Madras High Court
Dr. K.Kuppusamy vs Anna University on 30 July, 2008
Author: K.K.Sasidharan
Bench: K.K.Sasidharan
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED:- 30.07.2008
CORAM:
THE HONOURABLE MR. JUSTICE K.K.SASIDHARAN
W.P.NO.1746 OF 2006
Dr. K.Kuppusamy ..Petitioner
-Vs.-
1. Anna University
Rep.by its Registrar
Chennai-600 025.
2. The Registrar
Anna University
Chennai-600 025.
3. The Director
Centre for faculty development
Anna University, Chennai-600025. ..Respondents.
Writ Petition filed under Article 226 of the Constitution of India praying to issue a writ of Certiorari calling for the records of the second respondent culminating in his order No.5135/PD7/2004 dated 22.9.2005 and to quash the same.
For Petitioner : Mr.L.Raja for
Mr.Rajah and Venkatesan Associates
For Respondents : Mr.Mani Sundaragopal
for M/s. G.M.Mani Associates
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O R D E R
This writ petition has been preferred by a retired professor and former Chairman, Faculty of Electrical Engineering of Anna University challenging the order dated 22.9.2005 in No.5135/Pd/7/2004 on the file of the second respondent whereby a sum of Rs.10.24 lakhs was determined as one time honorarium for developing a software package for Engineering students.
2. The factual details as culled out from the affidavit filed in support of the writ petition are as follows:-
a) The petitioner as the Chairman of the faculty of Electrical Engineering took the initiative to introduce a new laboratory course "EEE435 Power System Simulation Laboratory" in the existing curriculum of B.E. Electrical and Electronic Engineering and the said proposal was considered by the Anna University in its meeting held on 6.12.2003 and approved by way of a resolution for introduction of the new laboratory course in the curriculum of B.E. Electrical and Electronics Engineering.
b) The petitioner also proposed a software package to conduct the laboratory course and constitution of a committee for implementation of the proposal to develop the software. Accordingly a committee was constituted by the Vice Chancellor with the Professor of Electrical Engineering as Convenor and three persons including the petitioner as members for the purpose of development of software modules required for the laboratory course "Power System Simulation", preparation of documents relating to software such as user manual and programme reference manual etc. The Committee was directed to complete the work by the end of March, 2004 so as to enable the University to communicate to the affiliated colleges for implementation in the VII Semester of B.E. Electrical and Electronics Engineering commencing from June, 2004.
c) In response to the said communication the petitioner as per his letter dated 19.3.2004 sought details about the project, expenses for developing the project etc., and in the said letter it was also stated that the project might be considered as a consultancy project. The second respondent as per proceedings dated 19/23.3.2004 granted necessary approval to undertake the said project and in the said communication, it was clearly stated that the project should be administered as per norms established for a consultancy project by the University.
d) The second respondent also as per proceedings dated 25.3.2004 informed the principles of all affiliated colleges about the new course and the software and indicated that the affiliated colleges can either procure the required software modules for the course from open market or go in for in-house development or may contact the writ petitioner, being Chairman, Faculty of Electrical Engineering as well as Member of the Committee for development of fresh software. As per proceedings dated 22.1.2004 norms for calculation towards distribution of consultancy charges were prescribed by the Anna university (hereinafter referred to as "University") wherein 64.5% received on account of the consultancy charges were to be distributed to the project team.
` e) The petitioner and other members of the team developed the software package AU Power Lab and distributed the software with relevant training to thirty three colleges under Phase-I. Subsequently, the petitioner raised a bill amounting to Rs.24.948 lakhs representing the consultancy charges collected from thirty three colleges. The said bill was approved by the University officials and the same was submitted to the Vice Chancellor for approval. The Vice Chancellor has accordingly approved the said bill as well as the note appended to the bill certifying that the consultancy charges have been checked by the Professor of Planning and Development Section and found to be as per the University norms.
f) Subsequently the second respondent as per letter dated 26.7.2004 sought certain clarification with respect to the software development of the petitioner and his team and accordingly they have submitted a detailed report on 12.8.2004 which was followed by another letter by the second respondent dated 5.10.2004 addressed to the third respondent raising objections to certain particulars provided by the co-ordinator and sought further clarifications to enable the second respondent to take a decision on the norms for pricing the software consultancy project. Later the petitioner came to know that a committee was constituted to fix the norms of distribution of revenue between the University and the project team.
g) While the matter stood thus, the petitioner received the impugned order dated 22.9.2005 addressed to the Co-ordinator of the project fixing a sum of Rs.10.24 lakhs as one time honorarium to the team to be distributed to the team members with indication that the ownership of the package on payment of the said sum would vest with the University. The order further directed the team members to hand over the developed source code and the executable version of AU Power lab simulation software to the University. The said order dated 22.9.2005 is the subject matter of the present writ petition.
3. The second respondent, the Registrar, Anna University in his counter denied the claim of the writ petitioner pertaining to the consultancy project. It was his contention that reference to administration of the project as a consultancy project in the communication issued by the respondents would only mean the administration aspect regarding the consultancy to be carried out by the Committee and has nothing to do with the remuneration of the Committee. It was further indicated in the counter that there was no contract between the petitioner and the University to pay the consultancy charges and as such, the petitioner is not entitled to claim the usual consultancy charges for the work undertaken by the team. It was also stated that the withdrawal of a sum of Rs.24,94,800/- as per the bill received by the petitioner cannot be construed to be an approval for making the payment for remuneration to them . In short, it was the contention of the second respondent that the petitioner is not entitled to treat the work as any other consultancy project undertaken by the University.
4. Heard Mr.L. Rajah, learned counsel for the petitioner and Mr.Mani Sundaragopal, learned counsel appearing on behalf of the respondents.
5. Learned counsel for the petitioner by placing reliance on the correspondence between the parties as well as the proceedings of the University contended that there was a binding contract between the parties whereby the University agreed to pay the consultancy charges to the petitioner. It was only after the completion of work by the team and payment of the first instalment that the University has constituted a committee to fix the norms for the payment to the team for developing the software and as such post facto review cannot be permitted. Learned counsel further contended that the letter sent by the University to the petitioner clearly shows that the project was treated as any other consultancy project by the University and it is too late for them to contend that by using the word "administration" they meant only the administration aspect of the consultancy and not payment of the remuneration to the team treating it as a consultancy project.
6. Thiru Mani Sundaragopal, learned Standing Counsel for the University contended that the very writ petition is not maintainable in view of the disputed questions of fact involved in the matter. It was also contended that the University never agreed to pay the consultancy charges to the petitioner and it was only a request made by the petitioner to pay the charges and at no point of time the University agreed to pay the charges. Learned counsel by placing reliance on the undated report of the Committee appointed by the Vice Chancellor submitted that the Committee after due deliberation took the decision to pay a consolidated amount to the team and the said decision cannot be stated to be bad so as to get it quashed in a proceeding under Article 226 of the Constitution of India. With respect to the contention that no notice was given to the petitioner before taking the decision by the Committee, learned counsel for the University contended that there was no requirement to give such notice as the same was only an administrative function assigned to the Committee by the Vice Chancellor. In the said factual situation, the learned counsel prayed for dismissal of the writ petition.
7. The only point which arises for consideration in the present writ petition is as to whether there was any such agreement to pay consultancy charges to the project team as contended by the petitioner so as to quash the order impunged in the writ petition.
8. It is found from the proceedings dated 10.6.1995 of the University that they have issued guidelines in respect of the consultancy undertaken by the faculty members and that the remuneration to the staff member is restricted to his annual gross salary and as per the appendix to the said guideline it was indicated that out of the consultancy charges calculated by the University 33.5% would go to the University and 64.5% would be divided between the consultancy group as well as non teaching staff.
9. The writ petitioner in his capacity as the Chairman, Faculty of Electrical Engineering as well as Member of the Project team for developing the software package for Power System Simulation Laboratory to be submitted to the affiliated colleges, submitted a request to the University as per letter dated 22.4.2004 wherein it was indicated that the Registrar has approved the proposal to treat the project like any other consultancy project and requested the University to relax the guideline regarding the maximum amount payable to the project team being their annual gross salary as a special case. In the said letter, the University has made an endorsement to the effect that the matter was discussed in detail in an informal meeting at the Registrar's Chamber and it was decided that the product development would be treated as a consultancy project undertaken by the team members on behalf of the University and handled by the Centre for Faculty Development as the product is to be used by the affiliated colleges for academic purposes. It was further indicated in the said note that all procedural formalities relating to any consultancy project will be followed in the present case also.
10. As per letter dated 19.3.2004, the petitioner requested the University for their approval for the consultancy project with a request that the same may be administered as per the norms of the University for consultancy works. Accordingly, approval was granted by the University as per proceedings dated 23.3.2004 and in the said proceedings it was clearly indicated that the project should be administered as per the norms established for a consultancy project by the University. The software was intended to be used by the Colleges affiliated to the University and in effect it was a commercial transaction for the University. The Registrar of the University as per his communication dated 25.3.2004 informed the affiliated colleges about the software with a request to contact the petitioner for the software developed by the University
11. The Registrar of the University as per proceeding No.5135/PD7/2004 dated 30.4.2004 informed the Director of Centre for Faculty Development of Anna University about the constitution of a Committee by the Vice Chancellor on the basis of the proposal given by the writ petitioner to undertake the project of developing software modules and that the project team consists of the Professor of Electrical Engineering as Co-ordinator and three other members. In the said proceedings it was also clearly indicated that the project should be administered as per the norms established by the consultancy project by the University. In fact in the later part of the proceedings it was noted that the project was being carried out as a consultancy project and all norms and procedures relating to the consultancy projects shall be followed in the particular project also. The Registrar as per proceedings dated 3.5.2004 granted sanction for drawal of a sum not exceeding Rs.1,51,200/- by the Finance Officer treating the sanction under the head "consultancy charges".
12. While the matter stood thus, the Co-ordinator of the consultancy project as well as the project team submitted a proposal to the Director, Centre for Faculty Development of the University for approval of the disbursement of consultancy charges for Phase I as per university norms. In the said communication it was clearly stated that as per the university norms, the share to the consultancy work team members out of the consultancy charges of Rs.24.984 lakhs were given in Annexure I and II and requested for approval. Annexure No.1 shows the break up of the consultancy charges and consultancy group, claimed at 64.5% as per the University norms for consultancy charges. The distribution of the consultancy charges were clearly as per the University norms as evident by the proceedings dated 9.6.2004.
13. The proposal for distribution of consultancy charges as submitted by the Co-ordinator as per letter dated 9.6.2004 was examined by the University at the higher level consisting of Vice Chancellor, Professor for Planning and Development as well as the Director, Centre for Faculty Development. In the proceedings of the Vice Chancellor dated 9.6.2004 the request made by the Co-ordinator of the consultancy project for approval of the distribution of consultancy charges as per University norms was clearly stated. The said proposal was approved by the Vice Chancellor and the other two members and decided to place the same before the Executive Committee for ratification.
14. In pursuance of the request given by the Co-ordinator of the consultancy project as per his letter dated 9.6.2004 and the approval granted by the Vice Chancellor as per proceedings dated 9.6.2004, the Registrar granted financial approval for drawal of a sum of Rs.24,94,800/- and to transfer the same to the Director, Centre for Faculty Development, Anna University and to treat the sanction under the head of account "consultancy charges". After payment of the amount as per the sanction order dated 10.6.2004, the Registrar called upon the third respondent as per communication dated 26.7.2004 to submit certain particulars for the purpose of processing the consultancy project. It was also indicated that the information sought for in the said communication was for the purpose of deciding the norms for payment regarding the software projects done as consultancy project.
15. In pursuance of the said request, the third respondent submitted the required particulars to the second respondent as per his reply dated 12.8.2004. Having not satisfied with the reply received from the third respondent the Registrar as per letter dated 5.10.2004 again requested the third respondent to submit certain other particulars and in the said letter it was indicated that the University will decide on the norms for pricing the software consultancy project and the request was also complied with by the third respondent. The said reply was followed by another letter from the second respondent dated 9.2.2005 addressed to the third respondent wherein the University had indicated its intention to put the product for commercial use. For the first time in the said communication the second respondent has come up with the information regarding constitution of a Committee to define the norms.
16. It was found from the proceedings dated 9.2.2005 of the second respondent that the University constituted a Committee to fix the norms of distribution of revenue between the University and the project team in charge of developing and distributing the software. In the note appended to the constitution of the Committee it was indicated by the University that the laboratory subject EE 435 named as "Power System Simulation" was introduced after the University became affiliating type in the early 2001 and a team of faculty members of the EEE Department put their minds together to integrate all the modules developed over a period of 25 years with the objective to help the self financing colleges with this package to conduct the above mentioned laboratory and a last lap of the work was the development of an opening manual in the commercial package style to go along with software package. It was also stated in the note that the project was not originally envisaged as a consultancy work but the idea came later to help the students and ultimately the team leader has raised a bill for consultancy charges which runs to tens of lakhs of rupees and in the said circumstances the University was faced with the problem of disposal of the claim and as such the legitimacy of the claim was referred to the Committee to examine and make suitable recommendations to settle the issue.
17. Subsequently the Committee appears to have submitted its report to the University and accordingly the impugned order has been passed on 22.9.2005 fixing the one time honorarium at Rs.10.25 lakhs to the team to be distributed among its members. In the impugned communication it was also indicated that the ownership of the package rests with the University and the team members should educate the junior faculty members in the department about the know how of the package so as to enable the University to use the same. Aggrieved by the said order, the petitioner has filed the present writ petition.
18. The string of correspondence referred to above clearly shows that there was meeting of minds between the project team including the petitioner (hereinafter referred to as "project team") and the University to pay the consultancy charges. Even though no written agreement had been entered into between the parties, the correspondence exchanged between them speaks for themselves and without any difficulty it could be seen that they have entered into a consultancy agreement, the terms and conditions of which are binding on the respective parties.
19. The terms and conditions of the consultancy project and the division of profits between the University and the project team are clearly found in the guideline dated 10.6.1995. Therefore there is no difficulty about the mode of distribution of the consultancy charges.
20. The next issue is as to whether on the basis of the correspondence exchanged between the parties, it can be said that a binding contract had been entered into between the parties.
21. The Apex Court in Rickmers Verwaltung GMBH v. Indian Oil Corpn. Ltd., reported in 1999(1) SCC 1 considered the question as to whether any agreement can be spelt out from the correspondence between the parties in a particular case and held thus:-
"12. The submission of Mr. Nariman that an agreement, even if not signed by the parties, can be spelt out from correspondence exchanged between the parties, admits of no doubt. In fact, various judgments cited by him at the Bar unmistakably support this assertion. The question, however, is: can any agreement be spelt out from the correspondence between the parties in the instant case?
13. In this connection the cardinal principle to remember is that it is the duty of the court to construe correspondence with a view to arrive at a conclusion whether there was any meeting of mind between the parties, which could create a binding contract between them but the court is not empowered to create a contract for the parties by going outside the clear language used in the correspondence, except insofar as there are some appropriate implications of law to be drawn. Unless from the correspondence, it can unequivocally and clearly emerge that the parties were ad idem to the terms, it cannot be said that an agreement had come into existence between them through correspondence. The court is required to review what the parties wrote and how they acted and from that material to infer whether the intention as expressed in the correspondence was to bring into existence a mutually binding contract. The intention of the parties is to be gathered only from the expressions used in the correspondence and the meaning it conveys and in case it shows that there had been meeting of mind between the parties and they had actually reached an agreement upon all material terms, then and then alone can it be said that a binding contract was capable of being spelt out from the correspondence."
22. The following factors would show that there was a concluded contract between the parties to pay the consultancy charges to the project team in accordance with the guidelines framed by the University for distribution of consultancy charges.
"(a) The project team through the petitioner made a request to the University to grant exemption from the provisions of the guideline to the effect that the remuneration to the project team should not exceed their annual gross salary. In the said communication it was also emphasised by the project team that the project is being taken up and treated as a consultancy project for financial administration. In the note found in the said letter dated 22.4.2004, the University has clearly recorded that the product development will be treated as a consultancy project undertaken by the team members on behalf of Anna University. It was also indicated that all procedural formalities relating to any other consultancy project will be followed in this case too.
(b) As per letter dated 19.3.2004, the Chairman, Faculty of Electrical Engineering requested the University to treat the project as consultancy project undertaken by the office of the Chariman, Faculty of Electrical Engineering through the committee constituted by the Registrar and to grant approval to the consultancy project with a further request to administer the same as per the norms of the University for consultancy works. The said application was approved by the University as per communication dated 23.3.2004. In the said communication there was a clear recital that the project should be administered as per the norms established for a consultancy project by the University.
(c) In the proceedings dated 30.4.2004 of the University the factum of treating the project as a consultancy project was further underlined by the University by stating that all norms and procedures relating to consultancy projects shall be followed in this project.
(d) The Co-ordinator of the project team submitted a proposal for distribution of consultancy charges Phase -I as per University norms through his letter dated 9.6.2004. The said letter was accompanied by Annexures I and II and in those two Annexures the distribution of consultancy charges as per the guidelines of the University viz., 64.5% for the consultancy group and 33.5% to the University was clearly indicated. The said proposal to distribute the consultancy charges as per the guideline of the University dated 10.6.1995 was approved by the University as per proceedings dated 9.6.2004. The Vice Chancellor, Professor of Planning and Development as well as Director, Centre for Faculty Development were the signatories in the said proceeding.
(e) The University as per proceedings dated 10.6.2004 permitted withdrawal of a sum of Rs.24,94,800/- for the purpose of payment of consultancy charges to the project team and the sanction was marked under the head "Consultancy Charges".
The proceedings dated 9.6.2004 and 10.6.2004 clearly shows that there was a concluded contract between the project team and the University binding on both the parties and by way of part performance of the contract, the University had disbursed a sum of Rs.24,94,800/- to the project team, being consultancy charges for Phase-I.
23. The materials produced by the petitioner referred to above clearly shows that an enforceable agreement has been entered into between the project team and the University. The intention of the parties can be clearly spelt out from the correspondence exchanged between the parties. Merely because there was no agreement in the standard format it cannot be said that there was no binding contract between the parties. Therefore the University cannot be heard to say that they are not liable to pay consultancy charges to the project team, in view of the absence of written contract between the parties.
24. It is too late for the University to contend for the position that the University had agreed only for administration of the project in the light of the order granting sanction for payment of consultancy charges for the first phase in accordance with the University guidelines for distribution of consultancy charges between the University and the project team. Therefore I am of the view that a binding contract had been entered into by and between the parties. Absence of written agreement was immaterial inasmuch as consensus ad idem can be spelt out from the contemporaneous correspondence exchanged between the parties. On a careful consideration of the correspondence exchanged between the parties, it can be said without any difficulty that the intention of the project team and the University was only to treat the project as a consultancy project and to distribute the consultancy charges in accordance with the guidelines formulated by the University.
25. Learned counsel for the University contended that in the realm of contract, a writ petition under Article 226 of the Constitution of India is clearly not maintainable as the power of judicial review is very limited in such cases. However it has to be borne in mind that there should be fairness in the dealings of administrative authorities and it cannot be said as a universal principle that whenever there was an issue involving a contract, writ petition is not maintainable especially in cases wherein arbitrariness and unfairness are writ large.
26. In Mahabir Auto Stores v. Indian Oil Corpn.,1990(3) SCC 752, the issue before the Apex Court was in relation to the supplies made by Indian Oil Corporation Limited to the appellant Mahabir Auto Stores. After the Corporation discontinued the supply of lubricants to the appellant, they filed a writ of Mandamus against the Corporation to desist from denying or discontinuing the supply of lubricants and the matter was defended by the Indian Oil Corporation on the ground that there was no written contract between the parties. The Apex Court repelled the said contention and held thus:-
"12. It is well settled that every action of the State or an instrumentality of the State in exercise of its executive power, must be informed by reason. In appropriate cases, actions uninformed by reason may be questioned as arbitrary in proceedings under Article 226 or Article 32 of the Constitution. Reliance in this connection may be placed on the observations of this Court in Radha Krishna Agarwal v. State of Bihar1. It appears to us, at the outset, that in the facts and circumstances of the case, the respondent company IOC is an organ of the State or an instrumentality of the State as contemplated under Article 12 of the Constitution. The State acts in its executive power under Article 298 of the Constitution in entering or not entering in contracts with individual parties. Article 14 of the Constitution would be applicable to those exercises of power. Therefore, the action of State organ under Article 14 can be checked. See Radha Krishna Agarwal v. State of Bihar1 at p. 462, but Article 14 of the Constitution cannot and has not been construed as a charter for judicial review of State action after the contract has been entered into, to call upon the State to account for its actions in its manifold activities by stating reasons for such actions. In a situation of this nature certain activities of the respondent company which constituted State under Article 12 of the Constitution may be in certain circumstances subject to Article 14 of the Constitution in entering or not entering into contracts and must be reasonable and taken only upon lawful and relevant consideration; it depends upon facts and circumstances of a particular transaction whether hearing is necessary and reasons have to be stated. In case any right conferred on the citizens which is sought to be interfered, such action is subject to Article 14 of the Constitution, and must be reasonable and can be taken only upon lawful and relevant grounds of public interest. Where there is arbitrariness in State action of this type of entering or not entering into contracts, Article 14 springs up and judicial review strikes such an action down. Every action of the State executive authority must be subject to rule of law and must be informed by reason. So, whatever be the activity of the public authority, in such monopoly or semi-monopoly dealings, it should meet the test of Article 14 of the Constitution. If a governmental action even in the matters of entering or not entering into contracts, fails to satisfy the test of reasonableness, the same would be unreasonable. In this connection reference may be made to E.P. Royappa v. State of Tamil Nadu2, Maneka Gandhi v. Union of India3, Ajay Hasia v. Khalid Mujib Sehravardi4, R.D. Shetty v. International Airport Authority of India5 and also Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay6. It appears to us that rule of reason and rule against arbitrariness and discrimination, rules of fair play and natural justice are part of the rule of law applicable in situation or action by State instrumentality in dealing with citizens in a situation like the present one. Even though the rights of the citizens are in the nature of contractual rights, the manner, the method and motive of a decision of entering or not entering into a contract, are subject to judicial review on the touchstone of relevance and reasonableness, fair play, natural justice, equality and non-discrimination in the type of the transactions and nature of the dealing as in the present case.
13. The existence of the power of judicial review however depends upon the nature and right involved in the facts and circumstances of the particular case. It is well settled that there can be malice in law. Existence of such malice in law is part of the critical apparatus of a particular action in administrative law. Indeed malice in law is part of the dimension of the rule of relevance and reason as well as the rule of fair play in action."
27. The Apex Court in Jayrajbhai Jayantibhai Patel v. Anilbhai Nathubhai Patel 2006(9) SCALE 147 considered the scope of judicial review in administrative matters and held thus:-
"12. Article 226 of the Constitution is designed to ensure that each and every authority in the State, including the State, acts bona fide and within the limits of its power. However, the scope of judicial review in administrative matters has always been a subject-matter of debate despite a plethora of case-law on the issue. Time and again attempts have been made by the courts to devise or craft some norms, which may be employed to assess whether an administrative action is justiciable or not. But no uniform rule has been or can be evolved to test the validity of an administrative action or decision because the extent and scope of judicial scrutiny depends upon a host of factors, like the nature of the subject-matter, the nature of the right affected, the character of the legal and constitutional provisions applicable, etc. While appreciating the inherent limitations in exercise of the power of judicial review, the judicial quest has been to find and maintain a right and delicate balance between the administrative discretion and the need to remedy alleged unfairness in the exercise of such discretion.
18. Having regard to it all, it is manifest that the power of judicial review may not be exercised unless the administrative decision is illogical or suffers from procedural impropriety or it shocks the conscience of the court in the sense that it is in defiance of logic or moral standards but no standardised formula, universally applicable to all cases, can be evolved. Each case has to be considered on its own facts, depending upon the authority that exercises the power, the source, the nature or scope of power and the indelible effects it generates in the operation of law or affects the individual or society. Though judicial restraint, albeit self-recognised, is the order of the day, yet an administrative decision or action which is based on wholly irrelevant considerations or material; or excludes from consideration the relevant material; or it is so absurd that no reasonable person could have arrived at it on the given material, may be struck down. In other words, when a court is satisfied that there is an abuse or misuse of power, and its jurisdiction is invoked, it is incumbent on the court to intervene. It is nevertheless, trite that the scope of judicial review is limited to the deficiency in the decision-making process and not the decision."
28. It is found from the report of the enquiry committee constituted by the University as per proceedings dated 9.2.2005 that the Committee took the decision behind the back of the petitioner. In fact the Professor of Planning and Development, was part of the administrative team sanctioned the distribution of consultancy charges as per the University guideline, but the very same officer functioned also as a member in the Committee constituted for fixing the norms. The Committee was well aware that they were taking a decision affecting the project team and any such decision would involve civil consequences to the members of the project and as such the project team should have been taken into confidence. In the report of the Committee, uncharitable remarks are found mentioned against the project team and the relevant paragraph is extracted below:-
`"Job done during eight months:-
The team has done only a cut and paste job after the issue of order to ready the package for installation. It is only accidental that such an occasion has arisen to utilize the developed modules over two decades. The team would have never dreamt of that such an occasion and opportunity will arise when different modules were developed. The accidental opportunism should not bee capitalized at a critical juncture. It is neither cardinal nor ethical to do so. Taking into account all aspects of the problem the committee suggests and recommends the following formula to resolve the pending issue."
29. It is trite that every authority be it a statutory or administrative or executive should act with fairness and in accordance with the principles of natural justice. In the present era, quasi judicial authorities as well as administrative and executive authorities exercise functions in different spheres. In case their decision involves civil right and burdened with civil consequences necessarily principles of natural justice should be followed.
30. The Committee in their recommendation observed that the project cannot be treated as a regular consultancy work but very conveniently failed to consider the admitted fact that even as per the University, the project was a commercial venture. At any rate, the project team were not taken in to confidence in the proceedings of the committee. The University also committed a serious error in passing the impugned order on the basis of the report submitted by the committee. The enquiry report of the committee cannot be treated as a Bible and before accepting the said enquiry report and passing the impugned order, the University should have atleast furnished a copy of the report to the project team and called for their remarks and they could have passed the order subsequently. The action of the University also lacks fairness.
31. In a recent judgment in SAHARA INDIA (FIRM), LUCKNOW v. COMMISSIONER OF INCOME TAX reported in 2008(6) SCALE 733, the Apex Court observed that the phrase "natural justice" is not capable of a precise definition and the said principle evolved under the common law is to check arbitrary exercise of power by the State and its functionaries and held thus:-
"11. Rules of "natural justice" are not embodied rules. The phrase "natural justice" is also not capable of a precise definition. The underlying principle of natural justice, evolved under the common law, is to check arbitrary exercise of power by the State or its functionaries. Therefore, the principle implies a duty to act fairly, i.e. fair play in action. As observed by this Court in A.K. Kraipak & Ors. Vs. Union of India & Ors. , the aim of rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. They do not supplant the law but supplement it. (Also see: Income Tax Officer & Ors. Vs. M/s Madnani Engineering Works Ltd., Calcutta ).
12. In Swadeshi Cotton Mills Vs. Union of India , R.S. Sarkaria, J., speaking for the majority in a three-Judge Bench, lucidly explained the meaning and scope of the concept of "natural justice". Referring to several decisions, his Lordship observed thus (SCC p.666; Headnote):
"Rules of natural justice are not embodied rules. Being means to an end and not an end in themselves, it is not possible to make an exhaustive catalogue of such rules. But there are two fundamental maxims of natural justice viz. (i) audi alteram partem and (ii) nemo judex in re sua. The audi alteram partem rule has many facets, two of them being (a) notice of the case to be met; and (b) opportunity to explain. This rule cannot be sacrificed at the altar of administrative convenience or celerity. The general principle - as distinguished from an absolute rule of uniform application - seems to be that where a statute does not, in terms, exclude this rule of prior hearing but contemplates a post-decisional hearing amounting to a full review of the original order on merits, then such a statute would be construed as excluding the audi alteram partem rule at the pre-decisional stage.Conversely if the statute conferring the power is silent with regard to the giving of a pre-decisional hearing to the person affected and the administrative decision taken by the authority involves civil consequences of a grave nature, and no full review or appeal on merits against that decision is provided, courts will be extremely reluctant to construe such a statute as excluding the duty of affording even a minimal hearing, shorn of all its formal trappings and dilatory features at the pre-decisional stage, unless viewed pragmatically, it would paralyse the administrative process or frustrate the need for utmost promptitude. In short, this 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 cardinal rule to the maximum extent possible, with situational modifications. But, the core of it must, however, remain, namely, that 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."
13. Initially, it was the general view that the rules of natural justice would apply only to judicial or quasi-judicial proceedings and not to an administrative action. However, in State of Orissa Vs. Binapani Dei & Ors. , the distinction between quasi-judicial and administrative decisions was perceptively mitigated and it was held that even an administrative order or decision in matters involving civil consequences, has to be made consistently with the rules of natural justice. Since then the concept of natural justice has made great strides and is invariably read into administrative actions involving civil consequences, unless the statute, conferring power, excludes its application by express language.
14. Recently, in Canara Bank Vs. V.K. Awasthy , the concept, scope, history of development and significance of principles of natural justice have been discussed in extenso,with reference to earlier cases on the subject. Inter alia, observing that the principles of natural justice are those rules which have been laid down by the Courts as being the minimum protection of the rights of the individual against the arbitrary procedure that may be adopted by a judicial, quasi-judicial and administrative authority while making an order affecting those rights, the Court said :
"Concept of natural justice has undergone a great deal of change in recent years. Rules of natural justice are not rules embodied always expressly in a statute or in rules framed thereunder. They may be implied from the nature of the duty to be performed under a statute. What particular rule of natural justice should be implied and what its context should be in a given case must depend to a great extent on the fact and circumstances of that case, the frame-work of the statute under which the enquiry is held. The old distinction between a judicial act and an administrative act has withered away. Even an administrative order which involves civil consequences must be consistent with the rules of natural justice. Expression 'civil consequences' encompasses infraction of not merely property or personal rights but of civil 'liberties, material deprivations, and non-pecuniary damages. In its wide umbrella comes everything that affects a citizen in his civil life."
15. Thus, it is trite that unless a statutory provision either specifically or by necessary implication excludes the application of principles of natural justice, because in that event the Court would not ignore the legislative mandate, the requirement of giving reasonable opportunity of being heard before an order is made, is generally read into the provisions of a statute, particularly when the order has adverse civil consequences for the party affected. The principle will hold good irrespective of whether the power conferred on a statutory body or tribunal is administrative or quasi-judicial.
16. We may, however, hasten to add that no general rule of universal application can be laid down as to the applicability of the principle audi alteram partem, in addition to the language of the provision. Undoubtedly, there can be exceptions to the said doctrine. Therefore, we refrain from giving an exhaustive catalogue of the cases where the said principle should be applied. The question whether the principle has to be applied or not is to be considered bearing in mind the express language and the basic scheme of the provision conferring the power; the nature of the power conferred and the purpose for which the power is conferred and the final effect of the exercise of that power. It is only upon a consideration of all these matters that the question of application of the said principle can be properly determined. (See: Union of India Vs. Col. J.N. Sinha & Ors.)
17. In Mohinder Singh Gill & Anr. Vs. The Chief Election Commissioner, New Delhi & Ors. , explaining as to what is meant by expression 'civil consequence', Krishna Iyer, J., speaking for the majority said:
"'Civil Consequences' undoubtedly cover infraction of not merely property or personal rights but of civil liberties, material deprivations and non-pecuniary damages. In its comprehensive connotation, everything that affects a citizen in his civil life inflicts a civil consequence."
(emphasis supplied)
18. The question in regard to the requirement of opportunity of being heard in a particular case, even in the absence of provision for such hearing, has been considered by this Court on a number of occasions. In Olga Tellis & Ors. Vs. Bombay Municipal Corporation & Ors. while dealing with the provisions of Section 314 of the Bombay Municipal Corporation Act, 1888, which confers discretion on the Commissioner to get any encroachment removed with or without notice, a Constitution Bench of this Court observed as follows:
"It must further be presumed that, while vesting in the Commissioner the power to act without notice, the Legislature intended that the power should be exercised sparingly and in cases of urgency which brook no delay. In all other cases, no departure from the audi alteram partem rule ('Hear the other side') could be presumed to have been intended. Section 314 is so designed as to exclude the principles of natural justice by way of exemption and not as a general rule. There are situations which demand the exclusion of the rules of natural justice by reason of diverse factors like time, place the apprehended danger and so on. The ordinary rule which regulates all procedure is that persons who are likely to be affected by the proposed action must be afforded an opportunity of being heard as to why that action should not be taken. The hearing may be given individually or collectively, depending upon the facts of each situation. A departure from this fundamental rule of natural justice may be presumed to have been intended by the Legislature only in circumstances which warrant it. Such circumstances must be shown to exist, when so required, the burden being upon those who affirm their existence."
19. Again in C.B. Gautam Vs. Union of India & Ors. a question arose whether in the absence of a provision for giving the concerned parties an opportunity of being heard before an order is passed under the provisions of Section 269 UD of the Act, for purchase by the Central Government of an immovable property agreed to be sold on an agreement to sell, an opportunity of being heard before such an order could be passed should be given or not. Relying on the decision of this Court in Union of India Vs. Col. J.N. Sinha and Olga Tellis (supra) it was held that:
"Although Chapter XX-C does not contain any express provision for the affected parties being given an opportunity to be heard before an order for purchase is made under Section 269-UD, not to read the requirement of such an opportunity would be to give too literal and strict an interpretation to the provisions of Chapter XX-C and in the words of Judge Learned Hand of the United States of America "to make a fortress out of the dictionary." Again, there is no express provision in Chapter XX-C barring the giving of a show cause notice or reasonable opportunity to show cause nor is there anything in the language of Chapter XX-C which could lead to such an implication. The observance of principles of natural justice is the pragmatic requirement of fair play in action. In our view, therefore, the requirement of an opportunity to show cause being given before an order for purchase by the Central Government is made by an appropriate authority under Section 269-UD must be read into the provisions of Chapter XX-C. There is nothing in the language of Section 269-UD or any other provision in the said Chapter which would negate such an opportunity being given. Moreover, if such a requirement were not read into the provisions of the said Chapter, they would be seriously open to challenge on the ground of violations of the provisions of Article 14 on the ground of non-compliance with principles of natural justice. The provision that when an order for purchase is made under Section 269-UD-reasons must be recorded in writing is no substitute for a provision requiring a reasonable opportunity of being heard before such an order is made."
32. The Apex Court in MAHABIR AUTO STORES v. INDIAN OIL CORPORATION (1990(3) SCC 752) cited supra reiterated the legal position that even in the field of public law relevant persons concerned or public affected should be taken into confidence and held thus:-
"18. Having considered the facts and circumstances of the case and the nature of the contentions and the dealing between the parties and in view of the present state of law, we are of the opinion that decision of the State/public authority under Article 298 of the Constitution, is an administrative decision and can be impeached on the ground that the decision is arbitrary or violative of Article 14 of the Constitution of India on any of the grounds available in public law field. It appears to us that in respect of corporation like IOC when without informing the parties concerned, as in the case of the appellant-firm herein on alleged change of policy and on that basis action to seek to bring to an end to course of transaction over 18 years involving large amounts of money is not fair action, especially in view of the monopolistic nature of the power of the respondent in this field. Therefore, it is necessary to reiterate that even in the field of public law, the relevant persons concerned or to be affected, should be taken into confidence. Whether and in what circumstances that confidence should be taken into consideration cannot be laid down on any strait-jacket basis. It depends on the nature of the right involved and nature of the power sought to be exercised in a particular situation. It is true that there is discrimination between power and right but whether the State or the instrumentality of a State has the right to function in public field or private field is a matter which, in our opinion, depends upon the facts and circumstances of the situation, but such exercise of power cannot be dealt with by the State or the instrumentality of the State without informing and taking into confidence, the party whose rights and powers are affected or sought to be affected, into confidence. In such situations most often people feel aggrieved by exclusion of knowledge if not taken into confidence."
33. In MANAGEMENT OF COIMBATORE DISTRICT CENTRAL CO-OPERATIVE BANK Vs. SECRETARY, COIMBATORE DISTRICT CENTRAL CO-OPERATIVE BANK EMPLOYEES ASSOCIATION AND ANOTHER (2007(6) SCALE 45) the Honourable Supreme Court considered the doctrine of proportionality and explained the said doctrine in the following words.
"16. So far as the doctrine of proportionality is concerned, there is no gainsaying that the said doctrine has not only arrived at in our legal system but has come to stay. With the rapid growth of Administrative Law and the need and necessity to control possible abuse of discretionary powers by various administrative authorities, certain principles have been evolved by Courts. If an action taken by any authority is contrary to law, improper, unreasonable, irrational or otherwise unreasonable, a Court of Law can interfere with such action by exercising power of judicial review. One of such modes of exercising power, known to law is the 'doctrine of proportionality'.
20. The doctrine has its genesis in the field of Administrative Law. The Government and its departments, in administering the affairs of the country, are expected to honour their statements of policy or intention and treat the citizens with full personal consideration without abuse of discretion. There can be no 'pick and choose', selective applicability of Government norms or unfairness, arbitrariness or unreasonableness. It is not permissible to use a 'sledge-hammer to crack a nut'. As has been said may a time:"Where paring knife suffices, battle axe is precluded".
21. In the celebrated decision of Council of Civil Service Union [CCSU] Vs. Minister for Civil Service [1984] 3 All ER 935: [1984] 3 WLR 1174: [1985] AC 374 [HL], Lord Diplock proclaimed:-
"Judicial review has I think developed to a stage today when, without reiterating any analysis of the steps by which the development has come about, one can conveniently classify under three heads the grounds on which administrative action is subject to control by judicial review. The first ground I would call 'illegality', the second 'irrationality' and the third 'procedural impropriety'. This is not to say that further development on a case by case basis may not in course of time add further grounds. I have in mind particularly the possible adoption in the future of the principle of proportionality'......"
[emphasis supplied].
34. The correspondence exchanged between the parties clearly shows that the University had agreed to pay consultancy charges to the project team treating the project as any other consultancy project undertaken by the University. The payment for the first phase as part performance of the contract has also been made by the University. It was long after the conclusion of contract and part performance of the contract that the University had come up with the impugned order denying the consultancy charges to the team. The University in the light of large number of correspondence between the parties showing their intention to treat the project as a consultancy project is estopped from contending that there was no concluded contract between the parties capable of execution.
35. The Apex Court in B.L. Sreedhar v. K.M. Munireddy, 2003(2) SCC 355 considered the scope and ambit of the rule of estoppel as provided under Section 115 of the Indian Evidence Act and held thus:
"13. Estoppel is a rule of evidence and the general rule is enacted in Section 115 of the Indian Evidence Act, 1872 (in short the Evidence Act) which lays down that when one person has by his declaration, act or omission caused or permitted another person to believe a thing to be true and to act upon that belief, neither he nor his representative shall be allowed in any suit or proceeding between himself and such person or his representative to deny the truth of that thing. (See Sunderabai v. Devaji Shankar Deshpande 4.)
15. On the whole, an estoppel seems to be when, in consequences of some previous act or statement to which he is either party or privy, a person is precluded from showing the existence of a particular state of facts. Estoppel is based on the maxim allegans contraria non est audiendus (a party is not to be heard to allege the contrary) and is that species of presumption juries et de jure (absolute or conclusive or irrebuttable presumption), where the fact presumed is taken to be true, not as against all the world, but against a particular party, and that only by reason of some act done, it is in truth a kind of argumentum ad hominem.
18. Though estoppel is described as a mere rule of evidence, it may have the effect of creating substantive rights as against the person estopped. An estoppel, which enables a party as against another party to claim a right of property which in fact he does not possess is described as estoppel by negligence or by conduct or by representation or by holding out ostensible authority.
19. Estoppel, then, may itself be the foundation of a right as against the person estopped, and indeed, if it were not so, it is difficult to see what protection the principle of estoppel can afford to the person by whom it may be invoked or what disability it can create in the person against whom it operates in cases affecting rights. Where rights are involved, estoppel may with equal justification be described both as a rule of evidence and as a rule creating or defeating rights.
30. If a man either by words or by conduct has intimated that he consents to an act which has been done and that he will not offer any opposition to it, although it could not have been lawfully done without his consent, and he thereby induces others to do that which they otherwise might have abstained from, he cannot question the legality of the act he had sanctioned to the prejudice of those who have so given faith to his words or to the fair inference to be drawn from his conduct."
36. In view of the understanding arrived at between the project team and the University to share the consultancy charges as per the guidelines of the University, which is also evident from the factum of part performance of contract by the University, the University is bound by the promise. As observed by the Supreme Court in B.L. Sreedhar's case cited supra estoppel is a rule of equity and it is invoked and applied to aid the law in administration of justice and but for it great many injustice may have been perpetrated. To curb and control such unwarranted conduct the Courts have extended the broad and paramount considerations of equity, to transactions and assurances, express or implied to avoid injustice.
37. The string of correspondence exchanged between the parties as well as the payment made by the University to the project team in part performance of the contract clearly shows that there were meeting of minds between the parties giving rise to a binding contract. Neither the project team nor the University could avoid the contract entered into between by them freely and they were fully aware of the nature of the agreement and in fact the project was a commercial transaction for the University. The condition earlier imposed by the University to obtain written permission from prof. H.W.Dommel, University of British Columbia, Canada, the original developer of the module "Electromagnetic Transients" was also complied with by the project team by obtaining permission from Prof. Emeritus as evident from the letter dated 23.3.2005. Therefore it is very clear that the project team did everything on their part to comply with the terms of the agreement. The University in fact conducted post facto review in the matter which is not permissible at all after entering into the contract and making payments towards phase-I of the project in part performance.
38. In view of the aforesaid reasons, I am inclined to quash the order dated 22.9.2005. In the result, the writ petition is allowed. The matter is remanded to the second respondent to pass fresh orders after hearing the project team including the petitioner and in the light of the observations made above. Since the matter is pending for a long time and in view of the fact that the dispute is between the teaching faculty and the University, the second respondent is directed to dispose of the matter as expeditiously as possible and in any case within a period of twelve months from the date of receipt of a coy of this order. No costs.
Tr/ To
1. Anna University Rep.by its Registrar Chennai-600 025.
2. The Registrar Anna University Chennai-600 025.
3. The Director Centre for faculty development Anna University, Chennai 600025