Calcutta High Court
Power Tools And Appliances Co. Ltd. vs Union Of India (Uoi) on 1 August, 1994
Equivalent citations: 99CWN181, [1995(70)FLR770], (1995)IILLJ148CAL
Author: Umesh Chandra Banerjee
Bench: Umesh Chandra Banerjee
JUDGMENT
Umesh Chandra Banerjee. J.
1. The doctrine of natural justice has a deep rooted foundation in the concept of fair-play and justice. This concept of fairness or fair-play, however, cannot by any stretch be said to be inflexible in nature and its flexibility is its real virtue, be it noted here that it is not possible to lay down rigid rules as to when the principles of natural justice ought to be made applicable but the same depends upon the facts and circumstances of the matter in issue. The observation of Lord Denning M.R. in R. v. Gaming Board of Great Britain ex. p. Benaim and Khaida 1970(2) Q.B.417 lends support to the view expressed above.
2. This concept of natural justice and fair play has come for increasing judicial scrutiny in recent years and the Law Courts have been in the past and still are expanding its frontiers depending upon the situations. This expansion of doctrine of fairplay, equity and justice culminating in the concept of natural justice is effected by reason of changes in the society and it is a primary duty of the Law Courts to keep on changing the structure of law as otherwise law will lag behind rendering the concept of justice totally nugatory. In a democratic set up the prosperity of the society depends upon the judiciary and in the event the function of judiciary falls below the expectation of the society the society shall perish. The doctrine propounded by Ro-scopound that laws stress upon the social purpose and the legal order must be flexible as well as stable still hold good as a guiding principle in order to do effective justice between the parties. It is the primary duty of the Law Courts to review the existing laws and with its adaptability broaden the scope so as to meet the demand of the society. As Bhagwati-J, observed in M.P.Sugar Mill's case that law is not antique to be taken down, dusted and put back on the shelf again, but it is essentially a social process and it must keep on growing and developing with the changing social concepts and values. The concept cannot be restricted in a straight-jacket formula and be applied only in certain specified cases. Law Courts have been working with the idea of fair administration of justice and have been expanding the horizon of the administrative law-whether in America or in England or in this country the judiciary has been quite active in the matter of expansion of the frontier of administrative law.
3. The above narration cannot but be adverted to by reason of the special facts of the matter under consideration but before turning attention on to the factual aspect a reminder is necessary to the basic principle once again. The House of Lords in Ridge v. Baldwin 1964 AC 40 reinstated the right to a fair hearing as 'a rule of universal application' in the case of administrative actions or decisions affecting the rights - and it would be useful to record the oft-cited observation of Lord Loreburn that the duty to afford such an opportunity of hearing is 'a duty lying upon every one who decides anything'. If we trace the English decisions little bit further one inevitable conclusion is that this decision of the House of Lords in Ridge v. Baldwin has opened up a new vista in regard to the concept of natural justice and since then there exists a steady refinement of administrative law by the English Courts. The decisions of the Indian Courts are also not lagging, however, on this count and it is now a well settled principle of law that the concept of natural justice has its application in administrative actions as well. The trend of judicial decisions in our country unmistakably depict the obliteration of dividing line between the administrative power and quasi-judicial power and the law is well settled to that effect and as such one need not dilate much on this score excepting, however, recording the observations of the Supreme Court in the decision of C.B. Boarding and Lodging v. State of Mysore and Anr., (1970-II-LLJ-403) wherein the Supreme Court observed; (p. 411):
"14. It was urged on behalf of the hotel owners that the power conferred to fix the minimum wages on the appropriate Government under Section 5(1) is a quasi-judicial power and in exercising that power, it was incumbent on the appropriate Government to observe the principles of natural justice. The Government having failed to observe those principles, the fixation of wages made is liable to be struck down. It is unnecessary for our present purpose to go into the question whether the power given under the Act to fix minimum wages is a quasi-judicial power or an administrative power as observed by this Court in A.K. Kamipak v. Union of India, , the dividing line between an administrative power and quasi judicial power is quite thin and is being gradually obliterated. It is further observed therein that principles of natural justice apply to the exercise of the administrative powers as well. But those principles are not embodied rules. What particular rule of natural justice, if any, should apply to a given case must depend to a great extent on the facts and circumstances of that case, the framework of the law under which the inquiry is held and the constitution of the tribunal or body of persons appointed for the purpose."
4. Having dealt with the broad aspects of this concept of natural justice and a right to have a fair hearing in the matter, it would be convenient, however, at this juncture to advert to the factual aspect briefly.
5. The appellant No. 1 is a company incorporated under the Companies Act, 1956 and carries on business as dealers and commission agents for imported plant and machinery. The appellant contended that no manufacturing process with the use of power is carried out by the appellant No. 1 in discharge of its usual function and the business of the appellant requires the appellant No. 1 to render maintenance service of the plant and machineries sold to various customers and there is no manufacturing process involved in order to render such a maintenance service.
6.On the factual score it appears that on July 30, 1992 the Vigilance Officer of the Employees' State Insurance did pay a visit to the office of the petitioner for the purpose of inspection of records, but-admittedly no inspection could be had on that date by the concerned officer. Subsequently on the same date the appellant was served with a notice calling upon the appellant to produce the records for the period April 1, 1987 till date before the Vigilance Officer of the Employees' State Insurance Corporation on August 3, 1992. The records were not produced even on that date, though a prayer for extension of time for such production was made on August 1, 1992. It appears that the Director of Vigilance did extend the time for making available the documents till December 2, 1992. In September, however, the concerned officer did pay a visit for the purpose of inspection of the records and did, in fact, inspect the records at the petitioners' factory.
7. Subsequently by notice dated February 22, 1993 the Regional Director passed an order declaring the petitioner No. 1 as a factory/establishment within the meaning of Section 2(12) of the Act provisionally with effect from April 1, 1989. The appellant also was given a Code number and necessary forms. Immediately thereafter it appears from records that the appellant No. 1 received a further notice dated February 26, 1993 issued by the respondent No. 4 calling upon the petitioner to submit 37 Declaration Forms in respect of the employees of 1993 relating to 37 persons under the employment of the appellant No. 1. It is the definite case of the appellant No. 1 that all the above noted 37 persons carry out administrative and clerical jobs at the office of the appellant No. 1 and none of them can be termed to be an employee within the meaning of Section 2(9) of the Act, even the durwans and sweepers wholly unconnected with the business activity of the Company have been brought within the ambit of the Act of 1948. The appellant No. 1, however, as appears from the records, by a letter dated March 4, 1993 requested for cancellation of the notice dated February 22, 1993 and reiterated that the appellant No. 1 cannot be termed to be a factory or an establishment within the meaning of the Act of 1948, more so by reason of the fact that no manufacturing process with the aid of power is being carried on by the petitioner in discharge of its business activity.
8. The factual score further depicts that on November 28, 1993 there was a further inspection of the premises in question but thereafter there was a total lull and silence on the part of the State Insurance Authorities till the end of March, 1994. On March 28, 1994 the petitioner received a notice dated February 247 March 16, 1994 calling upon the petitioner to submit the declaration form as demanded in the letter dated February 26, 1993 and immediately thereafter two separate notices both dated March 22, 1994 were served on to the appellant No. 1. Whereas by the first notice bearing No. 3314 the respon dents have demanded returns to be submitted for a certain period as mentioned in the notice with a clear caution that in the event the contribution is not paid within 15 days necessary steps would be taken for recovery of the sum from the appellant, the second notice bearing No. 3315, however, demanded a sum of Rs. 2372.52 P on account of labour charges. By the second notice the appellants were asked to show cause within 15 days as to why assessment for the period 1989-92 at Rs. 2372.52 P. on account of labour charges should not be issued. The appellant-petitioner thereafter through lawyer refuted the allegations though more or less in the nature of reiteration of the earlier facts.
9. On this factual backdrop the appellant-petitioner herein challenged the notices whereby the appellant No. 1 was declared as an 'establishment' within the meaning of the Employees' State Insurance Act, 1948 before the learned Trial Judge by way of an application under Article 226 of the Constitution. The main thrust of challenge in the writ petition is the violation of the principles of natural justice in the matter of issuance of the notices dated February 24, 1994, March 16, 1994 and March 22, 1994 since the above-noted three notices were issued without considering the representation of the appellant as contained in the letter dated March 4, 1993 and without affording an opportunity of hearing.
10. The Learned Trial Judge, however, rejected the writ application summarily and this appeal is directed against such on order of summary rejection of the writ petition principally on the ground that there exists an alternative remedy as laid down in Section 75 of the Employees' State Insurance Act, 1948. Mr. Pratap Chatterjee, appearing in support of the appeal, submitted that in the facts of the matter under consideration, however, the question of having an alternative remedy by reason of Section 75 of the Act of 1948 does not and cannot arise.
11. On this factual backdrop the issue before the Division Bench was as to whether Section 75 can be termed to be a bar in the matter of maintaining an application under Article 226 of the Constitution challenging the very basis of the issuance of three notices as above and having the provisions of the Act of 1948 applicable to the appellant No. 1
12. The learned Trial Judge, while rejecting the writ application, recorded: "In view of the fact that the petitioner has an alternative and more efficacious remedy in the matter of filing of a suit in terms of Section 75 of the Employees' State Insurance Act, in my opinion, no case has been made out in maintaining this writ application."
13. At this juncture, however, it would otherwise be worthwhile to note Section 75 of the Act in some details. The Section deals with the matters as listed in the body of the Section itself and it envisages that the same be decided by the Insurance Court. On a plain reading of the provision as laid down in the Section, however, there cannot be any manner of doubt or dispute that the Section is to be attracted in the event of there being any grievance concerning the levy or demand which is otherwise valid and question of entertaining a writ petition on the basis thereof does not and cannot arise. It appears that Section 75 is in Chapter VI of the Act of 1948 and the Scheme of the chapter clearly indicates the paramount intent of the legislature to relegate all disputes of such a kind as is mentioned in Section 75 to the Insurance Court but the issue arises in the factual matrix of the situation is a total different one viz., the applicability of the provisions of the Act itself and without coming to a definite finding to that effect, question of having a relief under Section 75 of the Act does not and cannot arise. The Scheme of the Act itself suggests that the Corporation is required to collect materials relevant to the question and it is then required to decide the question of applicability of the Act to the establishment or to the factory and such a decision cannot but be an objective one and not a subjective decision as the decision otherwise affects the rights of the employers and this decision cannot but be termed to be judicial or at least a quasi-judicial decision warranting the applicability of the doctrine of natural justice. The Corporation must act judicially when it decides the question as to whether the Act is applicable or not to a particular employer. Admittedly, on the fact of records it appears that by letter dated March 4, 1993 the petitioner had demanded an opportunity of being heard, but such an opportunity has never been granted nor any order as such has been passed on the basis thereof. It is this conduct or action, in our view, is violative of the doctrine of natural justice and the writ Court would be within its jurisdiction to deal with the matter itself rather than remitting the matter under Section 75 to the Insurance Court. The decision of the Allahabad High Court in Special Appeal No. 328 of 1974 between the Employees' State Insurance Corporation and M/s. U. P. Hotel and Restaurant Limited 1975-30-FLR-246 lend support to the view expressed above.
14. In that view of the matter, there shall be an order in terms of prayer 'A' of the stay petition and by reason of the observation as above, the order of the learned Trial Judge in dismissing the writ petition summarily cannot thus, be sustained and is set aside upon treating the stay petition and the appeal by consent of the parties on the day's list.
15. In the normal course of events this Court would have remitted the matter back to the learned Trial Judge for being dealt with appropriately but in the view expressed above and in the factual context so as to avoid further delay in the matter the writ petition also stand disposed of with a direction on to the respondent- State Insurance Authority to consider the matter as regards the applicability of the Act first within a period of three weeks from the date hereof upon affording an opportunity of hearing to the appellant-petitioner. The appellant-petitioner would be at liberty to adduce documentary evidence at the hearing of the preliminary issue in regard to the applicability of the Act and it is desired that the Insurance Authority should pass reasoned order in the matter. It is, however, clarified that in the event the Insurance Authority comes to a definite finding in regard to the applicability of the Act the authority concerned in that event, however, would be at liberty to proceed with the show-cause notice and the notice of demand in accordance with law and in that event, however, the appellant-petitioner's time to submit a reply to the show-cause notice be suitably extended by the appropriate authority.
16. The undertakings given by the appellant stand discharged.
The Registrar, Original Side, High Court is directed to make available a xerox copy of this order for the parties with utmost expedition on the usual undertakings of the petitioner.
Sudhendu Nath Mallick, J; I agree.