exposes him to further punishment. In
case of an order which is appealable but is not pronounced in the presence
of the affected person, the date of his knowledge of the order is the date
of the order for computing the period of limitation irrespective of the date
on which it is actually passed.128 "It would be^wholly unjust to compute
the period of limitation to file an appeal from a date earlier than the date
on which the party who is entitled to prefer an appeal has the knowledge
of the order." It is equally so even in the case of an order non-compliance
of which would lead to prosecution and consequent imposition of penalty.
The court emphasized that when the law lays down that non-compliance
with an order would expose the person against whom it is made to
criminal liability, it is reasonable to hold that in the absence of proof of
his knowledge of the order no penal action can be taken against him for
non-compliance with it. No person can be convicted for failure to pay
the penalty imposed on him by the director when he is not at all informed
earlier about the imposition of the penalty. "Hence in the absence of
proof of his knowledge of the order either by the supply of the copy of
the order" or "in any other manner," it cannot be said that such person
187
A.I.R. 1981 S.C. 427.
188
Raja Harish Chandra Raj Singh v. The Dy, Land Acquisition Officer, A.I.R. 1961 S.C
1500.

has failed to pay the penalty imposed on him under the Act and has
become liable to criminal prosecution. The information or knowledge
which he may gather about such order in the course of the criminal
proceeding instituted for its non-compliance, cannot be a substitute for
the knowledge of the order as mentioned above, which would ordinarily
precede the institution of such proceedings.
Tribunals
In Tata Consulting Engineers v. Workmen129 the Supreme Court has

pointed out that -'consent by a party cannot confer jurisdiction on a court.
What is without jurisdiction will remain so". Therefore, the court quashed
an order of the industrial tribunal as being outside its jurisdiction. In
Grindlays Bank v. Central Govt. Industrial Tribunal130 the Supreme Court
has ruled that the industrial tribunal has power to set aside an ex parte
award where a party is prevented from appearing at the hearing due to a
sufficient cause. Although there is no express provision in the relevant
Act or the rules for the purpose, a tribunal should be considered to be
endowed with such ancillary or incidental powers as are necessary to
discharge its functions effectively for the purpose of doing justice between
the parties.
Decision by a quasi-judicial body cannot be reopened by the body
concerned. The principle of res judicata applies in case of quasi-judicial
tribunals. Decision once given cannot be re-opened or reviewed by a
tribunal under its power of suo motu revision.131
IV DISCRETIONARY POWERS
Excessive delegation
Broad discretion conferred on the Comptroller and Auditor-General in

respect of fixation of seniority among the staff was challenged as being
arbitrary. But in Accountant General v. S. Doraiswamylsz the Supreme
Court rejected the contention saying that the Comptroller and Auditor-
General is a "high ranking" constitutional authority,133 and can be
expected to act according to the needs of the service and without arbitra
riness. He is the constitutional head of one of the most important
departments of the state, and is expected to know what the department
requires and how best to fulfil those requirements.
A more strict approach is noticeable on the question of excessive
" 9 AJ.R. 1981 S.C. 599, 604.

130
A.I.R. 1981 S.C. 606, 608.
181
Debabrata Tripathy v State, A.I.R. 1981 Cal. 114. Also see in this connection, XVI
A.S.I.L. 386(1980).
132
Supra note 26.
138
The office of the Comptroller and Auditor-General is created by art. 148 of the
Constitution.

delegation in Air India v. Nergesh Meerzalzi According to regulation

46(0(0 m a d e by t h e Air India (a statutory corporation), the normal age
of retirement of an air hostess was fixed at 35 years but, at the option of
the managing director, the same could be extended to 45 years subject to
other conditions (such as medicalfitness)being satisfied. Commenting on this
provision, the Supreme Court ruled that the factors to be taken into consi
deration in deciding whether extension is to be given or not must be
relevant, and bear a close nexus to the nature of the organization and the
duties of the employees. "Where the authority concerned takes into
account factors or circumstances which are inherently irrational or illogi
cal or tainted, the decision fixing the age of retirement is open to serious
scrutiny". But the court held the regulation invalid because it seemed to
arm the managing director with uncanalized and unguided discretion to
extend the age of air hostesses at his option which appears to suffer from
the vice of excessive delegation of powers. The court added :
It is true that a discretionary power may not necessarily be a discri
minatory power but where a statute confers a power on an
authority to decide matters of moment without laying down any
guidelines or principles or norms the power has to be struck down
as being violative of Article 14.135
The managing director was given an uncontrolled, unguided and
absolute discretion to extend or not to extend the period of retirement in
the case of air hostesses after 35 years. The words "at the option" were
wide enough to allow the managing director to exercise his discretion in
favour of one air hostess and not in favour af the other which could result
in discrimination. "The Regulation does not provide any guidelines,
rules or principles which may govern the exercise of the discretion by the
Managing Director". Similarly, there is also no provision in the regula
tion requiring the authorities to give reason for refusing to extend the
period of retirement of air hostesses. The provision does not even give
any right of appeal to higher authorities against the order passed by the
managing director. Under the provision, the extension of the retirement
of an air hostess is entirely at the mercy and sweet will of the managing
director. The conferment of such a wide and uncontrolled power on the
managing director was clearly violative of article 14 as the provision
suffered from the vice of excessive delegation of powers. Consequently,
the regulation in question was struck down. The effect of this ruling was
that air hostesses would retire at the age of 45 years.
As to the doctrine of excessive delegation of discretionary power, it
can be regarded as one corresponding to the doctrine of excessive delega
tion of legislative power.136 The courts have mainly invoked article 14 to
»* A.I.R. 1981 S.C. 1829.
"■ Id. at 1857-58.
*» For this doctrine see, XVI A.SJ.L. 362; Jain & Jain, supra oote 17 at 32-38.

develop the doctrine of excessive delegation of discretionary power. They

take the view that conferment of too broad and uncanalised power on
administrators is discriminatory under article 14. Discretionary power
ought to be hedged in by substantive standards and procedural safeguards
to make it valid.137 As to the tenability of the argument of a "high
official" being vested with power used by the Supreme Court in Dorai-
swamy1*8 to uphold broad discretion given to the Comptroller and
Auditor-General, reference may be made to the comments made by this
author in tjie 1979 Survey.139
Extent of discretionary power

Section 6A of the Essential Commodities Act, 1955 deals with the
administrative power of seizure and confiscation. It provides that the
collector, if satisfied that there has been a contravention of the order made
under section 3, may confiscate the essential commodity so seized. This
could be done after giving a hearing to the party concerned. Provision
has been made for an appeal to a judicial authority. The Supreme Court
commenting on this provision in State of Karnataka v. KB. Walvakar1^
pointed out that such power of confiscation is a discretionary power. The
deputy commissioner can, in the given circumstances of a particular
case, even direct the confiscation of the entire consignment of an essential
commodity in relation to which there has been a contravention of any
order issued under section 3. It all depends on the facts and circumstances
of each case whether the confiscation should be of the entire consignment
or part of it, depending on the nature of the contravention. The court
said :
The power conferred on the Deputy Commissioner, under S. 6-A
of the Act, by the use of the word may', makes the power coupled
with a public duty. Sometimes it may be in the public interest to
direct confiscation of the entire consignment of an essential com
modity when there is deliberate contravention of the provisions of
an order issued under S. 3.140a
In the instant case, 7200 kilograms of groundnut oil was confiscated. The
court held the order valid.
The executive power of the Union of India, when it is not trammelled
by any statute or rule, is wide, and pursuant to this power, it can make
executive policy. A policy once formulated is not good for ever; the
Union of India is perfectly competent to change it, rechange it, adjust it
137
XVI A.S.I.L. 389 et. seq. (1980).
*■* Supra note 132.
199
XV A.S.I.L. 323-326 (1979).
140
A.I.R. 1981 S.C. 1468.
140
*Id at 1471.

and readjust it according to the compulsions of circumstances and

imperatives of national considerations. But the government cannot
act arbitrarily or unequally. There is no bar to the government changing
the policy formulated earlier by it "if there are good and weighty reasons
for doing so". It is entirely within the reasonable discretion of the
Union to stick to its earlier policy or give it up. "But one imperative of
the Constitution implicit in Art. 14 is that if it does change its policy, it
must do so fairly and should not give the impression that it is acting by
any ulterior criteria or arbitrarily". The policy after being m^de should
be made known to the concerned people* "After all, what is done in
secret is often suspected of being capricious or mala fide". Every
administrative act must be done fairly.141
No review on merits
The Supreme Court has reiterated the principle that the courts do not
review discretionary decisions on merits. In P. Kasilingam v. P.S.G. College
of Technology,142 the court has asserted that a High Court transgresses its
jurisdiction under article 226143 if it enters upon the merits of the contro
versy by embarking upon an enquiry into the facts. The authority having
discretion has undoubted jurisdiction to draw its own conclusions upon
the material before it and the courts should not interfere with this matter.
Unauthorized act
Sanction to prosecute an employee of the Zoological Survey of India

for an offence investigated by the Special Police Establishment was granted
by the Ministry of Home Affairs. According to the Government of India
(Allocation of Business) Rules, this was not proper. This sanction ought
to be accorded by the concerned administrative ministry which was the
Ministry of Education and Social Welfare in this particular case. Because
sanction was not granted by the competent authority, the respondent's
conviction and sentence were set aside.144 This illustrates the principle
of ultra vires.
Time limit to decide
The petitioner applied to the deputy commissioner for permission to
sell his residential premises along with the land appertaining thereto under
section 27 of the Urban Land (Ceiling and Regulation) Act, 1976. The
deputy commissioner refused permission but made his order after more than
60 days of the receipt of the application, much less was it communicated
within that time. According to section 27 (4), if the competent authority
*« A.S. Sangwan v. Union of India, A.I.R. 1981 S.C. 1545, 1546.

x 2
i Supra note 122.
143
See infra, sec. V.
WI
State of Rajasthan v. A. K. Datta, A.I.R. 1981 S.C. 20.

does not refuse to grant the permission applied for or does not communi
cate the refusal to the applicant within 60 days of the date of receipt of
an application under section 27(1), "the competent authority shall be
deemed to have granted the permission applied for". In P.M. Kalwar
v. Dy. Commr. Belgaum145 the High Court strictly construed section 27
as it "places restrictions on the powers of the citizens to enjoy their
property". Accordingly, in the instant case, the court ruled that on the
failure of the deputy commissioner "to make an order within 60 days"
there was a "deemed grant" of permission in favour of the petitioner.
The court observed further :146
When once the power to refuse an application is lost, for whatever
reason it may be, that power is lost once and for all and cannot
be exercised after the expiry of the period specified by the Act. On
the expiry of the specified period an applicant who gets what is a
deemed grant in his favour, has an absolute right to deal with the
property.
This is a very welcome pronouncement as it is bound to make adminis
trative machinery somewhat efficient. What is the point of the legislature
imposing a time-limit within which the bureaucracy has to make a decision
if time-limit is not to be observed in practice. When law imposes a limit
ation period within which a person can assert his right and he loses the
remedy if he oversteps the period of limitation, similarly the administra
tion should lose its right to say 'no' if it does not do so within the
prescribed period. This is only fair administration. An individual's
substantive right is affected by the tardiness of the bureaucracy.
Reason to believe/relevant considerations
In Ganga Saran & Sons v. IT. Officer1*1 the Supreme Court examined
the significance of such phrases as "reason to believe" used in modern
statutes.
Two distinct conditions must be satisfied before the income-tax officer
can assume jurisdiction to issue notice under section 147(a), Income-
tax Act, 1961. First, he must have "reason to believe" that the income of
the assessee has escaped assessment. Secondly, he must have "reason to
believe" that such escapement is by reason of the omission or failure on
the part of the assessee to disclose fully and truly all material facts nece
ssary for his assessment. If either of these conditions is not fulfilled, the
notice issued by the income-tax officer would be without jurisdiction.
The court explained that the important words in section 147 (a) are
"has reason to believe". These words are stronger than the words ' i s
satisfied". The belief entertained by the income-tax officer must not be
145
A.I.R. 1981 Kant. 69.
1U
Id. at 70.
147
A.I.R. 1981 S.C. 1363.

496 Annual Survey of Indian Law [ 1981
arbitrary of irrational. It must be reasonable or, in other words, it must be

based on reasons which ar« "relevant and material". The courts, of course,
cannot investigate into the adequacy or sufficiency of the reasons which
have weighed with the income-tax officer in coming to the belief, but the
court can certainly examine whether the reasons are relevant and have a
bearing on the matters in regard to which he is required to entertain the
belief before he can issue notice under section 147(a). If there is no rational
and intelligible nexus between the reasons and the belief, so that, on such
reasons, no one properly instructed on facts and law could reasonably
entertain the belief, the conclusion would be inescapable that the income-
tax officer could not have reason to believe that any part of the income
of the assessee had escaped assessment and such escapement was by reason
of the omission or failure on the part of the assessee to disclose fully and
truly all material facts and the notice issued by him would be liable to be
struck down as invalid.
In the instant case, the notice issued by the income-tax officer under
section 147 (a) was quashed by the court. As neither of the two conditions
was satisfied, the notice issued by the income-tax officer was held to be
without jurisdiction.
The High Court of Madhya Pradesh recommended compulsory retire
ment of a sessions judge and, consequently, the state government passed
the necessary order. When the matter came before the Supreme Court (by
way of special leave) it transpired that there were two confidential reports
made by two successive chief justices in respect of the appellant
for overlapping periods. These two reports ex facie did not agree with
each other. While one report was favourable to him, the other was un
favourable. This fact appears to have escaped the attention of the High
Court when it considered the question whether the appellant should be
compulsorily retired. This means that the High Court did not take into
account relevant materials in coming to its decision to retire the petitioner.
Consequently, the Supreme Court in Brij Behari Lai v. High Court of
Af.P.118 quashed the recommendation of the High Court and the cons-
quent order of the government based on this recommendation. The High
Court could, however, consider the case again and take a fresh decision
on the question.
Rule 56(y) of the Fundamental Rules runs as follows :
[T]he appropriate authority shall, if it is of the opinion that it is in

the public interest to do so have the absolute right to retire any
Government servant by giving him notice of not less than three
months in writing or three months' pay and allowances in lieu of
such notice.149
148
A.I.R. 1981 S.C. 594.
149
On this rule see, XV A.S.I.L. 330 (1979).

Commenting on the above provision Krishna Iyer J., on behalf of the
court, in Baldev Raj v. Union of!ndiaim pointed out that the appropriate
authority must form the requisite opinion—"not subjective satisfaction but
objective and bona fide and based on relevant material". The requisite
opinion is that the retirement of the victim is 'in public interest'—not
personal, political or other interest but solely governed by the interest of
public service. The right to retire is not absolute though so worded.
Krishna Iyer J. emphasized that "absolute power is anathema under our
constitutional order". "Absolute" merely means wide not more, "Naked
and arbitrary exercise of power is bad in law". If under the guise of
4w
public interest", unlimited discretion is regarded acceptable for making
an order of premature retirement, it must fail for "unreasonableness,
arbitrariness and disguised dismissal". When an order of retirement is
challenged, the state must disclose the materials so that the court may be
satisfied that the order is not bad far want of any material whatever which
to a reasonable man reasonably instructed in law is sufficient to sustain
the grounds of 'public interest' justifying forced retirement of the public
servant. The court is confined to an examination of the material merely to
see whether a rational mind may conceivably be satisfied that the com
pulsory retirement of the officer concerned is necessary in public interest.
In this case the court quashed the retirement order because vital
material relevant to the decision, has been ignored and obsolete material,
less relevant to the decision, has influenced the decision. In the words
of Krishna Iyer J. :151
Any order which materially suffers from the blemish of overlooking

or ignoring wilfully or otherwise, vital facts bearing on the decision
is bad in law. Likewise, any action which irrationally digs
up obsolete circumstances and obsessively reaches a decision based
thereon, cannot be sustained. Legality depends on regard of the
totality of material facts viewed in a holistic perspective.
In this case, no adverse remarks were made against the appellant for
^\Q years before compulsory retirement. These reports were ignored but
earlier confidential reports had been taken into consideration by the
concerned authority. Even when adverse entries were made against him
in the past, he was allowed to draw increment without let or hindrance.
Thus, in making the order of retirement, vital material was ignored and
obsolete material, which was less relevant to the decision, had influenced
the decision and so the order was bad.
A provision in the relevant law said, "If the Director is satisfied
that circumstances exists in which payment of grant-in-aid., be made
directly..." The Calcutta High Court ruled in Vijoy Bahadur Singh v.
iB« A.LR. 1981 S.C. 70.

151
Id. at 75.

Secondary Education,152 that the court can go into the question whether
there were any such circumstances. In the words of the court :153
[T]hough the subjective opinion cannot be questioned by the court
yet the court can consider whether circumstances relevant or
condition precedent for the formation of subjective opinion existed
on the basis of which the administrative authority was satisfied in
making the order in question.
In the instant case, the court was satisfied that circumstances
existed for the order in question to be made. The order was not invalid
because of the absence of relevant circumstances or non-existence of the
condition precedent, nor can it be said that it was made on irrelevant
considerations or on unreasonable grounds or for oblique purposes.
Irrelevant considerations
Section 52(1) of the Estate Duty Act, 1953 runs as follows :
The Central Government may, on an application of the person
accountable for estate duty, accept in satisfaction of the whole or
any part of such duty any property passing on the death of the
deceased at such price as may be agreed upon between the Central
Government and that person, and thereupon such person shall
deliver possession of the property to such authority as may be
specified by that Govenment in this behalf.
In Asstt. Controller of Estate Duty v. Prayag Dasslu the Supreme
Court took an opportunity to comment on and analyse this provsion. When
the accountable person voluntarily applies to the central government, the
government 'may' accept the property offered. Section 52 does not say that
the governmet 'shall' do so but It 'may accept to do so. The question was
whether the government is bound to accept a property offered by the acco
untable person under this section. The court said that the "language of the
statute prima facie does not compel the Central Government to do so"
Section 52 is "in the nature of an enabling provision which authorises the
Central Government to accept a property in lieu of estate duty payable
subject to the conditions mentioned in it". The central government cannot
be compelled to accept the property in discharge of the estate duty when
no agreement is possible on its price, and when the law provides for no
machinery to determine the price in case there is no agreement. The
government has the option either to accept or reject the offer made by an
accountable person under this provision. He cannot claim that the
government is bound to accept such property. "The power of the Central
Government is purely administrative and discretionary". But it follows
152
A.LR. 1981 Cal. 105.
i " Id. at 110.
*»* AJ.R. 1981 S.C. 1263.

from this that the power should be exercised subject to the same
limitations which govern all such administrative and discretionary powers.
The court added :155
The Central Government or the authority which is competent to
take a decision should exercise its discretion bonafideand in good
faith by addressing itself to the matter before it and should not
allow itself to be influenced by extraneous and irrelevant considera
tions. The question should not be disposed of in an arbitrary or
capricious way.
The government must consider the application of the accountable
person on its merits and in the exercise of sound administrative judgment.
It must take its decision on relevant and bona fide considerations. In
the instant case, the court came to the conclusion that the competent
authority had not properly exercised its discretion. The authority
proceeded on the assumption that its discretion was unfettered even by
considerations relevant to administrative law. The court directed the
concerned authority to dispose of the application of the petitioner afresh
in accordance with law.
In Swastik Rubber Products Ltd. v. Poona Municipality,1™ the Poona
Municipality granted exemptions from octroi duty. This was challenged
on the ground that the municipality had taken extraneous or irrelevent
considerations into account. The Supreme Court rejected the argument.
The court found that considerations which weighed with the munici
pality in granting exemptions from octroi duty were not irrelevant or
extraneous.157
An order reducing the production quota of a licensed manufacturer
of guns from 30 to 10 guns a month was held bad by the Supreme Court
in Ranjit Singh v. India158 as the government had not taken into account
relevant considerations in making the order, viz., production capacity of
the factory, the quality of the guns produced, economic viability of the
unit, administrative policy pertaining to maintenance of law and order.
"Any curtailment of quota must necessarily proceed on the basis of
reason and relevance", observed the court. The principle was stated as,
"If all relevant factors are not considered, or irrelevant considerations
allowed to find place, the decision is vitiated by arbitrary judgment".169
Application of mind
A discretionary decision made mechanically without application of
mind on the part of the concerned decision-making authority is a bad
» 5 Id. at 1268.
166
A.I.R. 1981 S.C. 2022'
" 7 Id. at 2026.
™ A.I.R. 1981 S.C. 461.
169
Id. at 462.

decision. Nandlal1™ furnishes an example of this principle.

Section 35(1) of the Advocates Act, 1961 reads as :
Where on receipt of a complaint or otherwise a State Bar Council
has reason to believe that any advocate on its roll has been guilty of
professional or other misconduct it shall refer the case for disposal
to its Disciplinary Committee.
The Supreme Court has emphasized that under this provision, the bar
council is required to apply its mind to find out whether there is any reason
to believe that any advocate has been guilty of professional or other mis
conduct. The bar council of a state has to act on that reasoned belief.161
When the bar council has reasonable belief there is a prima facie case of
misconduct only then a disciplinary committee is entrusted with inquiry.
Thus, the Supreme Court held in Nandlal that the reference made by the
bar council to its disciplinary committee was incompetent as there was
nothing to show that before making the reference, the bar council had
applied its mind to the allegations made in the complaint and found that
there was a prime facie case to go before the disciplinary committee.
"Reason to believe" is essentially a barrier against frivolous enquiries.162
The reference by the bar council being incompetent, the order of the
disciplinary committee suspending the advocate for one year was set
aside by the court.
Procedural safeguards
The discretionary power should be exercised in accordance with law.

If any provision of law is contravened then the exercise of the discretionary
power would be bad. This proposition applies not only to substantive
provisions but also to mandatory procedural norms as well. The Indian
Police Service (Appointment by Promotion) Regulations, 1955 provide for
procedure for the selection of members of the state police force for
promotion to the Indian Police Service. Regulation 5(5) provides that if
in the process of selection, it is proposed to supersede any member of the
state police service, the selection committee "shall record its reasons for
the proposed supersession".
The Supreme Court ruled in Uma Charan v. State of Madhya
Pradesh1™ that the selection committee was bound to give reasons for the
supersession of a member of the police force. The court referred in this
connection to Union of India v. Mohan Lai Capoor.xU If the mandatory
provisions of regulation 5(5) are not complied with, then the selection
list prepared by the committee must be quashed.
160
Nandlal v. Bar Council of Gujarat, A.I.R. 1981 S.C. 477.
161
See Bar Council of Maharashtra w. M.V. Dabholkar, A.I.R. 1975 S. C. 2092.
162
See supra note 147.
163
A.I.R. 1981 S.C. 1915.
164
A.I.R. 1974 S.C. 87.

The Supreme Court has ruled165 that whenever action is proposed to be

taken to acquire land under the Land Acquisition Act, 1894 for a
company, the procedure laid down in rule 4 of the Land Acquisition
(Companies) Rules, 1963 is mandatory and its compliance is no idle
formality. Unless the directions enjoined by rule 4 are complied with,
the notification under section 6 is invalid. The compliance of rule 4
precedes the notification under section 4 as well as compliance of section 6
of the Act.166
Administrative discrimination
The courts are increasingly relying on article 14 of the Constitution to
control administrative action. When a court finds any administrative
decision as arbitrary, discriminatory or unreasonable it can invoke article
14 to quash such a decision. There have been quite a few cases in which
the courts have vetoed discretionary decisions as void by applying this
provision. Article 14 is thus evolving into a very effective instrument of
controlling exercise of discretionary powers. As discussed earlier, article
14 is also used to veto any provision of law which seeks to confer too
broad discretionary powers.167 Here we take a few examples denoting
application of article 14 to administrative action itself, the legal provision
conferring the discretion on the administration not being in question.
While allotting quotas of resin (a forest commodity in short supply) to
several small scale industrial units in the state, the government granted
quotas to some units but denied it to the petitioners though they were
similarly situated as others. Independently of Ramanam and Kasturi
Lai1*9 the Supreme Court declared in Omprakash v. Jammu & Kashmir1,70
the allotment of quotas of resin by the state government to the various
industrial units invalid being in violation of article 14 as the selection of
allottees had no rational relation to the object sought to be achieved in
the industrial policy decision of the state. The court found that the state
had followed no reasonable basis in making allotments in favour of new
allottees and denying allotment to the petitioners.
Following Bhagwati J.'s opinions in Ramana and Kasturi Lai, the
Allahabad High Court has held in Mjs. Yadav Medical Store v. State111
that where the notice inviting tenders for supplying medicines to the
government hospital set out certain conditions, acceptance of a tender of a
person not fulfilling the requisite conditions would be invalid as it would
166
Cen. Govt. Servants Coop. Housing Society Ltd. v, Wahab Uddin, A.I.R. 1981 S.C.
866.
166
For rule 4, also see, XI A.S.I.L. 466 (1975).
167
Supra notes 132-8; also see, X A.S.I.L. 529 (1974).
168
Ramana v. International Airport Authority, A.I.R. 1979 S.C. 1628. For a discussion
of this case see, XV A.S.I.L. 342-349 (1979).
ie
« A.LR. 1980 S.C. 1992. For comments on this case see, XVI A.S.LL. 408 (1980).
1.0
A.I.R. 1981 S.C. 1001.
1.1
A.I.R. 1981 All. 139.

be arbitrary and violative of the equality clause. As the court has said,
looking at the matter from a conservative point of view, the conditions in
the tender are merely administrative directions of a non-statutory character
and thus not binding on the government. But the recent judicial thinking
has adopted a radically different approach because there is grave danger
involved in a situation where the same rules govern the rights of persons
placed in the same category and yet the state is permitted to apply one
condition or restraint to one individual but at its sweet will waive it in the
case of another belonging to the same class. This would be flagrantly
discriminatory.
The Supreme Court has emphasized in State of Uttar Pradesh v. Shiv
Charan Sharma172 that a grant of lease for excavating sand and minor
minerals ought to be made by the state by public auction rather than on
an application of a party. According to the court,173 "Public auction with
open participation and a reserved price guarantees public interest being
fully subserved."
The same was the theme of another pronouncement by the Supreme
Court. In Fertilizer Corporation Kamgar Union, Sindri v. Union ofIndia,1H
the court emphasized that, as far as possible, sales of public property
ought to take place publicly when the intention is to get the best price.
The court emphasized :175
The vendors are not necessarily bound to accept the highest or any
other offer, but the public at least gets the satisfaction that the
government has put all its cards on the table.
The New Delhi Municipal Corporation constructed a shopping com
plex. All the shops in the complex were arranged in five zones on the
basis of classification of various trades. It was a condition of allotment
of a shop that the allottee would carry on the specific trade assigned to
the concerned zone. Some of these shopkeepers changed their business
but such businesses could not be carried on in the concerned zone. The
committee served these persons with show-cause notices as to why their
licences should not be cancelled. These persons filed writ petitions to
challenge the show cause notices. The Delhi High Court ruled in Sanjiv
Prakash v. New Delhi Municipal Committee1™ that the committee could
no longer insist on the petitioners to adhere to the zoning system as it had
permitted some persons to set up shops in defiance of the zoning system.
The court stated: "It is now settled law that the government or the state
cannot act arbitrarily while entering into contracts".177 Having given up
17a
A.LR. 1981 S.C. 1722.
178
Id. at 1723.
174
A.LR. 1981 S.C. 344 ; supranotc 5.
176
Id. at 350.
178
A.LR. 1981 Del. 280.
177
Ramana Dayaram Shetty v. International Airport Authority\ supra note 168.

the scheme of zoning while making allotments to some shopkeepers, it
would be arbitrary as well as irrational to insist that other allottees in the
same market should continue to adhere to the zoning system. This is
violative of article 14. After dispensing with zoning restrictions in favour
of some persons, the decision not to permit the petitioners to deviate from
the zoning system is clearly an arbitrary decision. "An arbitrary decision
is per se violative of Article 14".178
A notice of invitation of tender had a clause to the following effect:
"No tender will be received after 2.30 p.m. on 23.5.1957 under any
circumstances whatsoever and the tenders shall be opened at 3 p.m. on
the same day". A tender was received after 2.30 p.m. and it was
opened at 3 p.m. The court held that this was wrong. The court said
that whatever the reason, no tender could be accepted after the appointed
time.170
Bhim Sain v. Union of India180 is another example of administrative
discrimination. Here was a case of blacklisting a trader by the government
on the ground of backing out after having submitted the tender and after
extending its validity. The Delhi High Court held that the order of
blacklisting the petitioner was arbitrary and violative of the petitioner's
rights under article 14. The court said there is no doubt that the state is
free to choose any person with whom it wishes to enter into contract,
nevertheless, a person has a right to claim equal treatment to enter into a
contract. This right of equal treatment cannot be taken away by the state
acting in an arbitrary manner. The court observed :
By arbitrarily blacklisting a contractor, the effect would be that he
is deprived of an equal opportunity of being able to compete with
other tenderers.... A mere formal compliance with the requirement
of law of giving an opportunity cannot offer real justice to the
petitioner if the order which is passed is arbitrary.181
In the instant case, the order passed was completely arbitrary. One of
the conditions of the tender was that in the event of default by the
tenderer, he would be liable to forfeit 10 per cent of the security amount.
No other liability could be fastened on the tenderer as per the terms and
conditions thereof. By withdrawing his tender before being accepted, he
had not committed any breach of contract. A contractor being blacklisted
for breach of contract is understandable. But where no concluded
contract had come into existence, a tenderer cannot be backlisted if he is
not informed previously that such penalty can be imposed if the offer
178
E.P. Royappa v. State of Tamil Nadu, A.I.R. 1974 S.C. 555, 583. Also Ajay Hasia v.
Khalid Mujib Shervardi, see infra. On administrative discrimination also see,
Jawahar & Co. v. State, A.I.R. 1981 M.P. 214.
119
B. Rajkumar Patra v. Onion of India, A.LR. 1981 Ori. 143.
189
A.LR. 1981 Del. 260.
m
Id. at 261.

made by him is withdrawn. In other words, a new condition, not

previously known to a tenderer, could not be inserted, in effect, with
retrospective effect, in the invitation of tender.
In Bhim Sain, the tender of the petitioner, though lowest, was not
accepted by the concerned authority within the stipulated period of 60
days. The petitioner was then asked to extend the validity of the tender.
He extended it up to December 19, 1978, but as the prices went up
steeply, he withdrew his tender on November 30, 1978. The government
sought to accept the tender on December 2, 1978. The tenderer did lose
10 per cent of his earnest money. But thereafter the government also
wanted to blacklist him. This was held to be wrong under the circum
stances.
Permits of some permit holders for routes which overlapped with the
notified routes were curtailed. But there were other permit holders in the
same class having stage carriage permits for certain routes parts of which
were overlapping with the notified routes and yet these permits were not
curtailed and they continued to ply their stage carriages on the notified
routes. The court ruled in Vishnudas Hundumal v. State of M.P.182
that there was gross discrimination between the transport operators in the
same class in that some have their permits remaining intact with right to
ply their vehicles on the notified routes and some others whose permits
are curtailed. This is discrimination between persons in the same class.
The court declared that curtailment of the permits of the petitioners would
be of no effect and consequently all operators similarly situated were
similarly treated. The court said :183
When discrimination is glaring the State cannot take recourse to
inadvertence in its action resulting in discrimination. The approach
is, what is the impact of State action on the fundamental rights of
the citizen.
When denial of equal protection flows from state action and has a
direct impact on the fundamental rights of the petitioners, the court has to
remove the discrimination. To the same effect is Allied Transport Co. v.
State of M.P1U
The Kerala Education Rules provide for grant of permission for use
of school buildings for holding public functions arranged by the govern
ment or for any other purpose. Such permission can be granted by the
district educational officer. The Kerala High Court ruled in T. V. Anandan
v. State,185 that the concerned officer cannot refuse permission at his sweet
will and pleasure. The scheme of the provisions is such that granting of
permission is the rule and refusal of the permission is an exception.
1M
A.I.R. 1981 S.C. 1636.
183
Id. at 1638.
184
A.LR. 1981 S.C. 1639.
185
A.LR. 1981 Ker. 242.

"Permission cannot be refused arbitrarily". The court emphasized that

the government and its officers have a duty to act in a just and fair
manner. "Government cannot pick and choose the persons with whom
they will deal". When government is giving permission to some to use
school buildings, it cannot deny the same to others arbitrarily. "The
discretion in this regard should not result in discrimination".
In Anaadan, permission was denied to the R.S.S. The court ruled that
so long as the R.S.S. was allowed to continue its activities in the state, to
deny to it the privileges like the use of school buildings for public func
tions, which other organisations are allowed, will result in hostile
discrimination. Government cannot discriminate between organisation
and organisation and prevent some from using government school buildings
for their public functions. To do so is to violate article 14. Goverment
has no power to single out the R.S.S. and deny permission when others
arc given the permission.
When a primary school started by a private body applied for recogni
tion, it was refused by the concerned officer because of a resolution of the
government saying that recognition could not be granted till the concerned
school has its own adequate building. The Gujarat High Court quashed
the resolution in Santoshi Education Trust v. Stateim invoking article 14.
The court emphasized that the equality guarantee enshrined in this article
is infringed if an unreasonable or arbitrary condition is imposed. It would
result in hostile discrimination between applicants who own buildings to
run their schools and those who do not own their buildings but have
adequate rented premises for the purpose. The court found no nexus
between the classification made by the government for the purpose of
granting recognition and the object. If suitable accommodation is available,
what difference does it make if it is rented or owned. The court said that
the pre-condition insisted upon for granting permission and according
recognition was both unreasonable and arbitrary and it would result in
hostile discrimination. It created a privileged class. The resolution and
the consequent refusal to grant permission were quashed by the court.
In Ajay Hasia v. Khalid Majid,187 an interesting question was raised with
respect to the process of selecting candidates for admission to educational
institutions, viz., can the viva voce examination be regarded as a valid test
for this purpose with reference to article 14? It was argued against the
viva voce test that it could be discriminatory as it is a highly subjective and
impressionistic test. The interviewing committee could discriminate
between candidates at an oral interview. In the instant case, it appeared
that some candidates who had secured very high marks at the written
examination had got very low marks at the viva voce. On the other hand,
some candidates who had got low marks at the written test had got high
marks as the viva voce, and thus succeeded in getting admission to the
ia
* Supra note 56.
187
A.LR. 1981 S.C. 487; see supra note 4.

engineering college. These facts were cited as proof of discrimination.

It was also argued that the viva voce test was not properly conducted as
only 2 to 3 minutes were spent on each candidate. In Ajay Hasia, the
question related to the selection of candidates for admission to an engineer
ing college. The candidates had to take a written test as well as a viva
voce test which carried 33J per cent of the total marks (100 marks for
written test and 50 per cent marks for viva voce examination).
The Supreme Court has ruled that viva voce examination is a relevant
and permissible supplementary method for assesing the suitability of candi
dates wherever test of personal traits is considered essential. This has
been recognised in a number of earlier decisions.188 Therefore, the court
refused to accept the contention that the oral interview test is so defective
that selecting candidates for admission on the basis of oral interview in
addition to written test must be regarded as arbitrary. However, the court
was, nevertheless, conscious of the possibility that such a test could be
misused as it is subjective and based on first impression and its result is
influenced by many uncertain factors. Therefore, the court has prescribed
several conditions subject to which such a test ought to be conducted.
(/) The first precaution to be taken, "in the matter of admission to colleges
or even in the matter of public employment" is that the oral interview test
should not be relied upon as an exclusive test but should be resorted to
only as an additional or supplementary test, (ii) Great care should be
taken to appoint persons of high integrity, calibre and qualification to
conduct this test, (HI) The court has frowned upon attaching high relative
value to the viva voce in the overall evaluation of a candidate. The court
has thus held that allocation of 33| per cent of the total marks to oral
interview is plainly'arbitrary'and unreasonable as there are many defici
encies in such a test and it leads to deterioration in moral values. The
court's thinking is that not more than 15 per cent of the total marks ought
to be allotted to the viva voce test and more than that would be arbitrary
and unreasonable. On this point the court has observed :189
Now there can be no doubt that, having regard to the drawbacks

and deficiencies in the oral interview test and the conditions prevail
ing in the country, particularly when there is deterioration in moral
values and corruption and nepotism are very much on the increase,
allocation of a high percentage of marks for the oral interview as
compared to the marks allocated for the written test, cannot be
accepted by the Court as free from the vice of arbitrariness.
The admission procedure in the instant case was thus held to be infec
ted with the vice of arbitrariness because of the high percentage of marks
"• R. Chitralekha v. State of Mysore, A.I.R. 1964 S.C. 1823; A. Periakaruppan v. State
of Tamil Nadu, A.I.R. 1971 S.C. 2403.
»• Supra note 187 at 501. Also see, Nishi Maghu v. State of J. & K., A.LR, 1980 S.C.
1975.

allotted to the viva voce test, (iv) The court has also suggested that the
viva voce test be conducted fairly and properly. To take only 2 to 3 minutes
on each candidate and to ask questions having no bearing on the factors,
required to be taken into account for selection, is to make the viva voce
process vitiated and make the selections on the basis of such a test as
arbitrary. The court has also suggested tape-recording of the interview.
An allegation of malafides190against the interviewing committee was
also made in Ajay Hasia. The court found it to be a disturbing feature
that in case of a large number of candidates selected, it was because of
the marks obtained at the viva voce which tilted the balance in their favour
though they secured much less marks than many others at the written test.
The court entertained a strong suspicion that the marks at the viva voce
might have been manipulated to favour some candidates. But suspicion
cannot take the place of proof to establish mala fides. Much more cogent
material was needed to sustain the allegation of deliberate manipulation
of marks at the viva voce. Even though interview test was held to be
vitiated, the court refused to set aside admissions because 18 months had
already elapsed and this would cause great hardship to such students
whose admission could not be questioned. The petitioner also could not
be restored to the position as if they were admitted at the time. But the
college had agreed to take in 50 best students of the batch (1979-1980)
next year who could then get admission in addition to the normal intake
of students.
For selection of candidates for admission to the government medical
college, the government prescribed, inter alia, a viva voce test carrying 30
per cent of the total marks. It was argued in Arti v. State of J. & K191
that this high allocation of marks to the viva voce test was unreasonable
and arbitrary. The average time spent on each candidate for the viva voce
test was not more than four minutes. It was argued that in Ajay Hasia192
the court has made a clear pronouncement that an allocation of more than
15 per cent of the total marks to the viva voce examination would be
regarded as arbitrary and unreasonable and would thus result in constitu
tional invalidity. But that pronouncement was made after the selection
process in Arti had been completed, and, therefore, the court did not want
to disturb the selection process in Arti. The court did, however, impress
on the state government that "there is need to revise the marks ratio
because of the very real risk future selections will face on this score". The
court also drew attention of the government to the observations made by
it in Ajay Hasia to the effect that the government should ensure that the
selection committees take care to devote sufficient time to the oral inter
view of individual candidates having regard to the several relevant
considerations which must enter into their judgment respecting each
candidate.
"o On malafidessee, XVI A.S.I.L. 395-399 (1980).
1,1
A.I.R. 1981 S.C. 1009.
"• Supra note 187.

508 Annual Survey of Indian Law 1981]
The Supreme Court has differentiated between selection for admission

to an educational institution and selection for jobs for the purpose of
giving relative importance to the viva voce test.
At a selection for posts of munsifs, 25 per cent of the total marks were
allotted to the viva voce test under the rules. Was this precentage high
and so discriminatory? The court ruled in Lila Dhar v. State of Rajasthan193
that the scheme of selection for the posts of munsifs could not be struck
down on the ground that more than due weightage was given to the
interview test. The court held that selection was not rendered arbitrary
and violative of articles 14 and 16. The court accepted that both written
examination and interview test are essential features of proper selection,
but the weight to be attached to both of these tests may vary from
selection to selection. For example, in the case of admission to colleges,
importance attached to interview test may be minimal, greater weight
being attached to the written examination. The reason for this is that
the candidate's personality is yet to develop. This was decided in Ajay
Hasia. On the other hand, in the case of services to which recruitment
has to be made from persons of mature personality, interview test may be
the only way to judge the suitability of the candidate, subject to the basic
and essential academic and professional requirements being satisfied.
There cannot be any rule of thumb regarding the precise weight to be
given to interview test in all cases. It must vary from service to service
according to the requirements of each service, the minium qualifications
prescribed, the age group from which selection is to be made, the body to
which the task of holding the interview test is proposed to be entrusted
and a host of other factors. Exaggerated weight, however, should not be
given to interview with obvious oblique motives. In case of judicial
officers, in the instant case, interview test was conducted by a judge of the
High Court, a member of the Public Service Commission and a special
invitee-expert. There could be no legitimate grievance of arbitrariness
against such a body. The candidates were not fresh graduates from colleges
but those who had already received a certain amount of professional
training.
Ajay Hasia referred to the case of admission to colleges. There was
an observation in that case regarding public services as well suggesting
that public services and admission to educational institutions are to be
treated at par from the point of attaching relative significance to the viva
voce test in the whole selection process. But now the court ruled that
'the observation relating to public employment was per incuriam since the
matter did not fall for the consideration of the court in that case. Ajay
Hasia did not lay down 'kany wide, general rule" that the same principle
that applied in the matter of admission to colleges also applied in the
matter of recruitment to public services. The provision for marks for
interview test need not and cannot be the same for admission to colleges
1M
A.I.R. 1981 S.C. 1777.

and entry into public services.
These cases have given a new dimension to article 14. The constitu
tional provision has assumed a "highly activist" magnitude and embodies
"a guarantee against arbitrariness". This new dimension of article 14
was laid bare for the first time in E.P. Ropayya v. State of Tamil Nadulu
and was reaffirmed and elaborated in Maneka Gandhi.w An arbitrary
action necessarily involves negation of equality.
Delegation
Under section 29(1) of the Defence of India Act, 1962 any immovable
property can be acquired if in the opinion of the central ^government or
the state government it is necessary or expedient so to do for securing the
defence of India, civil defence, public safety, etc. Under section 40(1), the
central government may by order confer any power under the Act to any
officer subordinate to the central or the state government.
The Supreme Court has ruled in State of Assam v. Banshidhar
Shewbhagavan & Co.,19* that the opinion that the land is necessary for
defence purposes can be formed by any officer to whom the power to
requisition under section 29(1) has been delegated by the central govern
ment. The court has also reiterated the principle that if any authority
exercises any power conferred on him by law in bad faith or for collateral
purposes, it is an abuse of power and a fraud on the statute. In such a
case, the act of the authority may be quashed by the issue of an
appropriate writ under article 226. In the instant case, however, the court
upheld the requisition order as there was no material on record to hold
that the land was not required on the date of the impugned requisition
bonafidefor defence purposes.
The U.P. State Electricity Board framed a regulation laying down
the mode of appointment to various posts under the board, the
appointing authorities thereof, the authorities competent to impose
punishments on the employees and the authorities competent to hear
appeals against disciplinary action. The Allahabad High Court struck down
the regulation on the ground that there was no power of delegation by the
board which had the power to make appointments and which ordinarily
would be clothed with the power of terminating appointments. But the
Supreme Court reversed the High Court in U.P. State Electricity Board v.
Abdul Sakoor Hashmi.1*1 Although there is no specific provision in the
Act authorizing the board to delegate its powers, the court justified the
regulation under section 19(k) of the Act which authorises the board to
make regulations for "any other matter arising out of the Board's
functions under this Act for which it is necessary or expedient to make
"* Supra note 178.

195
Supra note 7.
196
A.LR. 1981 SC. 1957.
197
A.LR. 1981 S.C. 1708.

regulations". Section 79(/c) is a residuary provision which embraces the

power to make regulations in regard to the functions of the board. It
empowers the board to make regulations regarding termination of service
and disciplinary action for the board's employees. Section 79(k) takes
within its sweep the power to maintain or take disciplinary action. The
court justified this view on the "pragmatics of the situation". The electri
city board is an undertaking which employs several thousand employees.
It would be impossible for the board to carry on its functions if only the
board itself were to take disciplinary action against every employee.
V JUDICIAL REVIEW
Article 32
In the Fertilizer Corporation case,198 the Supreme Court has emphasized
upon the significance of article 32 as well as its limitations. The jurisdic
tion conferred on the Supreme Court by article 32 has been characterised
as "an important and integral part of the basic structure of the
Constitution" because it is meaningless to confer fundamental rights
without providing an effective remedy for their enforcement, if and when
they are violated. "A right without a remedy is a legal conundrum of a
most grotesque kind". But though article 32 confers one of the "highly
cherished" rights, the purpose for which that right can be used is to
enforce fundamental rights. "That violation of a fundamental right is the
sine qua non of the exercise of the right conferred by Art. 32".
Ordinarily it is no longer necessary to characterise a function as
'quasi-judicial' to give an opportunity of hearing to an affected person,
and, thus, though the invocation of the concept of quasi-judicial has very
much diminished in Indian Judicial decisions, it has not become completely
irrelevant or redundant. Once in a while, the concept of quasi-judicial
asserts itself in some context or the other. In 1981 the Supreme Court
has made use of this concept in Gulam Abbas v. State of U.P.199 where an
interesting question was raised : whether an order under section 144, Code
of Criminal Procedure, 1973 is a 'judicial' order or 'quasi-judicial' order or
whether it is passed in exercise of an 'executive power' in the performance
of executive function? The question became relevant in the context of
article 32. No fundamental right is said to be infringed by a judicial or
quasi-judicial order and so it is not amenable to article 32.200
The court pointed out that under the new Criminal Procedure Code,
there is separation of judicial functions from executive functions of the
magistrates.201 By and large, judicial functions have been allocated to
198
A.I.R. 1981 S.C. 344 ; supra note 5.
199
A.I.R. 1981 S.C. 2198, 2221.
200
Ujjam Bai v. State of Uttar Pradesh, A.LR. 1962 S.C. 1621 ; Pioneer Traders v. Chief
Controller of Imports and Exports, A.LR. 1963 S.C. 734.
331
See the 37th Report of the Law Commission on Code of Criminal Procedure^ 1898
paras 41, 43 (1967).

judicial magistrates and executive or administrative functions to the

executive magistrates. Section 144 deals with urgent cases of nuisance and
apprehended danger to public tranquillity. Power under this section has
been conferred on an executive magistrate. Therefore, an order passed
under it cannot be regarded as a judicial or quasi-judicial order ; the
function is essentially an executive (police) function. It is true that before
passing the order, the magistrate gives a hearing to the parties except in
cases of emergency when an ex parte order can be made without notice to
the person against whom it is directed. It is also true that an order made
by an executive magistrate under this provision is revisable by the High
Court or court of session. But hearing ensures fairness and observance of
the audi alteram partem rule which is essential to the performance of any
executive or administrative function. Revision only removes the vice of
arbitrariness, if any, pertaining to the section. These aspects do not make
the order a judicial or quasi-judicial order ; it is an executive order passed
in the performance of an executive function where "no lis as to any rights
between rival parties is adjudicated but merely an order for preserving
public peace is made" and as such it is amenable to the writ jurisdiction
under article 32.
Appointment of certain officers by the International Airport Authority
was challenged through a writ petition under article 32. The respondents
were appointed in 1975, and the present writ petitions were filed in 1978.
The court thought it would not be justified in reopening the question of
the legality of the appointments after several years.202
The Supreme Court has ruled in Lallubhai Jogibhai v. Union of Indtam
that the application of the doctrine of constructive res judicata20* is
confined to civil actions and civil proceedings. This principle of public
policy is entirely inapplicable to illegal detention and does not bar a
subsequent petition for a writ of habeas corpus uuder article 32 on fresh
grounds, which were not taken in the earlier petition for the same relief.
Thus, when a writ petition challenging an order of detention is dismissed
by the court, a second petition can be filed on fresh, additional grounds to
challenge the legality of the continued detention of the detenu. The subse
quent petition is not barred by res judicata.
Article 226
Ahmedabad Manufacturing & Calico Printing Company filed a special

leave petition under article 136 in the Supreme Court from the decision
of the industrial tribunal. The company withdrew the petition and
then filed a writ petition in the High Court under article 226. The High
m
Roshan Lai v. International Airport Authority of India, A.LR. 1981 S.C. 597. On
laches see, XVI A.S.I.L. 412 (1980).
m
A.LR. 1981 S C. 728.
m
For the doctrine of res judicata see, XIV A.S.I.L. 379-80(1978).

Court dismissed it in limine. The company appealed to the Supreme

Court from the High Court's decision and the Supreme Court reversed
the High Court. The Supreme Court ruled that the company had with
drawn its special leave petition with the permission of the court; it had
not been dismissed by the court. This cannot constitute res judicata
against the writ petition and, consequently, the High Court had not
exercised "a proper and sound discretion in dismissing the writ petition
in limine".2on
It has been reiterated several times that a writ petition cannot be filed
under article 226 to enforce a purely contractual obligation.208 This
principle has again been reiterated in Divisional Forest officer v. Bishwanath
Tea Co. Ltd™7 A writ petition was filed in the High Court by the
respondents questioning the action of the appellant to recover a sum of
money as royalty for cutting and felling trees by the respondents. The
court ruled that the respondents were seeking to enforce a contractual
obligation through the High Court's writ jurisdiction which could not be
done. To enforce a contractual obligation, the party may sue for damages
or for specific performance but a writ petition for the purpose would not
be entertained. Thus, the court observed :20S
In substance, this was a suit for refund of a royalty alleged to be
unauthorisedly recovered and that could hardly by entertained in
exercise of the writ jurisdiction on the High Court.
In M. Mayandi v. The Director of T.N. State Transport Department,209
the Supreme Court allowed the issue of a writ by the High Court under
article 226 to quash an order of dismissal of the petitioner by the depart
ment on the ground that there was no evidence to substantiate the charges
against him.
Certiorari is obviously intended to enable the High Court to issue it in
grave cases where the subordinate tribunals or bodies or officers act
wholly without jurisdiction, or in excess of it, or refuse to exercise a
jurisdiction vested in them, or there is an error apparent on the face of
the record and such act, omission, error or excess has resulted in manifest
injustice. Certiorari will not issue as a cloak of an appeal in disguise. It does
not lie to bring up an order or decision for rehearing. It exists to correct
error of law when revealed on the face of an order or decision or irregularity
or absence of or excess of jurisdiction when shown.210 In P. Kasilingam
265
Ahmedabad Mfg. & Calico Printing Co. v. Workmen, A.LR. 1981 S.C. 960. On this
point see, XIV A.S.I.L. 379 (1978).
208
Harshankar v. The Deputy Excise and Taxation Commissioner, A.LR. 1975 S C. 1121.
On this point see, XI A.S.I.L 500 (1975); XVI A S.LL 424 (1980).
207
AJ.R. 1981 S.C. 1368.
208
M a t 1373.
*«• A.LR. 1981 S.C. 1707.
™ See, XII AS.IL. 512(1976).

v. P.G.S. College of Technology*11 the decision of the High Court was
quashed by the Supreme Court as the High Court had transgressed
its jurisdiction under action 226 by entering upon the merits of the
controversy.
An inquiry committee has to act according to the principles of natural
justice.213 Certiorari was refused in the instant case beause there was no
failure of natural justice. It is not at all necessary that the enquiry which
had been held in part by more than one enquiry officer should be conti
nued by the same enquiry officers until the end. The post which the
members of the inquiry committee had originally might have ceased to
exist at a later stage, or one or more of the members of the committee
may no longer be available either on account of retirement or due to any
other cause. For that reason, it could not be held that the enquiry could
not be continued at all.
No mandamus can be issued by the High Court when government is
under no duty under the law.213
The Andhra Pradesh High Court has ruled in Sarvaraya Sugars Ltd.
v. A. P. Civil Supplies Corpn. Ltd.%u that a writ can be issued to enforce
a public duty whether it be imposed on a private individual or on a
public body. In Rohtas Industries v. Its Union,215 the Supreme Court had
held that a writ can be issued against a private person also. In Rohtas,
the Supreme Court sanctioned issue of a writ against the award of an
arbitrator appointed under section 10 (1) of the Industrial Disputes Act,
1947. Thus, a writ can be issued against a private person if he is discharg
ing a public duty. In the Sarvaraya case, a writ was issued by the court
against sugar producers at the instance of the Andhra Pradesh State Civil
Supplies Corporation as the sugar producers were bound to sell the levy-
free sugar to the writ petitioner at the rate fixed by the central government
under statutory order.
The High Court said that having regard to the Supreme Court's
pronouncement in Ajay Hasia, "a writ can be issued to enforce a public
duty whether it be imposed on a private individual or a public body.216
The Andhra Pradesh High Court in K. Bheema Raju v. Govt, of Andhra
Pradesh211 quashed the appointment of government pleader as the proce
dure prescribed in the relevant rules for this purpose had not been
211
A.LR. 1981 S.C. 789.
212
Union of India v. M.B. Patnaik, A.I.R. 1981 S.C. 858.
m
Bihar v. Sri Chandradip Rat, A.LR. 1981 S.C. 2071. Also see Bihar E.G.F. Co-op.
Society v. Sipahi Singh, A.LR. 1977 S.C. 2149; XIH A.S.I.L. 486-7 (1977).
214
A.LR. 1981 A.P. 402, 406.
216
AJ.R. 1976 S.C. 425; XII A.S.I.L. 510 (1976). Also see Kumkum v. Principal.
Jesus & Mary College, A.LR. 1976 Del. 35; XIII A.S.I.L. 488-491.
216
Ateo stQT.Gattaiahv. The Commissioner of Labour, Hyderabad, (1981)1 Lab. I.C.
942 where P.A. Choudary J. had held that a writ can be issued even against a
private person, provided he was discharging a public duty.
217
A.LR. 1981 A.P. 24.

followed. The said appointment had been made on 6.8.1978 and the
writ petition to question the appointment was filed on 6.8.1979. The
government opposed the petition, inter alia, on the ground of laches
on the part of the petitioner, But the court ignored the plea by saying :
[I]n a matter which involves the fudamental right to public office
and violation of legal procedure to be adopted in the matter of
appointment to public office... we do not think that the delay
should deter us in granting the discretionary relief and rendering
justice.218
Locus standi
A crucial question having an intimate bearing on the efficacy of the

judicial control of administrative action is concerning locus standi, i.e.
the question as to who is entitled to challenge an administrative action in
the court? This question has been considered by the courts in India in
several recent cases.219 If the category of persons who can challenge an
administrative action is confined within narrow limits, then the danger is
that many unauthorized actions of the bureaucracy may go unchallenged
as there may be none entitled to challenge the action. This realization is
moving the Supreme Court towards relaxing the rule of standing, so much
so that the court is veering round to the view of permitting public interest
litigation. The best advocacy for this view is to be found during the
survey year in the opinion of Krishna Iyer J. in Fertilizer Corporation
Kamgar Union v. Union of India™ one of the landmark decisions of the
year. The case arose in the context of the following fact-situation. The
Fertilizer Corporation, a government company, proposed to sell some
old machinery. The labour union filed a petition under article 32 in the
Supreme Court challenging the sale. The court ultimately dismissed
the petition on two grounds : (/) The decision of the corporation to sell
the old machinery could not be faulted on any principle of administrative
law and (ti) that it was doubtful if any fundamental right of the workmen
was being infringed by the impugned sale so as to justify a petition under
article 32. However, the court, and, especially Krishna Iyer J. went
deeply into the question of standing to challenge administrative decisions.
An outstanding feature of the opinion of Krishna Iyer J. is that he has
propounded an extremely liberal view of standing to challenge administra
tive decisions.
The general question was : Whether the labour union of the Fertilizer
Corporation had locus standi to challenge the sale of old plants by the
corporation? Chandrachud C.J. pointed out, on behalf of Fazal Ali and
A.D. Koshal JJ. and himself, that the "maintainability of a writ petition
(under article 32) which is correlated to the existence and violation of a
418
Id. at 29.
210
See on locus standi, XII A.S.I.L. 508-510 (1976); XIV A.S.I.L. 377-80 (1978).
220
AJ.R, 1981 S.C 344, supra note 5.

fundamental right is not always to be confused with the locus to bring a
proceeding under Art. 32". These two matters often mingle and
coalesce making it difficult to consider them in watertight compartments.
The question whether a person has the locus to file a proceeding depends
mostly and often on whether he possesses a legal right and that right is
violated. The Chief Justice, however, observed :nl
But in an appropriate case, it may become necessary in the changing
awareness of legal rights and social obligations to take a broader
view of the question of locus standi to initiate a proceeding, be it
under Art. 226 or under Art. 32 of the Constitution. If public
property is dissipated, it would require a strong argument to
convince the Court that representative segments of the public or at
least a section of the public which is directly interested and affected
would have no right to complain of the infraction of public duties
and obligations.
He went on to say that public enterprises are owned by the people
and those who run them are accountable to the people. If the sale were
found to be "unjust, unfair and mala fide", the court was not sure if it
would have refused relief to the workers.
However, Krishna Iyer J. (on behalf of Bhagwati J. and himself)
explicitly put the matter of locus standi to challenge administrative
decisions on an extremely broad basis. He cited the following reasons in
support of his liberal view :
(/) If the tone of public life in the country were sufficiently honest and
fair-minded, formal norms to control administration may not be needed.
But, "when corruption permeates the entire fabric of government", legality
is the first casualty, for then the state power "is exercised on grounds
unrelated to its norminal purposes'1.2*2
(//) In such a climate, civil remedies for administrative wrongdoing
depend upon the action of individual citizens. An individual must at
his own expense challenge the vast panoply of state power by a civil
action in a court at a great financial cost to himself.
(Hi) A pragmatic approach to social justice warrants a liberal interpre
tation of constitutional provisions (including articles 32 and 226) so that
the court can carry out effective policing of the corridors of power until
other ombudsman arrangements are made.
(iv) Court's function, of course, is limited to testing whether
administrative action has been fair and free from the taint of
unreasonableness and has substantially complied with the procedural
norms set for it by rules of public administration and that the action of
the administration is not mala fide.
221
Id. at 350.
2as
Supra note 223 at 353. He cited copiously from a study on Africa, Robert
Seidman, "Law and Economic Development in Independent, English-Speaking Sub-
Saharan Africa", 1966 Wisconsin L. Rev, 999-1070.

(v) Locus standi must be liberalised to meet the challenge of the times.
Ubi jus ibi remedium must be enlarged to embrace all interests of
public-minded citizens or organizations with serious concern for conserva
tion of public resources and the direction and correction of public power
so as to promote justice in its triune facets.
(vi) Justifying the broader concept of standing, Krishna Iyer J. has
stated, "Law, as I conceive it, is a social auditor and this function can be
put into action only when someone with real public interest ignites the
jurisdiction".323
(vii) Restrictive rules of standing are antithesis to a healthy system of
administrative law. If a plaintiff with a good case is turned away merely
because he is not sufficiently affected personally, that means that some
government agency is left free to violate the law, and that is contrary to
the public interest.
(viii) In India, freedoms suffer from atrophy and "activism is essential
for participative public justice". Therefore, public-minded citizens must
be given opportunities to rely on legal process and not be repelled by
narrow and pedantic concept of locus standi.
(ix) We ought not to be deterred by the prospect of false and frivolous
suits. Litigants are unlikely to expend their time and money unless they
have some real interest at stake. When a person wishes to sue merely
out of public spirit, he should not be discouraged. Public interest litigation
is part of the process of participative justice.
(x) If a citizen is merely a way-farer or officious intervener without
any interest or concern beyond what belongs to any one of the 660 million
people of this country, "the door of the court will not be ajar for him".
But if he belongs to an organization which has special interest in the
subject matter, if he has some concern deeper than that of a busybody,
"he cannot be told off at the gates, although whether the issue raised by
him is justifiable may still remain to be considered".
(xi) Justiciability of the issues and standing to agitate them are
two different things. "Locus standi and justiciability are different
issues".
A worker clearly has an interest in the industry. If he brings an action
regarding an alleged wrongdoing by the board of management he will have
standing to do so under article 226. Article 43^4 of the Constitution
confers, in principle, partnership status to workers in industry. He cannot
be kept away on technical considerations to seek to remedy wrongs com
mitted in the management of public sector.
The main thrust of Krishna Iyer J.'s opinion was on the democratisation
of judicial remedies. The view advocated by the court is in consonance
with the similar views expressed in other common law countries.2143
223
See Australian Law Reforms Commission Paper No. A: Access to the Courts—
Standing: Public Interest Suits; also, Working Paper No. 7, under the same title
(1977).

Section 80—notice
The Bombay High Court has ruled in Vasant Ambadas v. Bombay
Municipality22* that no suit can be instituted without service of the notice
if it is required statutorily as a condition precedent. But, this being a mere
procedural requirement, the same does not go to the root of jurisdiction
in the true sense of the term. The same is capable of being waived by
the defendant and on such waiver, the court gets jurisdiction to entertain
and try the suit. The court in this connection referred to the Supreme
Court's judgment in Dhirendra Nath v. Sundhir Chandra22*
Ouster of judicial review
Section 2 (1) (e) explanation of the Bombay Personal Inams Abolition

Act, 1952 runs as:
If any question arises whether any grant is a personal inam such
question shall be referred to the State Government and the decision
of the State Government shall be final....
The question which arose for consideration of the Supreme Court in
Sayed Mohamed Baquir El-Edroos v. State of Gujarat2,2* was whether the
above provision excludes the jurisdiction of the civil court by necessary
implication. The Act in question contains no explicit provision speci
fically barring the jurisdiction of the civil court. The court referred to
DhulabhaVs221 case and the propositions laid down therein by Hidayatullah
CJ. Considering the instant case, in the light of the principles laid down
therein, the court ruled that the "finality decision" of the government
"cannot exclude the jurisdiction of the civil court." Explaining the
reasons for this view, the court said :228
The Act does not give any details about the reference to and the
enquiry by the Government. No appeal has been provided for
and it cannot be said that the case of the plaintiff has been
considered by the Government in the same way as it would
have been considered if the case had been filed before a civil court.
-The court said further that the first principle laid down in Dhulabhai
postulates that where a statute gives a finality to the orders of the special
tribunal, the civil court's jurisdiction is held to be excluded if "there
is adequate remedy to do what the civil courts would normally do in
M
* AI.R. 1981 Bom. 394.
22
» A.I.R. 1964 S.C. 1300. For comments on Dhulabhai see XI A.S.I.L. 514 (1975). On
s. 80, Civil Procedure Code also see, X A.S.LL. 570-3 (1974); XIII A.SJ.L. 496
(1977).
aM
AJ.R. 1981 S.C. 2017.
227
Dhulabhai v. State of Madhya Pradesh, AJ.R. 1969 S.C. 78.
228
Supra note 226 at 2020.

a suit".229
The Act in question does not provide "adequate remedy" to the
plaintiffs on "reference made to the government". The second principle
laid down in Dhulabhai is: "where there is an express bar of the jurisdic
tion of the court", "an examination of the scheme of the particular Act to
find out the adequacy or the sufficiency of the remedies provided may be
relevant". In the instant case, the Act does not give any details about the
reference to be made to the government, the procedure to be followed by
the government and the opportunity to be afforded to the aggrieved party.
There is no detailed procedure of appeal and revision in the Act. In the
absence of any such details in the Act it is not possible to hold that the
rise of the expression 'finality of the decision of the Government' is meant
to bar the jurisdiction of the civil court.
VI CONTRACTS AND TORTS

Article 299
Some apartments belonging to the appellant were taken on rent by the
state government for locating some offices. A simple document was
executed for this purpose in 1958 by a state official and the appellant and
thereafter rent was paid for seven years. After some time the appellant
filed a suit for recovery of arrears of rent and for ejectment. On behalf
of the state, it was argued that the alleged contract was not valid because
it did not fulfil the provisions of article 299. The High Court accepted
this contention in Rawat Hardeo Singh v. State™ But the court
applied the principle laid down by the Supreme Court in Mulamchand v.
State of Madhya Pradesh.2*1 The court thus observed;232
[I]n all civilised systems of law, proper remedy must be provided to
prevent a person from getting unjust enrichment or unjust benefit
and restitution must be allowed in all such cases so as to place the
parties as nearly as possible in the same position, as if the contract
had not come into existence.
The effect of the contract being void because of non-compliance with
article 299 cannot be to deprive the owner of the property of the posses
sion thereof for all time to come. The state cannot be allowed to take
benefit of the plea of invalidity of the contract to remain in perpetual
possession of the property. Thus, the plaintiff was entitled to restitution
from the defendant and thereby seek re-delivery of possession of the
property, which was the subject-matter of a void contract. The
aM
M P . Jain, "Judicial Response to Privative Clauses in India," (1980) 22 J.LL.1.1,
6-10. Also see, XIII A.S.I.L. 492-496.
as0
A.I.R. 1981 Raj. 281.
831
A.I.R. 1963 S.C. 1218.
8,2
A.I.R. 1981 Raj. 282.

plaintiff's suit for possession of the premises and the arrears of rent was
decreed.
In an auction held for the grant of a licence for one year to sell country
liquor and bhang, the petitioners were the highest bidders. Because of
certain interim orders passed in certain writ petitions, this bid could not
be accepted, but an agreement was arrived at between the petitioners and
the district excise officer, under which the petitioners were allowed to run
the shops temporarily on daily payment basis in accordance with their bid
amount until the writ petitions were finally disposed of. The petitioner
started the shops but defaulted on payment as agreed. When the govern
ment gave notice that the amount due would be recovered as arrears of
land revenue, the petitioner instituted the writ petition seeking a direction
against the government not to enforce the said notice. It was contended
on behalf of the petitioner that as no contract had been executed in writing
in accordance with article 299, the said agreement was not enforceable.
But the court rejected this argument as the petitioner had derived benefit
under the said agreement by actually running the shop.233
In a contract between a contractor and the Government of India, the
following condition was included :
"67 : Recovery from Contractor : Whenever any claim for the
payment of a sum of money arises out of or under this contract
against the contractor the same may be deducted from any sum due
...under this or any other contract with the Government...or from
his security deposit...."
In S. Gajinder Singh v. Union of India 2U the Sikkim High Court
considered the following question. Even assuming that the petitioner has
committed a breach of the contract in question and as such is liable to pay
compensation to the Union of India, whether the Union can legally
withhold payment of any sum due to the petitioner from it under
any other contract between the petitioner and the Union and appropriate
such sums so withheld towards the satisfaction of its claim for compensa
tion for breach of this contract deducting such amount of claim from the
sums withheld.
The Union claimed the right to do so under clause 67 of the contract
noted above. But the court ruled that this clause comes into operation
only when "any claim,..arises out of or under this contract". This, the
court ruled, can operate only when the claim of the Union is "admitted
and undisputed or is adjudicated, determined and assessed by a court or
other proper authority according to procedure established by law". The
233
Ram Babu v. State, A.I.R. 1981 All. 16. The court cited the following cases in
support: Timber Kashmir Pvt. Ltd. v. Conservator of Forests, A.I.R. 1977 S.C. 151 ;
Harshankar v. Dy. Excise & Taxation Commr., AJ.R. 1975 S.C. 1121; State of Punjab
v. Balbir Singh, AJ.R. 1977 S.C. 1717.
*" AJ.R. 1981 Sikkim 9.

word 'claim' in clause 67 cannot mean "a claim made and decided and
assessed by the Government unilaterally and on their own" but means "a
claim, which, if not admitted by the contractor, has been determined and
assessed by a court or any other proper authority according to procedure
established by law". This interpretation is consistent with two principles
of natural justice, viz., (i) no one should be judge in his own cause, and
(ii) audi alteram partem.
The court referred to the Supreme Court decision in Union of India v.
Raman Iron Foundry™ in support of its view. The court has held there
that a sum does not become due and payable for any claim for compensa
tion or damages for any breach of contract unless the same has been
determined and assessed under and in accordance with the procedure
established by law. Thus, clause 67 was held as not laying down the
substantive rights and obligations of the parties under the contract but
merely as providing a mode of recovery by the government of any claim
against the contractor. The court issued a writ to prohibit the government
from recovering any amount under the contract from the payments due to
the contractor under other contracts.236
In State v. Chiroji Lai237 was raised the question of liability of the
state to pay damages for loss caused as a result of lathi-charge by the
police. The allegation was that the police resorted to lathi-charge wilfully
and without any reasonable cause and damaged plaintiff's property. The
court rejected the claim. The function of the state to regulate processions
and to maintain law and order are delegated to the police by the state.
These functions cannot be performed by private individuals. These are the
powers exercisable by the state or its delegates only and by their very
nature, these functions are to be regarded as 'sovereign functions' of the
state. The state is not liable for tortious acts of its servants or in respect
of consequences ensuing therefrom because the state is immune in such a
situation. It is liable if the liability arises from non-governmental or non-
sovereign functioning but not if the liability complained of flows from
tortious acts done or functions discharged in exercise of sovereign
powers.288
In Khatri v. State of Bihar,239 a very important question was raised :
If the state deprives a person of his life or personal liberty in violation of
the right guaranteed by article 21, can the court grant relief to the person
*" AJ.R. 1974 S.C. 1265.

138
The following cases were considered by the court but distinguished on the ground
that there the payment was withheld but not appropriated by the government
towards its claim ; Mohan Meakin Breweries v. Union of India, A.I.R. 1975 Del 248 ;
Marwar Tent Factory v. Union of India, AJ.R. 1975 Del. 27 ; Niranjan Lai Dalmia v.
Union of India, AJ.R. 1976 Del. 154.
237
A.LR. 1981 M.P. 65.
138
Also see State v. Dattamal, AJ.R. 1967 M.P. 246; Madhya Pradesh v. Premabai,
AJ.R. 1979 M.P. S5 ; Roop Lai v. Union of India, AJ.R. 1972 J & K 22.
*»9 AJ.R. 1981 S.C. 928.

who has suffered such deprivation ? Bhagwati J. said, "Why should the
court not be prepared to forge new tools and devise new remedies for the
purpose of vindicating the most precious of the precious Fundamental
Right to life and personal liberty".
The issue is of great constitutional importance involving the "explora
tion of a new dimension of the right to life and personal liberty." The
Supreme Court has said that it would lay down the correct implications of
the constitutional right in article 21 "in the light of the dynamic
constitutional jurisprudence" which the court is evolving.
VII PUBLIC UNDERTAKINGS

Judicial review
Reference has been made at several places in the previous pages of this
survey to the landmark case Fertilizer Corporation Kamgar Uwon v.
Fertilizer Corporation.2^ There is one more significant aspect of this case
which may be underlined here. In this case, the court, and especially,
Krishna Iyer J., has considered the question: What is the role of the
judiciary vis-a-vis the public enterprises ? In the words of Krishna
Iyer J. :241
What is the role of the judicial process, read in the light of the
dynamics of legal control and corporate autonomy ? This juristic
field is virgin but is also heuristic challenge, so that law must meet
life in this critical yet sensitive issue. The active co-existence of
public sector autonomy, so vital to effective business management,
and judicial control of public power tending to berserk, is one of
the creative claims upon functional jurisprudence.
Therefore, Krishna Iyer J. emphasized that "judicial, though
interstitial, law-making is needed in this field". He went on to state
further :242
We have no doubt that public law, as part of the panorama of the
developmental process, must possess the specific techniques of public
sector control within well-defined parameters which will anathe
matize administration by court writ and interdict public officials
handling public resources in disregard of normative essentials and
constitutional fundamentals.
Thus, the main thesis of Krishna Iyer J. is that the public sector has
assumed great significance in India. There is no adequate control mecha
nism to supervise it. Accountability of the public sector to the Parliament
248
A.I.R. 1981 S.C. 344 ; supra note 5.
841
Id. at 352.
243
Ibid.

5^2 Annual Survey of Indian Law [1981
is ineffective, diffuse and haphazard. There is no ombudsman; there is no

body of law yet in existence to deal with misuse of power by public
enterprises. It thus behoves the courts to make use of their law-creative
powers (which they undoubtedly have) to develop the law in this area.
In the light of this assertion by the highest court, one may expect some
interesting developments in future in administrative law, especially in
the area of government undertakings.
What is an authority ?
Since the Airport Authority case in 1979, the Supreme Court has been
giving an expansive interpretation to the term 'authority' in article 12.243
This development is helpful in several ways—it helps in the expansion of
administrative law as more and more bodies fall under its restraints; it helps
in the expansion of judicial review as many more bodies become subject to
writ jurisdiction, and it also makes bodies amenable to the restrictions of
fundamental rights. This judicial trend has been taken further during the
year through two Supreme Court cases, viz., Som Prakash and Ajay
Hasia.2** This trend also helps in the expansion of judicial control over
public enterprises which assume various structural forms, for example,
some are statutory having been created directly by law, while others have
been incorporated or registered under a general law. A government
company is registered under the Indian Companies Act, 1956. There has
been a good deal of controversy on the question whether a government
company is subject to the writ jurisdiction.
In Som Prakash2** the Supreme Court considered a significant question
which keeps on rising up again and again without a final solution, viz.,
what is the meaning of 'other authorities' in article 12? The Bharat Petro
leum Corporation has been incorporated under the Indian Companies Act.
Burmah Shell was nationalised and vested in the government itself under
the Burmah Shell (Acquisition of Undertakings in India) Act, 1976. This
Act provided for vesting of the undertaking in a government company and
hence the undertaking was taken over by Bharat Petroleum, a government
company. The main question in Som Prakash was whether a writ under
article 32 would lie against Bharat Petroleum which is neither a government
department nor a statutory corporation but just a company. The answer
to this depended on whether or not the Bharat Petroleum could be
regarded as an 'authority' and thus 'state' under article 12.
In this case, there was a formal transfer from government to a govern
ment company. Therefore, the court held that the comany is but 'the
alter ego' of the central government and is 'state' under article 12. Krishna
Iyer J. delivering the judgment of the court pointed out that the company
«« See, XV A.S.I.L. 342-349, 351-353 (1979); XVI A.S.I.L. 410-411 (1980).

244
Som Prakash v. Union of India, A.I.R. 1981 S.C. 212; supra note 3. Also supra
note 4.
248
Ibid.

in question has functional and jural individuality of its own for certain
purposes and in certain areas of law. "It does not necessarily
follow that for the effective enforcement of fundamental rights under our
constitutional scheme", the court "should not scan the real character of
that entity". If it is found to be a "mere agent or surrogate" of the state,
in fact "owned" by the state, in truth "controlled" by the state and in
effect an "incarnation" of the state, then enforcement of fundamental
rights against such a body ought not to be frustrated. In the instant case,
control by government of the corporation is writ large in the Act and in
the factum of being a govenment company. Moreover, here statutory
recognition is given to the government company. Krishna Iyer J. empha
sized that the search must be to see whether the Act vested authority in
the company as agent or instrument of the state, to affect the legal
relations of oneself or others. For this purpose, the test whether the body
in question has been formed by a statute or under a statute is irrelevant.
"The true test is functional".
Reviewing the provisions of the Act, the court came to the conclusion
that the corporation in question is more than a "mere government
company". The Act transformed it into "an" instrumentality of the
central government with a strong statutory flavour superadded and clear
indicia of power to make it an "authority". The court pointed out that
recent rulings of the Supreme Court had broadened the concept of
"authorities...under the control of the Government of India". Reference
was made in this connection to the Airport Authority case246 and the U.P.
Warehousing Corporation case247 with approval. The main reason for
liberally interpreting article 12 is to protect fundamental rights from being
completely nullified by the expedient of setting up corporate bodies—statu
tory or non-statutory—to carry on the functions of the government. The
contrivance of carrying on business activities by the state "through
statutory corporations, government companies and other bodies with legal
personality, simplifies and facilitates transactions and operations beyond
the traditional and tardy processes of governmental desks and cells noted
for their red tape", but the use of corporate methodology "is not to
liberate the state from its basic obligation" to obey fundamental rights.243
Otherwise, a plurality of corporations can take over all activities and
eclipse fundamental rights completely. If the corporate body is an "instru
mentality or agency" of government, then fundamental rights will trammel
its operations.
The court mentioned the following factors which may point to a
statutory corporation, a government company, a cooperative society and
other registered society or body being an "authority" and so "state"
under article 12 :218a
24ft
Supra note 168.
247
U.P. Warehousing Corporation v, Vijay Narain, A.I.R. 1980 S.C. 84.
248
A.I.R. 1981 S.C. 212 ; supra note 3.
248
« Id. at 225.

(1) "[I]f the entire share capital of the corporation is held by
government, it would go a long way towards indicating that
the corporation is an instrumentality or agency of Govern
ment."
(2) Existence of "deep and pervasive state control may afford an
indication that the corporation is a state agency or instru
mentality."
(3) "[A] relevant factor may also be whether the corporation enjoys
monopoly status which is State conferred or State protected."
(4) "If the functions of the corporation are of public importance,
and closely related to governmental functions, it would be a
relevant factor in classifying the corporation as an instru
mentality or agency of Government."
(5) "Specifically, if a government department is transferred to a
corporation it would be a strong factor supportive of this
inference of the corporation being an instrumentality or agency
of Goverment."
The finale is reached when the cumulative effect of ali the relevant
factors above set out is assessed and once the body is found to be
an instrument or agency of Government, the further conclusion
emerges that it is 'State' and is subject to the same constitutional
limitations as Government.
Krishna Iyer J. emphasized :249
It is dangerous to exonerate corporations from the need to have
constitutional conscience; and so, that interpretation, language
permitting, which makes governmental agencies, whatever their
mein, amenable to constitutional limitations must be adopted by the
court as against the alternative of permitting them to flourish as an
imperium in imperio.
Therefore, held the court, that Bharat Petroleum Corporation Ltd., is
subject to article 32.
Another significant pronouncement of the Supreme Court having the
same theme is Ajay Hasia v. Khalid Majid™ in which the decision was
given by Bhagwati J. The Regional Engineering College, Srinagar, is
sponsored by the Government of India. It is established and its adminis
tration is carried on by a society registered under the Registration of
Societies Act, 1860, The society can amend, vary or add to its rules with
the approval of the central and state governments. Money to run the
college is provided by the state and central governments. The accounts
24
» Id. at 230.
250
AJ.R. 1981 S.C. 487; supra note 4. In this case Bhagwati J. delivering the
judgment of the Full Bench has given the reasons for the proliferation of the public
sector.

of the society as certified by a duly appointed auditor are to be sent
annually to the state and central governments. The state government can
appoint one or more persons to review the working and progress of the
society or the college and on receipt of their report the state government,
with the approval of the central government, can take such action and
issue such directions as it may consider necessary. The society or the
college is bound to comply with such directions. The state government has
power to take over the administration of the college if it is not functioning
properly. A number of members of the society (including its chairman)
are the nominess of the state, central government and other official
bodies.
The Supreme Court held in Ajay Hasia that the society falls under the
expression 'other authorities' in article 12 of the Constitution. The court
has emphasized that the efficiency of the fundamental rights would be
greatly eroded if a corporation were to be free from the basic obligation to
obey these rights, for, in that case, the government might be tempted to
override the fundamental rights by adopting the stratagem of carrying its
functions through a corporation while retaining control over it. Accor
dingly, where a corporation is an instrumentality or agency of the
government, it must be held to be an authority under article 12 and be
subject to the same basic obligation to obey fundamental rights as the
government itself. Reference has been made in this connection to
R.D. Shetty v. The International Airport Authority261 Sukhdev v.
Bhagatram,252 U.P. Warehousing Corp. v. Vijay Narain2bZ
A corporation whether created by a statute or under a statute can be
regarded as an instrumentality or agency of the government. It may be a
statutory corporation or a government company or a registered society.
Whatever its origin, it would be 'authority' within article 12 if it is an
instrumentality or agency of the government. In the words of Bhagwati J.,
"The inquiry has to be not as to how the juristic person is born but why
it has been brought into existence." He observed further :a54
The corporation may be a statutory corporation created by a
statute or it may be a Government company formed under the
Companies Act, 1956 or it may be a society registered under the
Societies Registration Act, 1860 or any other similar statute.
Whatever be its genetical origin, it would be an "authority" within
the meaning of Article 12 if it is an instrumentality or agency of the
Government... The concept of instrumentality or agency of the
Government is not limited to a corporation created by a statute but
is equally applicable to a company or society....
The society in the instant case was held to be an instrumentality or the
251
Supra note 168.
252
A.I.R. 1975 S.C. 1331.
288
Supra note 247.
254
A.I.R. 1981 S.C. 487 ; supra note 3 at 496.

agency of the state and the central governments. It was thus subject to
article 14.
The court has again narrated the tests for determining as to when a
corporation can be said to be an instrumentality or agency of the govern
ment. These tests have been culled out from the court's earlier decision
in the Airport Authority case. The court, however, warned that these
tests are not "conclusive or clinching" but are merely indicia which must
be used with care and caution. The court cautioned that while it is
necessary to place a wide meaning on the expression "other authorities"
in article 12, it should not be stretched too far so as to bring in every
autonomous body having some nexus with the government.
Are A.P. State Irrigation Development Corporation and A.P. Leather
Industries Development Corporation 'state' for purposes of article 12?
These bodies have been incorporated under the Companies Act. The
Andhra Pradesh High Court has held in B. Satyanarayana v. State2™ that
the A.P. Irrigation Development Corporation can be termed as an
instrumentality or agency of the state and so falls under article 12 and a
writ can, therefore, be issued to the corporation. Its capital is contributed
by the state; its functioning is totally subject to the control of the
government, which is empowered to issue such directives and instructions
as it thinks fit, with respect to the finances and conduct of the business
and affairs of the company, and the activity it is carrying on is for the
benefit of the public.
Similarly, the Leather Industries Corporation is an instrumentality of
the government. It has been created with a view to reviving the leather
industry; its initial paid-up capital is contributed by the government;
public cannot subscribe to its shares or debentures. All its directors are
to be appointed and removed by the government; their salaries are fixed
by the government which can issue such directives to it as it may consider
necessary in regard to the conduct of the business and affairs of the
corporation. The corporation is not a purely commercial venture on the
part of the state; its functions are of a public nature and meant for the
benefit of the public. It can, therefore, be regarded as an instrumentality
of the government.
In a debatable decision, B. Rajkumar Patra v. Union of India256 the
Orissa High Court has held that the Indian Rare Earths Ltd., a govern
ment company, is not an instrumentality of the government and so is not
an 'authority' for purposes of article 12. The court has taken the view
that where the government embarks upon a commercial activity, such
factors as the government putting the entire money, exercising direct or
indirect control and receiving profits by themselves may not be adequate
to hold it to be an instrumentality. On that basis the court has ruled
that article 14 would not apply to Rare Earths. According to the court's
thinking only when the functions are closely related to governmental
*" A.I.R. 1981 A.P. 125.
»• A.I.R. 1981 Ori. 143.

functions and where a department of the government is transferred to a

corporation or where rule-making or regulation-making power has been
given which when made would regulate the conduct of the people at large
are clear features in support of treating the institution as an instrumentality
or agency of the government.257 Needless to say that the High Court's
view is antiquated and not in accord with the latest judicial thinking on
the subject as represented by Ajay Hasia.
In Satish Kumar v. Punjab State Co-op. Bank Ltd.258 a society registered
under the Cooperative Societies Act was held not to be an authority
under article 12. The court did not agree with the Calcutta859 and
Madhya Pradesh260 High Courts holding a cooperative society to be
an authority either because its affairs are controlled by the Registrar of
Co-operative Societies or because it has power to frame rules and bye-
laws. A body registered under a statute can be an 'authority' if it is an
instrumentality or agency of the government.261 The district central
co-operative bank was held not to be an instrumentality or agency of the
government and, therefore, not amenable to writ jurisdiction for the
following reasons :
(i) Neither its entire nor major share capital was owned by the
government;
(ii) The government did not spend any money on the working of the
bank;
(///) The cooperative banks had no monopoly in the sphere of banking
business;
(iv) The government had no control over the day to day working of
the bank and did not exercise deep pervasive control over the bank;
(v) Some of the objects of the bank might be of relative public import
ance but its primary function is banking which cannot be termed of
public importance so as to make it an instrumentality or agency of the
state;
(vi) No department of the government or its working has been
transferred to the bank since its inception.
The courts have refused to issue writs to recognised private schools
aided by the government. A private school aided and recognised by the
government is not an instrumentality of the government, and so is not an
authority within article 12. Such a school is established by private
initiative and it has its own funds and management.262
a
" Id. at 147.
268
A.I.R. 1981 P. & H. 282.
>w
Madan Mohan Sen Gupta v. State of West Bengal, A.I.R. 1966 Cal. 23.
360
Dukhooram Gupta v. Hari Prasad Gupta, A.I.R. 1961 M.P. 289.
m
Also see, Ajmer Singh v. The Registrar, Coop. Soc.9 Punjab, A.I.R. 1981 P. & H.
107.
962
/ . Tiwari v. Jwala Devi Vidya Mandir, A.I.R. 1981 S.C. 122; In Re. Badri Narayan
Thakur, A.I.R. 1981 Cal. 214.

In Union of India v. R.C. Jain2™ the Supreme Court has held that
Delhi Development Authority (D.D.A.) is a 'local authority' and, therefore,
the Payment of Bonus Act, 1965 is not attracted to the D.D.A. This
authority is constituted for the specific purpose of "the development of
Delhi according to plan". Planned development of towns is a govern
mental function which is traditionally entrusted by the various Municipal
Acts in different states to municipal bodies. Thus, the D.D.A. is an
authority to which is entrusted, by a statute of Parliament, a governmental
function ordinarily entrusted to municipal bodies. D.D.A. has been given
the power to make regulations. Such a power is analogous to the power
usually given to municipalities to frame bye-laws. The activities of the
D.D.A. are limited to the local area of the Union Territory of Delhi.
There is some element of popular representation in the constitution of this
body and it enjoys a considerable degree of autonomy.
Acquisition for a company
The Land Acquisition Act makes different provisions for acquisition

of land for a 'company' and for a 'department'. Under section 3(e) of the
Act, 'company' is a body registered under the Companies Act or the
Societies Registration Act or the Cooperative Societies Act or incorporated
under a law of Parliament. The Food Corporation is created by the
Food Corporation Act, 1964. Its original share capital was provided by
the central government and 11 out of 12 members of the board of directors
are also appointed by that government. These factors make it a govern
ment instrumentality and an authority for article 12. But, as the
corporation is an autonomous body and is not a government department,
for purposes of the Land Acquisition Act, it is to be treated as a
'company'.264
Deputation of a government servant
A member of the Indian Administrative Service, whose services are

placed at the disposal of the super bazar, a co-operative store, is not a
'public servant'within the meaning of section 21(12), Indian Penal Code
(I.P.C.) for purposes of section 197 of the Criminal Procedure Code (Cr.
P.C.) Accordingly, the store as well as he as the general manager thereof
can be prosecuted under the Prevention of Food Adulteration Act, 1954.
Under section 21, I.P.C, a person, inter alia, "in the service" of a
"corporation established by or under" a law or government company is a
"public servant". Under section 197, Cr. P.C, a person employed in con
nection with the "affairs of the Union" cannot be prosecuted for a
criminal offence without the sanction of the central government.
263
A.LR. 1981 S.C. 951. Also see Premji Bhai Parmar v. Delhi Dev. Authority, A.LR.
1980S.C. 738 holding the D.D.A. as an authority under art. 12. See XVI A.S.I.L.
410.
164
State of Punjab v. Raja Ram, A.I.R. 1981 S.C. 1694.

The Supreme Court has ruled in S.S. Dhanoa v. Delhi Municipality2**

that with reference to section 21(12), I.P.C, the cooperative store is not a
corporation established by a central or state Act. The expression "corpo
ration" in section 21(12) means "a corporation created by the legislature
and not a body or society brought into existence by an act of a group of
individuals. Such a corporation is not, therefore, a corporation estab
lished by or under an Act of the central or state legislature". Ordinarily,
the term 'corporation' is wide enough to include private corporations,
but, in the context of section 21(12), I.P.C. the expression'corporation'
must be given a narrow legal connotation.
In a questionable ruling the court has said that the super bazar is not
an intrumentality of the state. The central government holds more than
97 per cent shares in the total shareholding of the society. The govern
ment has also advanced a loan of 40 lakh rupees to the society and under
the loan agreement the society cannot appoint or remove the key admini
strative personnel without the written consent of the central government.
The store is run under the control of the Ministry of Agriculture.
Nevertheless, the court has ruled :266
Legally speaking, the Super Bazars are owned and managed by
the society and not by the Central Goverment and, therefore, the
appellant was not employed in connection with the affairs of the
Union within the meaning of S. 197 of the Code of Criminal
Procedure, 1973.
The question is : Is this ruling consistent with Ajay Hassial
■•• AJ.R. 1981 S.C. 1395.

«• Id. at 1399

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22

* Professor of Public Law, University of Malaya; formerly Professor of Law, Banaras

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to follow general standards of democratic behaviour. In 1981, the Supreme

• A.I.R. 1981 S.C. 1668.

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on the central government the need to honour its contractual obligation.

The court went on to say :13

[I]n a democratic society governed by the rule of law, it is the duty

The court wondered whether "the highest principle of our constitu­

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that in future such leases can only be granted to government-owned corpo­

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prescribe the conditions of service of persons serving in the Indian Audit

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Under section 3 (6) of the Essential Commodities Act an order made

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As stated last year, a weakness of delegated legislation is that there is

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of khandsari units, at least to a representative of the association represen­

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action and certain consequences prescribed by statute follow forthwith".

The distinction between 'rules' and 'directions' has become rather

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discriminatory. Also, the impugned directive sought to amend the recruit­

[FJurther and better implementation of the Recruitment Rules.

An army instruction regarding release of commissioned officers was

Ill NATURAL JUSTICE

When can a person claim a right of hearing before an administrative

™a Supra note 55 at 415.

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« XIV A.S.I.L. 358-370 (1978) ; XVI A.S.LL. 370-389 (1980).

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The court held that the dissolution of the committee unceremoniously

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opportunity, in the shortest time", cannot be afforded to the concerned

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cardinal rule to the maximum extent possible, with situational modifica­

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(v) Whether the hearing is pre-decisional or post-decisional, the person

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** Supra note 90.

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be "rational and judicious". It was a suspension order in the nature of a

When, as in this case, nothing is alleged against the appellants

In Sanjay Lobo v. Rajasthan University™2 the Rajasthan High Court

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Norms of fair hearing

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To support the above proposition, the court referred to the Nehrulm

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open to those persons to appear or not. In this situation if an

The court wondered whether "the highest principle of our constitu

that in future such leases can only be granted to government-owned corpo

of khandsari units, at least to a representative of the association represen

discriminatory. Also, the impugned directive sought to amend the recruit

cardinal rule to the maximum extent possible, with situational modifica