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Indian Railway Construction Co. Ltd. V. Ajay Kumar

Written by: Mansi Trivedi - Study in Nirma University, VI Sem
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Discretion is the Science of understanding to discern between falsity and truth, between wrong and right, between shadow and substance, between equity and colourable glasses and pretences, and not to do according to their wills and private affection. - Justice Coke

Administrative law is the body of law that governs the activities of administrative agencies of government. Government agency action can include rulemaking, adjudication, or the enforcement of a specific regulatory agenda. Administrative law is considered a branch of public law. As a body of law, administrative law deals with the decision-making of administrative units of government (e.g., tribunals, boards or commissions) that are part of a national regulatory scheme in such areas as police law, international trade, manufacturing, the environment, taxation, broadcasting, immigration and transport. Administrative law expanded greatly during the twentieth century, as legislative bodies worldwide created more government agencies to regulate the increasingly complex social, economic and political spheres of human interaction.

Civil law countries often have specialized courts, administrative courts, that review these decisions. The plurality of administrative decisions contested in administrative courts are related to taxation. Administrative law has a tremendous social function to perform. It is the body of reasonable limitations and affirmative action parameters, which are developed, and operationalised by the legislature and the courts to maintain and sustain the rule of law. The courts, through writs of habeas corpus, mandamus, certiorari, prohibitio and quo warranto, control administrative action. The source of Administrative law is the statutes, statutory instruments, precedents and customs. The article discusses the doctrine of legitimate expectation, Public Accountability and doctrine of proportionality. The increased power of the administration judicial control has become an important area of administrative law, because courts have proved more effective and useful than the legislative or the administrative powers.

In simple terms, the Rule of Law requires that government operate within the confines of the law; and that aggrieved citizens, whose interests have been adversely affected, be entitled to approach an independent court to adjudicate whether or not a particular action taken by, or on behalf of, the state is in accordance with the law. In these instances, the courts examine a particular decision made by an official, or an official body, to determine whether it falls within the authority conferred by law on the decision-maker. In other words, the courts rule as to whether or not the decision is legally valid. In so doing, the judges do not substitute their own discretion and judgement for that of the government.

They simply rule whether the government or its officials have acted within the ambit of their lawful authority. Thus, the judges do not “govern” the country and, do not “displace” the government when government decisions are challenged in the courts. With the increasing dominance of the private sector in many countries, and the emphasis of government activity shifting from direct participation (through government-owned corporations) to regulation (as often as not, of privatised activities), the role of the courts is, if anything, becoming even more important. Decisions of government regulators impact directly on the private sector interests that they are regulating, and the private sector will look to the courts with greater frequency to shield it from excessive or abusive use of regulatory powers. At times the courts will be expected to go further, and actually review the legality of decisions being made in the private sector itself, applying the principles of administrative law (previously applicable only to official institutions), where these decisions impact significantly on the public interest.

Judicial review is the doctrine in democratic theory under which legislative and executive action is subject to invalidation by the judiciary. Specific courts with judicial review power may annul the acts of the state when it finds them incompatible with a higher authority, such as the terms of a written constitution. Judicial review is an example of the functioning of separation of powers in a modern governmental system (where the judiciary is one of three branches of government). This principle is interpreted differently in different jurisdictions, which also have differing views on the different hierarchy of governmental norms. As a result, the procedure and scope of judicial review differs from country to country and state to state.

Constitutional judicial review is usually considered to have begun with the assertion by John Marshall, chief justice of the United States (1801–35), in Marbury v. Madison (1803), that the Supreme Court of the United States had the power to invalidate legislation enacted by Congress. There was, however, no express warrant for Marshall’s assertion of the power of judicial review in the actual text of the Constitution of the United States; its success rested ultimately on the Supreme Court’s own ruling, plus the absence of effective political challenge to it.

Courts engaged in judicial review of administrative action are increasingly using the term ‘rationality’ to describe at least some aspects of the standards of good administrative decision-making embodied in judicial review grounds. However, while ‘rationality’ is probably the most ubiquitous concept used in studying how humans behave, its meaning is often unclear. The legality–merits distinction has replaced the distinction between jurisdictional and non-jurisdictional questions as an organising principle of judicial review. Jurisdictional questions remain relevant, but legality is wider than jurisdiction and encompasses rationality requirements.

Introduction of The Case
Administrative action is stated to be referable to broad area of governmental activities in which the repositories of power may exercise every class of statutory function of executive, quasi-legislative and quasi-judicial nature. It is trite law that exercise of power, whether legislative or administrative, will be set aside if there is manifest error in the exercise of such power or the exercise of the power is manifestly arbitrary.

The Court will be slow to interfere in such matters relating to administrative functions unless decision is tainted by any vulnerability like illegality, irrationality and procedural impropriety. Whether action falls within any of the categories has to be established. Mere assertion in that regard would not be sufficient.

Acts/ Rules/ Orders
Indian Railway Construction Co. Ltd. (Conduct, Discipline and Appeal) Rules (1981), R.30(2) - DISMISSAL - Dismissal from service - That enquiry will take some time cannot be a ground to dispense with enquiry.

Constitution of India, 14. Equality before law.- The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India.

Constitution of India Article-311- Dismissal, removal or reduction in rank of persons employed in civil capacities under the Union or a State.-
(1) No person who is a member of a civil service of the Union or an all-India service or a civil service of a State or holds a civil post under the Union or a State shall be dismissed or removed by an authority subordinate to that by which he was appointed.

(2) No such person as aforesaid shall be dismissed or removed or reduced in rank except after an inquiry in which he has been informed of the charges against him and given a reasonable opportunity of being heard in respect of those charges:
Provided that where it is proposed after such inquiry, to impose upon him any such penalty, such penalty may be imposed on the basis of the evidence adduced during such inquiry and it shall not be necessary to give such person any opportunity of making representation on the penalty proposed:
Provided further that this clause shall not apply-
(a) where a person is dismissed or removed or reduced in rank on the ground of conduct which has led to his conviction on a criminal charge; or
(b) where the authority empowered to dismiss or remove a person or to reduce him in rank is satisfied that for some reason, to be recorded by that authority in writing, it is not reasonably practicable to hold such inquiry; or
(c) where the President or the Governor, as the case may be, is satisfied that in the interest of the security of the State it is not expedient to hold such inquiry.
(3) If, in respect of any such person as aforesaid, a question arises whether it is reasonably practicable to hold such inquiry as is referred to in clause (2) the decision thereon of the authority empowered to dismiss or remove such person or to reduce him in rank shall be final.

Constitution of India, Article 226- Power of High Courts to issue certain writs-

(1) Notwithstanding anything in Article 32 every High Court shall have powers, throughout the territories in relation to which it exercise jurisdiction, to issue to any person or authority, including in appropriate cases, any Government, within those territories directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibitions, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose.

(2) The power conferred by clause ( 1 ) to issue directions, orders or writs to any Government, authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories.

(3) Where any party against whom an interim order, whether by way of injunction or stay or in any other manner, is made on, or in any proceedings relating to, a petition under clause ( 1 ), without
(a) furnishing to such party copies of such petition and all documents in support of the plea for such interim order; and
(b) giving such party an opportunity of being heard, makes an application to the High Court for the vacation of such order and furnishes a copy of such application to the party in whose favour such order has been made or the counsel of such party, the High Court shall dispose of the application within a period of two weeks from the date on which it is received or from the date on which the copy of such application is so furnished, whichever is later, or where the High Court is closed on the last day of that period, before the expiry of the next day afterwards on which the High Court is open; and if the application is not so disposed of, the interim order shall, on the expiry of that period, or, as the case may be, the expiry of the aid next day, stand vacated
(4) The power conferred on a High Court by this article shall not be in derogation of the power conferred on the Supreme court by clause ( 2 ) of Article 32
Administrative Law, Judicial Review- Administrative action - Interference by Court Justified when manifest error in exercise of power or its exercise in manifestly, arbitrary manner by concerned authority - Or when decision suffers from illegality, irrationality or procedural impropriety. Test to determine reasonableness and irrationality.

Facts
The respondent (hereinafter referred to as 'the employee') was appointed on a probation basis in May, 1981. His appointment was on temporary basis and he was not confirmed even after the initial period of probation. Alleging that he assaulted a senior officer and along with others ransacked the office creating chaotic condition, an order of dismissal was passed on 7-12-1983. On the alleged date of incident, information was lodged with police. The order was passed in respect of two employee the present appellant and one Mr. V. K. Talwar. It was pointed out in the order of dismissal that it would not be practicable to hold an enquiry before directing dismissal. The respondent-employee, on the other hand, alleged that the order of dismissal was the outcome of victimization. He took a stand in the writ petition filed before the Delhi High Court that because of union activities, he had become an The respondent (hereinafter referred to as 'the employee') was appointed on a probation basis in May, 1981.

His appointment was on temporary basis and he was not confirmed even after the initial period of probation. Alleging that he assaulted a senior officer and along with others ransacked the office creating chaotic condition, an order of dismissal was passed on 7-12-1983. On the alleged date of incident, information was lodged with police. The order was passed in respect of two employee the present appellant and one Mr. V. K. Talwar. It was pointed out in the order of dismissal that it would not be practicable to hold an enquiry before directing dismissal. The respondent-employee, on the other hand, alleged that the order of dismissal was the outcome of victimization. He took a stand in the writ petition filed before the Delhi High Court that because of union activities, he had become an eyesore of the management, and the order of dismissal without holding an enquiry was violative of law and was at variance with the requirements of Art. 311(2) of the Constitution of India, 1950 (in short 'the Constitution').

Learned single Judge was of the view that in a given case, enquiry can be dispensed with; but the case at hand was not of that nature. It was further held that the protection under Art. 311(2) was available and non-observance of the procedure vitiated the order of dismissal. The matter was challenged in Letter Patents Appeal before the Division Bench of the Delhi High Court by the present appellant. It was submitted that there was no scope for judicial review of the order dispensing with enquiry. The order of dismissal was quashed on the ground that it was activated with mala fides. Though, it was observed that the decision whether an enquiry was to be conducted or not and could be dispensed with was primarily that of the concerned authority; it could not be his ipse dixit and a given case could be judicially reviewed. In any event, Art. 311(2) had no application. The Division Bench by the impugned judgment held that Art. 311(2) was not attracted. However, it upheld the judgment of the learned single Judge holding that on a limited judicial review, the order dispensing with enquiry was not sustainable.

Issues
Ø Whether it is appropriate to dispense the enquiry on the ground that it will take time to commence?
Ø Whether on the basis of a presumptuous conclusion, that delinquent is indulged in giving threats, coercion and undue influence to other employees, the concerned authority should not dispense with enquiry?
Ø Whether the power to dismiss an employee by dispensing with an enquiry is be exercised so as to circumvent the prescribed rules?
Ø Whether the interference of the court is justified or reasonable when there is manifest error in exercise of power by concerned authority?
Ø Whether it is possible hold enquiry by HC on the ground that dispensing with enquiry was mala fide though there was no specific allegation of mala fide?
Ø Whether it is appropriate to direct the authorities to hold the enquiry by the HC in absence of the power to hold the enquiry?

Contentions
Appellant:
In support of the appeal, Mr. Mukul Rohtagi, learned Additional Solicitor General appearing for the appellant submitted that the Division Bench was not justified in upholding conclusions of the learned single Judge about the scope of judicial review. Both the learned single Judge and the Division Bench proceeded to deal with the matter as if mala fides had been established. There was no finding recorded that the incident did not take place. On the contrary, both the learned single Judge and the Division Bench accepted that certain incident took place. After having held so, the plea on the presumptuous ground that the respondent-employee was the victim of bias and the authorities acted with mala fides, cannot be sustained. There was no specific plea relating to mala fides and even persons who allegedly acted mala fide were not impleaded in the writ petition. Residually, it was submitted that the employer lost confidence on the employee for his grave acts of misconduct, which had adversely effected the image and reputation of the employer as the incident took place in the presence of valued customers, some of whom were foreign customers. If the High Court felt that the dismissal was untenable in the absence of enquiry at the most it could have directed enquiry before dismissal order was effectuated. The dismissal order could not have, in any event, been set aside without any such direction. These aspects have also to be considered along with the plea relating to loss of confidence.

Respondent:
In response, learned counsel for the respondent-employee submitted that the facts are telltale and the background highlighted by the respondent in the writ petition clearly shows that management was bent upon dismissing him for his union activities. That was sufficient to prove mala fides and even if no particular person was impleaded, the management acted in unison through some of its officers for his dismissal from employment. It was submitted that the High Court was correct in holding that the order of dismissal was illegal.

It was submitted that though there was no assertion in the writ petition that the alleged incident did not take place, the same was on account of the fact that the employee was not aware of the alleged incident. In fact, the order dispensing with enquiry surfaced much later and in the rejoinder affidavit it was pleaded. In respect of the plea relating to loss of confidence, it was submitted that such a stock plea cannot be permitted to be raised, as every employer can take the plea and thereby crush the employee's right to raise legitimate demands through unions.

Judgment
It is fairly well settled that the power to dismiss an employee by dispensing with an enquiry is not be exercised so as to circumvent the prescribed rules. The satisfaction as to whether the facts exist to justify dispensing with enquiry has to be of the disciplinary authority. Where two views are possible as to whether holding of an enquiry would have been proper or not, it would not be within the domain of the Court to substitute its view for that of the disciplinary authority as if the Court is sitting as an appellate authority over the disciplinary authority. The contemporaneous circumstances can be duly taken note of in arriving at a decision whether to dispense with an enquiry or not. What the High Court was required to do was to see whether there was any scope for judicial review of the disciplinary authority's order dispensing with enquiry. The focus was required to be on the impracticability or otherwise of holding the enquiry.

One of the points that falls for determination is the scope for judicial interference in matters of administrative decisions. Administrative action is stated to be referable to broad area of governmental activities in which the repositories of power may exercise every class of statutory function of executive, quasi-legislative and quasi-judicial nature. It is trite law that exercise of power, whether legislative or administrative, will be set aside if there is manifest error in the exercise of such power or the exercise of the power is manifestly arbitrary. ( State of U.P. and others v. Renusagar Power Co. and others[1]).

At one time, the traditional view in England was that the executive was not answerable where its action was attributable to the exercise of prerogative power. Professor De Smith in his classical work "Judicial Review of Administrative Action" (4th Edition at pages 285-287) states that, the legal position in his own terse language that the relevant principles formulated by the Courts may be broadly summarised as follows. The authority in which a discretion is vested can be compelled to exercise that discretion, but not to exercise it in any particular manner. In general, a discretion must be exercised only by the authority to which it is committed. That authority must genuinely address itself to the matter before it; it must not act under the dictates of another body or disable itself from exercising a discretion in each individual case. In the purported exercise of its discretion, it must not do what it has been forbidden to do, nor must it do what it has not been authorised to do. It must act in good faith, must have regard to all relevant considerations and must not be influenced by irrelevant considerations, must not seek to promote purposes alien to the letter or to the spirit of the legislation that gives it power to act, and must not act arbitrarily or capriciously.

From the judgment of Lord Greene in Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn.[2]. It reads as follows:
". . . . . . . . .It is true that discretion must be exercised reasonably. Now what does that mean? Lawyers familiar with the phraseology used in relation to exercise of statutory discretions often use the word 'unreasonable' in a rather comprehensive sense. It has frequently been used and is frequently used as a general description of the things that must not be done. For instance, a person entrusted with a discretion must, so to speak, direct himself properly in law. He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does not obey those rules, he may truly be said, and often is said to be acting 'unreasonably.' Similarly, there may be something so absurd that no sensible person could even dream that it lay within the powers the authority. . . . . . . In another, it is taking into consideration extraneous matters. It is unreasonable that it might almost be described as being done in bad faith; and in fact, all these things run into one another."

The principles of judicial review of administrative action were further summarised in 1985 by Lord Diplock in CCSU case as illegality, procedural impropriety and irrationality. He said more grounds could in future become available, including the doctrine of proportionality which was a principle followed by certain other members of the European Economic Community. Lord Diplock observed in that case as follows:
". . . . . . . .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.' That is not to say that further development on a case-by-case basis may not in course of time and further grounds. I have in mind particularly the possible adoption in the future of the principle of 'proportionality' which is recognised in the administrative law of several of our fellow members of the European Economic Community."

It was observed thus : P.G.I. of Medical Education and Research, Chandigarh v. Raj Kumar[3]:
"The Labour Court being the final Court of facts came to a conclusion that payment of 60% wages would comply with the requirement of law. The finding of perversity or being erroneous or not in accordance with law shall have to be recorded with reasons in order to assail the finding of the Tribunal or the Labour Court. It is not for the High Court to go into the factual aspects of the matter and there is an existing limitation on the High Court to that effect."

Therefore, again at paragraph 12 of this case, this Court observed:
"Payment of backwages having a discretionary element involved in it has to be dealt with, in the facts and circumstances of each case and no strait-jacket formula can be evolved, though, however, there is statutory sanction to direct payment of backwages in its entirety. ( Hindustan Motors Ltd. v. Tapan Kumar Bhattacharya and another[4]):
In our considered opinion, a further payment of Rupees 12 lacs towards backwages and for giving effect to the order of dismissal on the ground of loss of confidence would suffice. The total amount of Rupees 15 lacs shall be in full and final settlement of all claims. The payment is to be paid within eight weeks from today after making permissible deductions statutorily provided and/or adjustments, if any, to be made. Thus, the appeal is accordingly disposed of in the above terms.

Relevance of Judicial Review In Administrative Action

Judicial review of administration is, in a sense, the heart of administrative law. It is certainly the most appropriate method of inquiring into the legal competence of a public authority. The aspects of an official decision or an administrative act that may be scrutinized by the judicial process are the competence of the public authority, the extent of a public authority’s legal powers, the adequacy and fairness of the procedure, the evidence considered in arriving at the administrative decision and the motives underlying it, and the nature and scope of the discretionary power. An administrative act or decision can be invalidated on any of these grounds if the reviewing court or tribunal has a sufficiently wide jurisdiction. There is also the question of responsibility for damage caused by the public authority in the performance of its functions. Judicial review is less effective as a method of inquiring into the wisdom, expediency, or reasonableness of administrative acts, and courts and tribunals are unwilling to substitute their own decisions for that of the responsible authority.

Judicial review of administration varies internationally. Sweden and France, for instance, have gone as far as subjecting the exercise of all discretionary powers, other than those relating to foreign affairs and defense, to judicial review and potential limitation. Elsewhere, a preoccupation with procedure results in judicial review deciding only whether the correct procedure was observed rather than examining the substance of the decision.

It is of course impractical to subject every administrative act or decision to investigation, for this would entail unacceptable delay. The complainant must, therefore, always make out a prima facie case that maladministration has occurred.

In judicial review of administration at a national level, a country’s history, politics, and constitutional theory all play their part. There are, broadly, three major systems: the common-law model; the French, or council of state, model; and the procurator model.

Conclusion And Suggestion
It is a fundamanetal principle of law that every power must be exercised within the four corners of law and within the legal limits. Exercise of administrative power is not an exception to that basic rule. The doctrines by which those limits are ascertained and enforced form the very marrow of administrative law. Unfettered discretion cannot exist where the Rule of Law reigns. Again, all power of capable of abuse, and that the power to prevent the abuse is the acid test of effective judicial review[5].

Under the traditional theory, courts of law used to control existence and the extent of prerogative power but not the manner of exercise thereof. That position was, however, considerably modified after the decision in Council of Civil Service Union v. Minister for Civil Service[6], wherein it was emphasized that the reviewability of descretionart power must depend upon the subject matter and not upon its source. The extent and degree of Judicial review and justifiable area may vary from case to case.

At the same time, however, the power of judicial review is not unqualified or unlimited. If the courts were to assumejurisdiction to review administrative acts which are unfair in their opinion, the courts would assume jurisdiction to do the very thing which is to be done by administration. If judicial review were to tresspass on the merits of the exercise of administrative power, it would put its own legitimacy at risk.

Bibliography
Books:
Takwani C. K. , Lectures on Administrative Law, Eastern Book Company, 3rd Edition

Articles:
Fox-Decent, P. E. (2006). Judicial review of Administrative Action.
Justice Fazal Karim, F. J. (n.d.). Judcial Review of Administrative Action.
Muhammad Bashir Jehangiri, F. C. (n.d.). Judicial Review of Administrative Action.

[1] AIR 1988 SC 1737
[2] KB at p. 229 : All ER p. 682, 1948 (1) KB 223 : (1947) 2 All ER 680
[3] AIR 2001 SC 479
[4] AIR 2002 SC 2676
[5] Wade: Administrative Law, (1994), pg. 39-41
[6] (1984) 3 All ER 935

The author can be reached at: mansitrivedi3@legalserviceindia.com / ph no: 09428835903 / Print This Article

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