TMI Blog2010 (9) TMI 774X X X X Extracts X X X X X X X X Extracts X X X X ..... of the present nature which is a fact finding or preliminary inquiry, has no right to demand copies of the documents and affidavits or to be represented by legal practitioner or to cross-examine the witnesses examined by the Commission in the inquiry. Whether the opinion formed by the Government for not applying Sections 8B and 8C of the Act to an Authority / Commission is justified or not can be questioned in a court of law on permissible grounds, namely, arbitrariness, unfairness, unreasonability, irrationality, etc. - WP(C) No.9783/2006 - - - Dated:- 28-9-2010 - MR. JUSTICE A.K. SIKRI, MR. JUSTICE MANMOHAN, JJ. For Appellant: Mr. Rajive Sawhney, Senior Adv. with Mr. Vineet Jhanji, Adv. For Respondents : Mr. C.S.Vaidyanathan, Senior Adv. with Mr. Dalip Mehra, Adv. for R-1. DIPAK MISRA, CJ The petitioner invoked the jurisdiction of this Court under Article 226 of the Constitution of India for issue of a writ of certiorari for quashment of the notifications dated 11.11.2005 issued by the respondent No.1, Union of India, vide Annexures 3 and 4 to the writ petition and further to lancet the rule framed on 20.1.2006 by the respondent No.2, the same being uncons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all for determination. 4. Because of the aforesaid, a Full Bench has been constituted and the matter has been placed before us. 5. To appreciate the controversy from a proper perspective, it is necessary to refer to certain facts in brief. On 11.11.2005, the Government of India through the Ministry of Finance constituted an Authority named as Justice R.S. Pathak Inquiry Commission to go to the root of certain matters of definite public importance as set out in the terms of reference specified in the said Resolution. The Terms of Reference of the Inquiry Authority were stipulated as follows: (1) To inquire into the sources of information, materials and documents that were available with the Independent Inquiry Committee (appointed by the Secretary General of the United Nations to investigate the administration of the UN Oil-For-Food-Programme) with reference to the Report (including the Tables) of the said Committee pertaining to contracts bearing number M/9/54 and number M/10/57 and to give its opinion on the authenticity and reliability of the said sources, materials and documents, and whether, in its opinion, the purported transactions in oil are genuine or not. (2) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise of powers conferred under Section 11 of the Commissions of Inquiry Act, 1952 (60 of 1952), the Central Government hereby directs that the provisions of the said Act specified in the Annexure to this notification shall apply to the said Authority. ANNEXURE The Commission of Inquiry Act, 1952 (60 of 1952) Serial Number Provision of the Act (1) (2) 1. Sub-section (4) of Section 3 2. Section 4 3. Sub-section (2) of Section 5 4. Sub-section (3) of Section 5 5. Sub-section (4) of Section 5 6. Sub-section (5) of Section 5 7. Section 5A 8. Section 6 9. Section 9 10. Section 10 11. Section 10A [F.No.8/35/2005-E.S.] RAKESH SINGH, Jt. Secy. 7. As set forth, the respondent No.2 issued notice to the petitioner under Section 5(2) of the Act directing the petitioner and his firm to furnish a statement of facts alongwith documents within ten days from the receipt of the notice. The petitioner filed an application stating therein that he has neither been allowed any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... give to that person a reasonable opportunity of being heard in the inquiry and to produce evidence in his defence: Provided that nothing in this section shall apply where the credit of a witness is being impeached. 8C. Right of cross-examination and representation by legal practitioner. The appropriate Government, every person referred to in section 8B and, with the permission of the Commission, any other person whose evidence is recorded by the Commission, - (a) may cross-examine a witness other than a witness produced by it or him; (b) may address the Commission; and (c) may be represented before the Commission by a legal practitioner or, with the permission of the Commission, by any other person. 10. The notification issued by the Central Government does not mention / include the applicability of Sections 8B and 8C of the Act to the Authority in question. Once the said provisions are not applied to an Authority, the said provisions indubitably stand excluded. 11. The first question that arises for consideration is whether resort to Section 11 of the Act necessarily results in the application of Sections 8B and 8C of the Act to the proceedings before the Inquiry Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion to inquire into the same matter for so long as the Commission appointed by the Central Government is functioning; (b) by a State Government, the Central Government shall not appoint another Commission to inquire into the same matter for so long as the Commission appointed by the State Government is functioning, unless the Central Government is of opinion that the scope of the inquiry should be extended to two or more States. 13. The question that emerges for consideration is whether the Authority (by whatever name called) other than a Commission appointed under Section 3 becomes a deemed Commission on the issue of a notification and would all other provisions under the Act get attracted in the case of a Commission appointed under Section 3 for the purposes of the Act despite the issue of a notification or which of the provisions would be applicable. To appreciate the issue, it is apposite to understand the concept shall be deemed to be a Commission‟ in proper perspective. The word deemed‟ has its own signification. In this context, we may refer with profit to the observations made by Lord Justice James in Ex Parte Salton, In re, Levy, 1881 (17) Ch D 746 whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdships have relied thus: 9. The legal fiction also which has been introduced should only be limited to that purpose and there can be no justification for extending it 17. In Consolidated Coffee Ltd. v. Coffee Board, Bangalore, AIR 1980 SC 1468, the purpose of the word deemed‟ occurring in Section 5(3) of the Central Sales Tax Act, 1956 came for consideration. The issue that emanated was whether a legal fiction has been created by use of the word deemed‟. Their Lordships noticed that the same word deemed has been used by the legislature in Section 5(1) and Sections 3 and 4 of Chapter II of the Central Sales Tax Act and opined that no legal fiction has been created by the use of the word deemed‟ in Section 5(3) of the Central Sales Tax Act. It is fruitful to reproduce what has been exposited by their Lordships: 11. It is true that the word "deemed" has been used in S.5(3) but the same word has been used not merely in S.5(1) but also in the other two Sections 3 and 4 of Chapter II of the Central Sales Tax Act which has the heading "Formulations of Principles for determining when a sale or purchase of goods takes place in the course of inter-State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the debtor a judgment-debtor, their Lordships opined that the same is not a decree for the purposes of applying Section 34 of the Code of Civil Procedure because the legal fiction cannot be extended for treating an application under Section 31(1) as a plaint for payment of Court fee. In this regard, we think it apposite to reproduce what their Lordships have stated in the said decision: 29. Of course, in view of the limited scope of legal fiction as indicated above the provisions in the Code shall be applicable to an order of sale under the Act only with regard to execution of that order as if it was a decree in a suit and the Financial Corporation was a decree holder and the debtor a judgment-debtor and this legal fiction will not be capable of being extended so as to treat an order of sale passed under the Act to be a decree in a suit for any other purpose for instance applying Section 34 of the Code as was sought to be done in the case of M/s. Everest Industrial Corporation (AIR 1987 SC 1950) (supra) nor could it be extended for treating the application made under Section 31(1) of the Act as a plaint for purposes of payment of court fee as was sought to be done in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the language employed in Section 11 of the Act, it is clear as day that once the notification comes into existence in respect of an Authority, it becomes a Commission under Section 3 for the purposes of the Act because of the use of the term deemed‟. At the same time, the government has been conferred the power, a significant and a pregnant one, to form an opinion whether all or any of the provisions of the Act should be made applicable to that Authority and direct that only those provisions of the Act shall be applied to that Authority. To elaborate, the appropriate government has been bestowed with the power to exclude the applicability of certain provisions of the Act while appointing an Authority other than a Commission under Section 3 of the Act and at that point of time it can exclude certain provisions not to be made applicable. Thus, though the authority becomes a deemed Commission appointed under Section 3 for the purposes of the Act, it has to be read in the context keeping in view the intendment of the legislature. It has to be construed that the term deemed‟ does not clothe the said authority, to be a Commission under the Act which has all the powers as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay take colour and appear different than when the statute is looked at without the glasses provided by the context. With these glasses we must look at the Act as a whole and discover what each section, each clause, each phrase and each word is meant and designed to say as to fit into the scheme of the entire Act. No part of a statute and no word of a statute can be construed in isolation. Statutes have to be construed so that every word has a place and everything is in its place 24. While keeping in view the aforesaid principle when the anatomy of Section 11 is scanned, it becomes vivid that the competent government has been empowered subject to the prohibition contained in the proviso to sub-section (1) of Section 3 to direct that all or any of the provisions of the Act should be made applicable to the Authority. The said words as employed by the legislature have to be given its effective meaning. 25. Quite apart from that the said words precede the terms shall be deemed to be a commission appointed under Section 3 for the purposes of this Act‟. In Mahadeolal Kanodia v. The Administrator General of West Bengal, AIR 1960 SCC 936, a three-Judge Bench of the Apex Court w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modification of the language used. 26. After so stating, the Apex Court took note of the submission that if the word amended is interpreted to include omissions, it would become meaningless because it makes no sense to say that a provision which has been omitted shall apply. After noting the submission, their Lordships opined thus: 10. We are unable to see how it is possible, unless rules of grammar are totally disregarded to read the words "as amended by this Act" as to qualify the word "provisions". If ordinary grammatical rules are applied there is no escape from the conclusion that the adjectival phrase "as amended by this Act" qualifies the proximate substantive, viz., the Calcutta Thika Tenancy Act, 1949. There is no escape from the conclusion therefore that what the Legislature was saying by this was nothing more or less than that the provisions of the amended Thika Tenancy Act shall apply. 27. In this regard, it is apt to refer to the decision in The Regional Provident Fund Commissioner, Bombay v. Shree Krishna Metal Manufacturing Co. Anr., AIR 1962 SC 1536, wherein it has been held as follows: The ordinary rule of grammar on which a construction is based ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... word 'exception' is really a misnomer because in these exclusionary cases, the audi alteram partem rule is held inapplicable not by way of an exception to "fair play in action", but because nothing unfair can be inferred by not affording an opportunity to present or meet a case. The audi alteram partem rule is intended to inject justice into the law and it cannot be applied to defeat the ends of justice, or to make the law 'lifeless, absurd, stultifying, self-defeating or plainly contrary to the common sense of the situation'. Since the life of the law is not logic but experience and every legal proposition must, in the ultimate analysis, be tested on the touchstone of pragmatic realism, the audi alteram partem rule would, by the experiential test, be excluded, if importing the right to be heard has the effect of paralysing the administrative process or the need for promptitude or the urgency of the situation so demands. But at the same time it must be remembered that this is a rule of vital importance in the field of administrative law and it must not be jettisoned save in very exceptional circumstances where compulsive necessity so demands. It is a wholesome rule designed to sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resumed when in the circumstances of the case, there is paramount need for secrecy or when a decision will have to be taken in emergency or when promptness of action is called for where delay would defeat the very purpose or where it is expected that the person affected would take an obstructive attitude. To a limited extent it may be necessary to revoke or to impound a passport without notice if there is real apprehension that the holder of the passport may leave the country if he becomes aware of any intention on the part of the passport authority or the Government to revoke or impound the passport. But that by itself would not justify denial of an opportunity to the holder of the passport to state his case before a final order is passed. It cannot be disputed that the legislature has not by express provision excluded the right to be heard . 32. In Swadeshi Cotton Mills v. Union of India, (1981) 1 SCC 664, the majority speaking through Sarkaria, J. adverted to the concept of basic facets of natural justice, the twin principles, namely, audi alteram partem and nemo judex in re sua, the decisions rendered in Maneka Gandhi (supra), State of Orissa v. Dr. Bina Pani Dei, AIR 1967 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dhi etc. etc. They are now considered so fundamental as to be 'implicit in the concept of ordered liberty' and, therefore, implicit in every decision-making function, call it judicial, quasi-judicial or administrative. Where authority functions under a statute and the statute provides for the observance of the principles of natural justice in a particular manner, natural justice will have to be observed in that manner and in no other. No wider right than that provided by statute can be claimed nor can the right be narrowed. Where the statute is silent about the observance of the principles of natural justice, such statutory silence is taken to imply compliance with the principles of natural justice. The implication of natural justice being presumptive it may be excluded by express words of statute or by necessary intendment. Where the conflict is between the public interest and the private interest, the presumption must necessarily be weak and may, therefore, be readily displaced. (Emphasis supplied.) 101. Not only, therefore, can the principles of natural justice be modified but in exceptional cases they can even be excluded. There are well-defined exceptions to the nemo judex i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he enactment. Such an exclusion can also arise by necessary implication from the nature of the subject matter, the scheme and the provisions of the enactment. The public interest underlying such a provision would outweigh the salutary purpose served by the requirement to record the reasons. The said requirement cannot, therefore, be insisted upon in such a case. 40. For the reasons aforesaid, it must be concluded that except in cases where the requirement has been dispensed with expressly or by necessary implication, an administrative authority exercising judicial or quasi-judicial functions is required to record the reasons for its decision. [Emphasis supplied] 36. In Union of India and another v. W.N. Chadha 1993 Supp. (4) SCC 260 their Lordships, while adverting to the issue of applicability of the doctrine of natural justice, have ruled thus: 80. The rule of audi alteram partem is a rule of justice and its application is excluded where the rule will itself lead to injustice. In S.A. Smith‟s Judicial Review of Administrative Action, (4th Edn.) at page 184, it is stated that in administrative law, a prima facie right to prior notice and opportunity to be heard may be he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries Ltd. (1993) 3 SCC 259, the Apex Court has held as follows: 7. Particular statute or statutory rules or orders having statutory flavour may also exclude the application of the principles of natural justice expressly or by necessary implication. In other respects the principles of natural justice would apply unless the employer should justify its exclusion on given special and exceptional exigencies. 39. In Dr. Rash Lal Yadav v. State of Bihar Ors., (1994) 5 SCC 267, the Apex Court, after referring to the decisions in A.K. Kraipak (supra), Dr. Bina Pani Dei (supra), J. N. Sinha (supra), Swadeshi Cotton Mills (supra) and Mohinder Singh Gill v. Chief Election Commissioner, (1978) 1 SCC 405, 439, held as follows: 9. What emerges from the above discussion is that unless the law expressly or by necessary implication excludes the application of the rule of natural justice, courts will read the said requirement in enactments that are silent and insist on its application even in cases of administrative action having civil consequences. However, in this case, the High Court has, having regard to the legislative history, concluded that the deliberate omission of the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e were got inducted in the shape of a statutory provision. It is thus incumbent upon the Commission to give an opportunity to a person, before any comment is made or opinion is expressed which is likely to prejudicially affect that person. Needless to emphasise that failure to comply with principles of natural justice renders the action non est as well as the consequences thereof. 42. To buttress the submission that the violation of the rules of natural justice in any sphere would destroy the marrow of justice dispensation system, he has placed reliance upon the decisions rendered in A.K. Kraipak (supra), Mohinder Singh Gill (supra), Dr. Bina Pani Dei (supra), State of Kerala v. K.T. Shaduli Grocery Dealer, AIR 1977 SC 1627, S.L. Kapoor v. Jagmohan Ors., (1980) 4 SCC 379 and Canara Bank Ors. v. Debasis Das Ors., (2003) 4 SCC 557. In Debasis Das (supra), the Apex Court, while dealing with the concept of natural justice, has held thus: 20. Natural justice has been variously defined by different Judges. A few instances will suffice. In Drew v. Drew and Lebura (1855) 2 Macq. 1, Lord Cranworth defined it as universal justice . In James Dunber Smith v. Her Majesty the Queen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time be a party . The form nemo potest esse simul actor et judex , that is, no one can be at once suitor and judge is also at times used. The second rule is audi alteram partem , that is, hear the other side . At times and particularly in continental countries, the form audietur et altera par ' is used, meaning very much the same thing. A corollary has been deduced from the above two rules and particularly the audi alteram partem rule, namely qui a liquid statuerit, parte inaudita altera acquum licet dixerit, haud acquum fecerit that is, he who shall decide anything without the other side having been heard, although he may have said what is right, will not have been what is right [See Boswel's case (1605) 6 Co.Rep. 48b, (Co Rep at p.52-a) or in other words, as it is now expressed, justice should not only be done but should manifestly be seen to be done . whenever an order is struck down as invalid being in violation of principles of natural justice, there is no final decision of the case and fresh proceedings are left upon (sic open). All that is done is to vacate the order assailed by virtue of its inherent defect, but the proceedings are not terminated. 43. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on two counts, namely, when a statutory provision has been introduced into the statute book including the doctrine of natural justice and there is an authority conferred on the competent government to apply certain provisions and the said provisions have deliberately not been included which amounts to its exclusion, the principles of natural justice which, in law, is excludable cannot be brought in by taking recourse to the factum of presumptive applicability. Quite apart from the above, we are disposed to think that when Sections 8B and 8C of the Act specifically provide for grant of reasonable opportunity of being heard and grant of permission for cross-examination and representation by the legal practitioner, in view of the exclusion of the said provisions, it is inconceivable to incorporate the same. 46. The issue No.2 is also required to be tested in the obtaining factual backdrop. Mr. Vaidyanathan, learned senior counsel has submitted that the Authority or the Commission that has been constituted is basically a preliminary fact finding inquiry equivalent to investigation or a preliminary inquiry in a disciplinary proceeding. It is contended by him that the Commission is r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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