Madras High Court
P. Damodaran vs The Chairman, Tamil Nadu Cements And ... on 12 July, 1994
Equivalent citations: (1994)2MLJ601
ORDER Mishra, J.
1. The petitioner herein, who is employed in the Tamil Nadu Cements, a Government of Tamil Nadu under taking has moved this Court under Article 226 of the Constitution of India, for the issue of a writ in the nature of certiroari to call for the records on the file of the 1st respondent herein relating to orders in proceedings R.C. No. 11575/A-1/84 dated 22.8.1984, under which, he has confirmed the orders of the 2nd respondent herein and confirmed the imposition of the punishment of stoppage of increment for a period of three years with cumulative effect.
2. For the reason that I have found a serious infirmity in the appellate order, I do not propose in the instant case to narrate the facts leading to the disciplinary proceedings against the petitioner, the service of memorandum of charges upon him, enquiry and the imposition of penalty by the 2nd respondent herein. The petitioner, however preferred before the 1st respondent, and the 1st respondent has disposed of, the appeal by stating in the order, as follows:
The appeal petition of Thiru P. Damodaran, Accountant, Tamil Nadu Cements Corporation Limited, preferred against the orders of the Managing Director, issued in the proceedings first cited has been carefully examined along with connected records. I do not find adequate reasons to intervene and, accordingly, the appeal is rejected.
3. The court's notice is drawn by learned Counsel for the petitioner to the petition of appeal by the petitioner before the 1st respondent, in which he has raised several contentions, both in respect of facts and law and that he has brought in a definite plea that the cause of action for the enquiry itself into certain irregularities in the affairs of the undertaking was his report to the higher officer i.e., Financial Controller' and that he himself had come to know of the irregularities only when certain lapses of one Narayanamurthy, came to light, who acted, it appears, in connivance with another Junior Assistant. He has made a definite allegation in the memorandum of appeal against the Manager (Administration), in these words:
I had been taking a leading part in the trade union of TANCEM and in the discharge of the duties as the Secretary of the TANCEM Union I had come in contact with Thiru Madhusudanan, Manager (Administrat ion). Thiru Madhusudanan, Manager (Administration) had wrongly fixed his pay on a higher level in contravention of the existing procedure. This fact was brought to my notice as Secretary of the Trade Union by the members. Then I had no other alternative but to bring it to the notice of the then Chairman. This action had irritated Thiru Madhusudanan, Manager (Administration) and from that day on wards, he was inimically disposed of towards me. Consequent on the action taken by me as Secretary of the TANCEM Trade Union, the A.G. auditors had also objected to the wrong fixation of pay of Thiru Madhusudanan, Manager(Administration). Again in respect of a fraudulent transaction similar to the one relating to Mr.Wilson committed by Thiru Madhusudanan, Manager (Admn.) as Secretary of the Union, I brought this also to the notice of the Chairman and Managing Director. Thiru Madhusudanan, Manager (Administration) who was involved in the above fraudulent transaction was dead set against me for bringing this to the notice of the higher officers. Thiru Madhusudanan, Manager (Administration) Was therefore, naturally interested to involve me and implead me in the transaction relating to Thiru Wilson. I had reliably learnt that he had also informed a friend of mine he will see that Thiru Damodaran (i.e. myself) is finished and dismissed from service.
4. Learned Counsel for the petitioner on the said basis, has contended that there is a gross violation of one of the principles of natural justice, which must inform every quasi judicial process, i.e. where an Authority makes an order in exercise of quasi judicial function, he must record his reasons i n support of the order he makes. It is not disputed, and it is not possible to do so, that the 1st respondent exercised the appellate power and was obliged to consider as enjoined by Rule 5.12 of the Service Rules of the Tamil Nadu Industrial Development Corporation Limited, which, it is said, is fully applicable to the undertaking of the 1st respondent and the 2nd respondent viz., (a) whether the facts on which the order was based, have been established, (b) whether the facts established afford sufficient ground for taking action; and (c) whether the penalty is excessive, adequate or inadequate. The rule, however, when it was in the process of development in its application in India, was stated in the case of Bhagat Raja v. Union of India in the following words:
It was argued that the very exercise of judicial or quasi judicial powers in the case of a Tribunal entailed upon it an obligation to give reasons for arriving at a decision for or against a party. The decision of tribunals in India are subject to the supervisory powers of the High Court under Article 227 of the Constitution and of appellate powers of this Court under Article 136. It goes without saying that both the High Court and this Court are placed under a great disadvantage if no reasons are given and the revision is dismissed curtly by the use of the single word 'rejected', or, 'dismissed'. In such a case, this Court can probably only exercise its appellate jurisdiction satisfactorily by examining the entire records of the case and after giving a hearing come to its conclusion on the merits of the apppeal. This will certainly be a very unsatisfactory method of dealing with the appeal. Ordinarily, in a case like this, if the State Government gives sufficient reasons for accepting the application of one party and rejecting that of the others, as it must, and the Central Government adopted the reasoning of the State Government this Court may proceed to examine whether the reasons given are sufficient for the purpose of upholding the decision. But, "when the reasons given in the order of the State Government are scrappy or nebulous and the Central Government makes no attempt to clarify the same, this Court, in appeal may have to examine the case de novo without anybody being the wiser for the review by the Central Government. If the State Government gives a number of reasons some of which are good and some are not, and the Central Government merely endorses the order of the State Government without specifying those reasons which according to it are sufficient to uphold the order of the State Government, this Court, in appeal may find it difficult to ascertain which are the grounds which weighed with the Central Government in upholding the order of the State Government. In such circumstances, what is known as a 'speaking order' is called for.
In Siemens Engg. and Mfg. Co. v. Union of India , a more authentic role of this rule of making a 'speaking order', is stated in these words:
It is now settled law that where an authority makes an order in exercise of a quasi judicial function, it must record its reasons in support of the order it makes. Every quasi judicial order must be supported by reasons. That has been laid down by a long line of decisions of this Court ending with N.M. Desai v. Testools Ltd. C.A. No. 245 of 1970 decided on 17.12.1975 (S.C). But unfortunately, the Assistant Collector did not" choose to give any reasons in support of the order made by him confirming the demand for differential duty. This was in plain disregard of the requirement of law. The Collector in revision did give some sort of reason but it was hardly satisfactory. He did not deal in his order with the arguments advanced by the appellants in their representation dated 8th December, 1961 which were repeated in the subsequent representation dated 4th June, 1965. It is not suggested that the Collector should have made an elaborate order discussing the arguments of the appellants in the manner of a court of la w. But the order of the Collector could have been a little more explicit and articulate so as to lend assurance that the case of the appellants had been properly considered by him. If Courts of law are to be replaced by administrative authorities and tribunals, as indeed, in some kinds of cases, with the proliferation of Administrative law, they may have to be so replaced it is essential that administrative authorities and tribunals should accord fair and proper hearing to the persons sought to be affected by their orders and give sufficiently and explicit reasons in support of the orders made by them. Then alone administrative authorities and tribunals exercising quasi-judicial function will be able to justify their existence and carry credibility with the people by inspiring confidence in the adjudicatory process. The rule requiring reasons to be given in support of an order is, like the principle of audi alteram partem, a basic principle of natural justice which must inform every quasi-judicial process and this rule must be observed in its proper spirit and mere pretence of compliance with it would not satisfy the requirement of law.
The importance of the above said third rule in the field of public law, has since been so well recognised by the courts in India, that even in the field of private law and in respect of the decisions by arbitrators appointed by parties or by the Courts in particular some courts extended this rule until finally in the case of Rajpur Development Authority v. Chokhamal Contractors A.I.R. 1990 S.C. 1426, a Constitution Bench of the Supreme Court has made a pronouncement that the above is a rule confined to the public law in particular and cannot be extended as a rule to the private disputes and determinations by arbitrators. The Constitution Bench, in the process of disposing of the above contention, has noticed that the principle on which Bhagat Raja v. Union of India , has been decided is not based on the ground that it was not in conformity with the principles of natural justice, but on the ground that the order of the Central Government was subject to the supervisory powers of the High Court under Article 227 of the Constitution of India and the appellate powers of the Supreme Court under Article 136 of the Constitution of India. Speaking however, about the judgment in Siemens Engg. and Mfg. Co. v. Union of India and other judgments on the said principle, the Supreme Court has commented that this and some other decisions are relied upon for the concept of natural justice, which had undergone a great deal of change in recent years and while originally there were two rules of natural justice, in course of time, many more procedural rules have been added to the principles of natural justice and the requirement of giving reasons for a decision, is one such new rule of natural justice, the court has pronounced as follows:
It is no doubt true that in the decisions pertaining to Administrative Law, this Court in some cases has observed that the giving of reasons in an administrative decision is a rule of natural justice by an extension of the prevailing rule. It would be in the interest of the world of commerce that the said rule is confined to the area of Administrative Law. We do appreciate the contention urged on behalf of the parties who contend that it should be made obligatory on the part of the arbitrator to give reasons for the award that there is no justification to leave the small area covered by the law of arbitration out of the general rule that the decision of every judicial and quasi judicial body should be supported by reasons. But at the same time, it has to be borne in mind that what applies generally to settlement of disputes by authorities governed by public law need not be extended to all cases arising under private law such as those arising under the law of arbitration which is intended for settlement of private disputes. As stated elsewhere in the course of this judgment if the parties to the dispute feel that reasons should be given by the arbitrators for the awards it is within their power to insist upon such reasons being given at the time when they enter into arbitration agreement or sign the deed of submission. It is significant that although nearly a decade ago the Indian Law Commission submitted its report on the law of arbitration specifically mentioning therein that there was no necessity to amend the law of arbitration requiring the arbitrators to give reasons, Parliament has not chosen to take any step in the direction of the amendment of the law of arbitration. Even after the passing of English Arbitration Act, 1979, unless a court requires the arbitrator to give reasons in the award (vide Sub-section (5) and (6) of Section 1 of the English Arbitration Act, 1979 an award is not liable to be set aside merely on the ground that no reasons have been given in support of it.
Whatever little doubt in this behalf any person could have, is completely answered by a Constitution Bench of the Supreme Court in the case of S.N. Mukherjee v. Union of India the following words:
The decisions of this Court referred to above indicate that with regard to the requirement to record reasons the approach of this Court is more in line with that of the American Courts. An important consideration which has weighed with the court for holding that an administrative authority exercising quasi judicial function must record the reasons for its decision, is that such a decision is subject to the appellatejurisdiction of this Court under Article 136 of the Constitution as well as the supervisory jurisdiction of the High Courts under Article 227 of the Constitution and that the reasons, if recorded, would enable this Court or the High Court to effectively exercise the 1appellate or supervisory power. But this is not the sole consideration. The other considerations which have also weighed with the Court in taking this view are that the requirement of recording reasons would (i) guarantee consideration by the authority: (ii) introduce clarity in the decisions and (iii) minimise chances of arbitrariness in decision-making. In this regard a distinction has been drawn between ordinary courts of law and tribunals and authorities exercising judicial functions on the ground that a Judge is trained to look at things objectively uninfluenced by considerations of policy or expediency whereas an executive officer generally looks at things from the stand point of policy and expediency.
Reasons, when recorded by an administrative authority in an order passed by it while exercising quasi-judicial functions, would no doubt facilitate the exercise of its jurisdiction by the appellate or supervisory authority. But the other considerations referred to above, which have been weighed with the court in holding that an administrative authority must record reasons for its decisions are of no less significance. These considerations show that the recording of reasons by an administrative authority serves salutary purpose, namely, it excludes chances of arbitrariness and ensures a decree of fairness in the process of decisions-making. The said purpose would apply equally to all decisions and its application cannot be con fined to decisions which are subject to appeal, revision or judicial review. In our opinion, therefore, the requirement that reasons be recorded should govern the decisions of an administrative authority exercising quasi-judicial functions irrespective of the fact whether the decision is subject to appeal, revision or judicial review. It may, however, be added that it is not required that the reasons should be an elaborate as in the decision of a court of law. The extent and nature of the reasons would depend on particular facts and circumstances. What is necessary is that the reasons are clear and explicit so as to indicate that the authority has given due consideration to the points in controversy. The need for recording of reasons is greater in a case where the order is passed at the original stage. The appellate or revisional authority, if it affirms such an order, need not give separate reasons if the appellate or revisional authority agrees with the reasons contained in the order under challenge.
Having considered the rationale for the requirement to record the reason for the decision of an administrative authority, exercising quasi-judicial functions, we may now examine the legal basis for imposing this obligation. While considering this aspect, the Donoughmore Committee observed that it may well be argued that there is a third principle of natural justice, namely, that a party is entitled to know the reason for the decision, be it judicial or quasi-judicial. The committee expressed the opinion that there are some cases where the refusal to give grounds for a decision may be plainly unfair and this may be so, even when the decision is final and no further proceedings are open to the disappointed party by way of appeal or otherwise "and that" where further proceedings are open to a disappointed party, it is contrary to natural justice that the silence of the Minister or the Ministerial Tribunal should deprive them of the opportunity." (p.80). Prof. H.W.R. Wade has also expressed the view that natural justice may provide the best rubric for it, since the giving of reasons is required by the ordinary man's sense of justice." (See Wade, Administrative Law, 6th Edn. p.548). In Siemens Engg. and Mfg. Co. v. Union of India , this Court has taken the same view when it observed that "the rule requiring reasons to be given in support of an order is, like the principles of audi alteram partem, a basic principle of natural justice which must inform every quasi judicial process." The decision proceeds on the basis that the two well known principles of natural justice, namely, (1) that no man should be a Judge in his own cause and (ii) that no person should be judged without a hearing are not exhaustive and that in addition to these two principles there may be rules which seek to ensure fairness in the process of decision-making and can be regarded as part of the principles of natural justice. This view is in consonance with the law laid down by this Court in A.K. Kraipak v. Union of India wherein it has been held:
The concept of natural justice has undergone a great deal of change in recent years. In the past it was thought that it included just two rules, namely, (i) no one shall be a Judge in his own cause (nemo debet esse judex propria causa) and (ii) no decision be given against a party without affording him a reasonable hearing (audi alteram partem). Very soon thereafter, a third rule was envisaged and that is that quasi-judicial enquiries must be held in good faith, without bias and not arbitrarily and unreasonably. But in the course of years many more subsidiary rules came to be added to the rules of natural justice" (pp 468-69) of S.C.R.)(at pp. 156-57 of A.I.R.) A similar trend' is discernible in the decisions of English courts wherein it has been held that natural justice demands that the decision should be based on some evidence of probative value see: R. v. Deputy Industrial Injuries Commissioner Ex. p. Moore (1965) 1 Q.B. 456 Mohan v. Air New Zealand Ltd. 1984 A.C. 808.
The object underlying the rules of natural justice is to prevent miscarriage of justice' and secure 'fair play in action'. As pointed out earlier the requirement about recording of reasons for its decision by an administrative authority, exercising quasi judicial functions achieves this object by excluding chances of arbitrariness and ensuring a degree of fairness in the process of decision-making. Keeping in view the expanding horizon of the principles of natural justice, we are of the opinion that the requirement to record reason can be regarded as one of the principles of natural justice which govern exercise of power by administrative authorities. The rules of natural justice are not embodied rules. The extent of their application depends upon the particular statutory framework whereunder jurisdiction has been conferred on the administrative authority. With regard to the exercise of a particular power by an administrative authority including exercise of judicial or quasi judicial functions, the legislature, while conferring the said power, may feel that it would not be in the larger public interest that the reasons for the order passed by the administrative authority be recorded in the order and be communicated to the aggrieved party and it may dispense with such a requirement. It may do so by making an express provision to that effect as those contained in the Administrative Procedure Act, 1946 of U.S.A. and the Administrative Decisions (Judicial Review) Act, 1977, of Australia whereby the orders passed by certain specified authorities are excluded from the ambit of the 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.
For the reasons aforesaid, it must be concluded that except in cases where the requirement has been dispensed with expressly or by necessary implications, an administrative authority exercising judicial or quasi-judicial functions is required to record the reasons for its decision.
In the case of S.N. Mukherjee. v. Union of India , the Constitution Bench of the Supreme Court has laid down that except in cases, where the requirement is dispensed with expressly or by necessary implication, decisions by any administrative authority must be informed by reasons and must be fully supported by it, in view of the expanding horizon of the principles of natural justice, the requirement to record reasons can be regarded as one of the principles of natural justice, which govern the exercise of powers by administrative authorities.
5. Fairness in action is not observed and if such a rule has not been found fully expressed in the administrative action, it shall render the action invalid. It will apply more rigorously in cases where the administrative authority is exercising a quasi judicial power, where a right of a person is involved and he is likely to be visited with civil consequences. Administrative action not informed by the rule of fairness, as above, will be as good as one exercised with malice in law. The petitioner is an employee of a Government undertaking which is an Authority and, therefore, a State under Article 12 of the Constitution of India. It is accordingly obliged to respect petitioner's fundamental right under Articles 16(1), 14 and 21 of the Constitution of India. The order in appeal passed by the 1st respondent is obviously not one in conformity with the rule of a speaking order' to be made by the Appellate Authority.
6. Inspite of such authoritative pronouncements of the Supreme Court on the principle afore mentioned, learned Counsel for respondents 1 and 2 has contended that when the Appellate Authority has only affirmed the order of the Disciplinary Authority it was not required to assign any reason or to make a speaking order. He has, for the said proposition, relied upon a judgment of the Supreme Court in the case of Tara Chand v. Delhi Municipality , This case is an authority on the principle that although it may be necessary for the disciplinary authority to record its provisional conclusions in the notice calling upon the delinquent Officer to show cause why the proposed punishment be not imposed upon him, if it differs from the findings arrived at by the Enquiry Officer with regard to the charge, but it is not obligatory to do so in case the Disciplinary Authority concurs with the findings of the Enquiry Officer. In Tara Chand's case, the Supreme Court has no occasion to consider independently how the afore mentioned principle of making a speaking order should be applied in the cases of appeals and revisions before the quasi judicial Authority.
7. This Court is bound by the pronouncement of the Constitution Bench of the Supreme Court in the case of Mukherjee A.I.R. 1990 S.C. 1984.
8. Learned Counsel for the respondents 1 and 2 has, however, stated that this Court should take notice of the subsequent conduct ofthe petitioner, who, it is said, made a representation against the punishment imposed upon him to the 1st respondent and the 1st respondent reduced the quantum of punishment of withholding of increment for a period of three years with cumulative effect into one for one year. According to him, the petitioner should be deemed to have acquiesced in the subsequent order of the Appellate Authority and estopped from questioning the same in the instant proceedings. Apart from the rule that courts ordinarily do not entertain acquiescence by such conduct of persons, as it would amount to denial of fundamental right under the Constitution, it will be a mistake of law treating the representation of the petitioner to the 1st respondent as an act of acquiescence. The question posed in such a situation may be, whether by making a representation to the 1st respondent against the quantum of punishment, the petitioner has waived his right to object to the appellate order. The answer to that also will be, he has not done so. An order, which is stricken by a clear invalidity, gives no authority to any person and takes away no right of any person.
9. In sum, I find sufficient merit in the contention of learned Counsel for the petitioner that the appellate order is invalid for the reason that it is violative of the principles of natural justice. The same is fit to be quashed. In the result, the order of the Appellate Authority in proceedings No. R.C. 11575/A. 1/84 dated 22.8.1984 is quashed and the case is remitted to the 1st respondent for further hearing and disposal in accordance with law. The writ petition is allowed in the above terms, with costs, payable by respondents 1 and 2 to the petitioner. Hearing fee Rs. 2,500.