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Whether entering into Consultation amounts to improper exercise of discretion under Section 19 of Prevention of Corruption Act

A body when given with the authority to exercise discretion or with the authority to act judicially then such body in exercise of their discretion or application of mind enters into dialogue or consultation with other institutional bodies.

The consequence of such consultation or sharing of opinion is that it influences the concerned authority in application of an independent mind.

It has been recognised by Honourable Supreme Court in several cases as well as it has been a constant ground for dispute that the Sanctioning authority as provided under Section 19 of Prevention Corruption Act,1988, even if acting under an administrative capacity, is entering into conversations and dialogues with bodies such as Central Vigilance Commission.

The sanctioning authority usually has formulated an opinion and resultant conclusion on the matter before entering into consultation, discussion or dialogue with above bodies. The conclusion at which the Sanctioning authority has arrived at appears in formal correspondence, minutes of meetings etc. and it is also observed that the sanctioning authority has arrived at the conclusion on the basis of evidence furnished and facts presented.

  • The question is whether such conclusion stands binding on the authority?
  • What are the problems if conclusion is not held binding on the Sanctioning authority?
  • Whether it is valid exercise of discretion if the sanctioning authority differs from the conclusion that it arrived at just on the basis of an opinion or interpretation that external bodies to discretion has arrived at?

Consultation by a Qusi-Judicial authority

It is a well settled law that quasi-judicial authorities cannot enter into consultation with other bodies while deciding the rights and liabilities of parties involved in an issue. In the Case of State Bank of India v. D.C. Aggarwal, AIR 1993 SC 1197the Honourable Apex court provided that the order of disciplinary committee shall be quashed on the ground that the disciplinary committee took consideration of CVC without furnishing the report to the concerned employee.

The report and the considerations were taken behind the back of the employee without his participation and this is violative of procedural safe guard and contrary to fair and just inquiry.[1]
The facts of the abovementioned case are that an inquiry was held against an employee of the bank. The inquiry officer found certain charges against the employee not proved and sustained only certain charges against the employee.

The bank directed the inquiry officer to submit his report through Central Vigilance Commission. The CVC disagreed with the inquiry officer and held that all the charges against the employee are duly proved and he stands guilty for all of them. The punishment as provided by CVC was to remove employee from the service. The bank disagreed that on wholesome consideration of situation, it would be too harsh to remove employee from the service.

The basis of the above judgement is that when the body acts as a quasi-judicial authority then it must act under the bindings of Principles of Natural justice as they determine the questions of vested rights, remedies to violation of vested rights and incur liability.

In the case of Prem Chandra v. Central Tax Officer, AIR 1958 SC 667, The commercial tax officer while assessing the appellant was of opinion, based on the established facts, that the appellant shall not be imposed with tax but even after this he thought it to be prudent to refer the matter to superior officer. The superior officer was of opinion that the concerned individual shall be imposed with tax and consequently as a result of the opinion conferred by the superior officer the tax was imposed on the appellant.

The Honourable Supreme Court provided that the assessing body did not exercise its own mind……the court further characterized the procedure as unfair, contrary to the principle of Natural Justice, and calculated to undermine the confidence of the public in the impartial and fair administration.[2]

It is also pertinent to note the case of Sirpur Paper Mills v. Commissioner of Wealth Tax, AIR 1970 SC 1520 theHonourable Supreme Court quashed the order of the commissioner of wealth tax because he had surrendered his authority and judgement to the Board of Revenue in deciding questions raised by the company in its revision application against the order of the Appellate Assistant of the Wealth Tax.

Section 13 of the Wealth Tax Act provides that officers shall observe and follow the directions of Board of revenue. In exercise of S.13 the authority was in constant consultation with the Board of Revenue from the very beginning of the proceedings.

It appeared that the authority was acting on the directions of the Board, acting contrary to the procedure of law as it conferred the authority with power and responsibility to independently apply its own mind under Section 25 of the i.e. The Commissioner may call for records of any proceedings under this Act in which an order has been passed by any authority subordinate to him and may make inquiry and pass an order thereon as Commissioner thinks fit.

Section 25 confers power to the Commissioner of a nature that makes him a quasi-judicial authority wherein he shall not enter into consultation with any other body or act under direction of any other body and shall bring to bear an unbiased mind, consider impartially the objections raised the aggrieved party, and decide the dispute according to procedure consistent with the principle of Natural Justice.[3]

It is true that an exercise of powers of revoking or cancelling the permission is akin to and partakes of a quasi-judicial complexion and that is exercising of the former power the authority must bring to bear an unbiased mind, consider impartially the objections raised by the aggrieved party and decide the matter consistent with principles of Natural Justice. The Authority cannot permit its decision to be influenced by the dictation of other as this would amount to abdication and surrender of its discretion. It would then not be the authority's discretion that is exercised, but someone else's. If authority hands over its discretion to another body it acts ultra vires. Such interference by a person or body extraneous to the power would plainly be contrary to the nature of the power conferred upon the authority.[4]

Analysis: An executive authority is said to have acquired the personality of a quasi-judicial authority when the statute impliedly or expressly imposes a duty to act judiciously on such executive authority. Duty to act judiciously refers to the act where an authority, like a judge, is conferred with the power to ask for any relevant documents or furnishing facts or evidences for proper adjudication of issue in hand so as to decide the right, remedy and liability of parties involved.

The moment authority acts in the capacity of a quasi-judicial body, it automatically acquires all the limitation and rights that a judge in a normal court of justice has until and unless expressly limited or expanded by the statute under which the authority enjoys his adjudicatory powers. The quasi-judicial authority doesn't have the power to enter into consultation or dialogue with any other body while adjudicating a matter.

What it does is that it asks the related bodies and parties involved to furnish facts and evidences to support such facts and after receiving the stated, the quasi-judicial authority exercises independent application of mind. The quasi-judicial body arrives at a conclusion that acts as a final decision for the parties involved and such conclusion doesn't change until there appears to be fundamental change in material facts.

Material facts are those facts that are necessary to present a composite picture of cause of action[5]further they also mean the entire bundle of facts, which would constitute a complete cause of action.[6]

A judge in a court of law is not entering into conversation or consultation with lawyers representing parties or with institutional bodies such as Central Bureau of Investigation, Central Vigilance Commission etc. or with any expert giving evidence such as doctors, scientists. A judge hears them all and he may ask them question to further clarify or gain more explanation but he doesn't author the judgement by having a conversation with the above personalities and bodies as it would mean that the judge shared his discretion and invested such discretion in an individual or body or institution which under law wasn't supposed to enjoy such discretion.

Consultation by authority exercising Administrative functions

When an authority is conferred with discretion and if such discretion is of administrative nature then the discretion shall only be exercised by the authority that has been granted such discretion. The authority may ask for aid and assistance but this simultaneously imposes a responsibility over the authority entering into such consultation to explicitly provide or act in a way that makes it apparent that the authority even after such consultation has acted independently and applied and processed its own mind.

Halsbury's Laws of England provides the following

A body entrusted with a statutory discretion must address itself independently to the matter for consideration. It cannot lawfully accept instructions from, or mechanically adopt view of, another body as to the manner of exercising its discretion in a particular case, unless that other body has been expressly empoweredto issue such directions or unless the deciding body or officer is a subordinate element in an administrative hierarchy within which instructions from above may properly be given on question at issue.[7]

Aid or assistance is permissible; provided, however, that thereafter the discretion is exercised by the authority concerned genuinely without blindly and mechanically acting on such aid or assistance.[8]

Lord Esher MR in the case of R v. Vestry of St. Pancras, (1890) 24 QBD 371, 375 provided that:

If people who have to exercise a public duty by exercising their discretion take into account matters which the Courts consider not to be proper for the guidance of their discretion, then in the eye of the law they have not exercised their discretion.[9]

It is evident from the Lord Esher MR's ratio that the test to determine whether valid consideration has been taken or not or whether the process of incorporating ofvalid consideration is correct in the eyes of law or not is that whether Court would have acted in the same way as the authority had acted if court was granted the same discretion which the administrative authority was granted.

An administrative authority enjoys discretion only when law provides for such discretion. The exercise of discretion shall only be in the procedure and manner provided under law. When a law provides a specific authority that can exercise discretion then that specified authority can only exercise such discretion and it can share its discretion with any other body or authority only when the law which empowers the authority with discretion also empowers the same authority to share such discretion and the law shall also explicitly provide the bodies with which the authority can share its discretion.

Sanction to Prosecute under Section 19 of Prevention of Corruption act, 1988

Section 19 of Prevention of corruption Act, 1988 provides:
19. Previous sanction necessary for prosecution.- (1) No court shall take cognizance of an offence punishable under sections 7, 10, 11, 13 and 15 alleged to have been committed by a public servant, except with the previous sanction [save as otherwise provided in the Lokpal and Lokayuktas Act, 2013 (1 of 2014)]-

  1. in the case of a person who is employed in connection with the affairs of the Union and is not removable from his office save by or with the sanction of the Central Government, of that Government;
  2. in the case of a person who is employed in connection with the affairs of a State and is not removable from his office save by or with the sanction of the State Government, of that Government;

In the case of State of Bihar v. P.P. Sharma, AIR 1991 SC 1260,the Honourable Supreme Court has established it as a well settled law that the discretion to Sanction to prosecute is an administrative discretion and not a quasi-judicial discretion. The discretion only examines whether there is prima facie any case that requires further proceedings, the sanction grants the relevant adjudicatory body to initiate proceedings on the matter and it is not a discretion that decides rights, liabilities and punishments by itself.[10]

The idea and the concept that a sanction to prosecute is an administrative action and not an quasi-judicial action is a Concept of English courts where the Honourable Lords of the courts of England were of view that the necessity of compliance with Principle of Natural Justice is not essential as the sanction only provides the initial ignite to the proceedings and the party aggrieved may challenge the Sanction as well as have the opportunity of being heard during the proceedings.[11]

This raises an essential question as what is then necessity of Sanction to Prosecute?

In the case of Mansukhlal Chauhan v. State of Gujarat, AIR 1997 SC 3400 the Honourable Supreme Court provided that Sanction is a weapon to ensure discouragement of frivolous and vexatious prosecution and is a safeguard for the innocent but not a shield for the guilty.

Public Servants are acting in Public capacity and it has public consequences to such exercise of power. A public servant shall stay free from any burden or influence to exercise of such powers so as to efficiently discharge their duty. It is essential that they are protected from frivolous complaints and accusation or else every public servant would be deterred from exercising his lawful powers in necessary situations as they don't have any immunity or safeguard against the possibility of harassment from individuals on whom such power would be exercised.
Consultation under Sanction to Prosecute under Section 19 of Prevention of Corruption Act, 1988

The Honourable Supreme Court has asserted the necessity of free and independent application of mind of sanctioning authority:

Since the validity of sanction depends on the applicability of mind by the sanctioning authority to the facts of the case as also the material and evidence collected during investigation, it necessarily follows that the sanctioning authority has to apply its own mind for the generation of genuine satisfaction whether prosecution has to be sanctioned or not…..Since the discretion to grant or not to grant sanction vests absolutely in the sanctioning authority, its discretion should be shown to have not been affected by any extraneous considerations.[12]

In the case of State of Punjab and Anr. v. Mohammed Iqbal Bhatti, (2011) 1 SCC (Cri) 949, Apex courtwhile dealing with the same question under section 197 of Code of Criminal Procedure, provided that it is, however, beyond any cavil that while passing an order for grant of sanction, serious application of mind on the part of the concerned authority is imperative.

The legality and/or validity of the order granting sanction would be subject to review by the criminal courts.An order refusing togrant sanction may attract judicial review by the Superior Courts. Validity of an order of sanction would depend upon application of mind on the part of the authority concerned and the material placed before it. All such material facts and material evidences must be considered by it. The sanctioning authority must apply its mind on such material facts and evidences collected during the investigation. Even such application of mind does not appear from the order of sanction; extrinsic evidences may be placed before the court in that behalf.

While granting sanction, the authority cannot take into consideration an irrelevant fact norcan it pass an order on extraneous consideration not germane for passing a statutory order. It is also well settled that the Superior Courts cannot direct the sanctioning authority either to grant sanction or not to do so. The source of power of an authority passing an order of sanction must also be considered.

The Honourable Supreme Court in the case of State Of H.P v.Nishant Sareen provided that the power of review, however, is not unbridled or unrestricted. It seems to us sound principle to follow that once the statutory power under Section 19 of the 1988 Act or Section 197 of the Code has been exercised by the Government or the competent authority, as the case may be, it is not permissible for the sanctioning authority to review or reconsider the matter on the same materials again.

It is so because unrestricted power of review may not bring finality to such exercise and on change of the Government or change of the person authorised to exercise power of sanction, the matter concerning sanction may be reopened by such authority for the reasons best known to it and a different order may be passed. The opinion on the same materials, thus, may keep on changing and there may not be any end to such statutory exercise.
It can be concluded from the authorities cited that an authority has to reflect application of his own mind while deciding whether to grant sanction or not. The word own mind reflects independent and uninfluenced application of mind.

In the case of Union Of India v. Mohan LalCapoor & Others, 1974 SCR (1) 797 Apex Court provided that Application of mind shall appear in the order as the reasons are the links between the material on which certain conclusions are based and actual conclusions. They disclose how the mind is applied on the subject matter for the decision whether it is purely administrative or quasi-judicial. They should reveal a rational nexus between the facts considered and the conclusions reached. Only this way can opinions or decisions recorded be shown to be manifestly just and reasonable.[13]

Once a sanctioning authority passes an order and if the reasons in the order reflect application of mind by the sanctioning authority then such authority cannot review or reopen the order unless new evidence is furnished or there is material change in material facts of the case.

The Sanctioning authority has to satisfy that the mind applied was his own and it has not been influenced or its application has not been under the awe of an authority, individual or a body. The discretion was granted to the sanctioning authority and if it appears that the sanctioning authority hasn't applied its own mind and worked as per the direction of or on the opinion of an external body then such an order suffers from non-application of mind and stands void.

The sanctioning authority can ask for opinions of various authority to arrive at a conclusion and cannot enter into consultation with any other body or act upon an opinion expressed by an external body to discretion as doing so amounts to extending discretion to authorities and bodies to which legislators didn't intend extend.

The problem is that what if order reflects application of mind as the order provides reasons and there also exists nexus between reasons and conclusion but does that automatically mean that the authority applied its own mind? What if the reasons and conclusion are not what the authority arrived at?
A sanctioning authority is bound by an order once it is granted. An authority may amend revision or review the order if there is material change in material facts of the situation or fresh evidences and facts have arrived in front of the authority.

The order provides an application of mind and such application of mind was based on the evidence furnished and facts provided then a change in opinion or perception shall not affect the order passed as this would lead to unbridled power of amendment, alteration, revision and review. If authorities are provided with such powers then the exercise would no more remain under the rule of law but would become an instrument of implementing arbitrariness of the authority.

An order is said to be passed and binding on authority if it satisfies the following requirements:

  1. The Government becomes immediately responsible and bound by the order if it is validly made and issued. (State of Bihar v. Sonabati Kumari, AIR 1961 SC 221)
     
  2. An order of a competent authority which is not expressed in the name of Governor does not create any right in favour or levy any obligation on the individual unless law provides the competent authority a separate power to issue such order. (Kedar Nath Bahl v. State of Punjab, AIR 1979 SC 220)
     
  3. To formally bind the Government and the public, the order shall be communicated to the person affected by it.(Bachhittar Singh v. State of Punjab, AIR 1963 SC 395, State of Punjab v. Sodhi Sukhdev Singh, AIR 1961 SC 493)


The order stands binding to the concerned authority when it has been communicated to the party affected. An authority is not bound by something that he scribbled on a piece of paper, it has to be issued through the procedure established, expressed under the name of governor (unless law provides for contrary) and finally shall be communicated to the person affected by the order.

Then the question remains. Does the scribbling on a piece of paper, conclusions arrived by the authority appearing in minutes of meeting, final orders that are yet not communicated to the affected party be considered as binding on sanctioning authority?
Scribbling, conclusions reflected under minutes of meetings, final orders yet not communicated to the affected parties, recordings under official correspondence etc. are instruments that suffers from procedural necessity to qualify as an order but they reflect application of mind by the sanctioning authority.

This instruments hold a conclusion arrived by an authority through application of mind on the basis of evidence furnished and facts presented. If the authority changes its conclusion on the basis of discussion, dialogue or consultation with bodies such as CVC, CBI etc. where the specified bodies didn't furnish new evidence or material change in material facts but only an opinion or an interpretation of existing facts and if the order reflects the conclusion that is different from which authority arrived at before such discussion, dialogue or consultation then the authority shall be bound by the conclusion that it arrived on before such consultation.

If the authorities are not bound by the conclusion they arrived at, the party affected would never be able to challenge the opinion of external bodies under whose influence the sanctioning authority changed its conclusion as they are considered acts before passing of order as well as it also makes it difficult for the parties to challenge order on non-application of sanctioning authority'smind as the affected party can only challenge it if the order suffers from non-application of mind.

The order may provide reasons and nexus between reasons and conclusion but that does not itself shall be considered a sufficiency for application of authority's mind, especially when it appears from the specified instrument that the authority arrived at a different conclusion then the conclusion reflected in order. The conclusion reflected in the order may have reason and nexus of reason and conclusion but it does not amount to his application of mind but rather application of mind of body other than the authorized one.

If such instruments are not held binding on the concerned authority then the authorities would have unbridled power to delegate or extend discretion to bodies to which legislators didn't intend to delegate or extend. This improper extension and delegation of power causes a wide spread difference of opinion to which the affected party would never have the opportunity to challenge. This has somehow become a loop hole which allows arbitrariness to be the basis of discretion and not the parameters established by law. This is of more danger in administrative exercise of discretion such as granting of sanction than quasi-judicial as in quasi-judicial exercise of discretion is bound by principles of natural justices. The affected party has the opportunity to participate in the process of formulating of conclusion that is going to affect him.

Indian jurisprudence has strictly adhered to the idea that the administrative authority finds its exercise of discretion in law and shall and can only exercise in situation provided under law and shall and can only exercise such discretion in the manner prescribed by law. The reason to such strict adherence is that, unlike quasi-judicial authorities, administrative authorities are not bound by Principles of natural justice.

Audi alteram Partern, nemojudex
in causasua and notice are the principles through which the affected party enters into process of adjudication. This allows the affected party pin point the acts where it appears that the authority is not applying its own mind but is acting under the opinion of some other body. Administrative authorities are immune to Principles ofnatural justice and that makes the exercise of discretion a process that is in accessible to party affected.

The opportunity to object only arises if it appears in the black latters of order that there is non-application of mind or else if there exist application of mind then it is presumed that the mind applied was of authority's and not of anyone else's. Presumption are mental exercise of society not under rule of law, a presumption if any under law shall have sufficient scope of challenging it or else the presumption becomes the hiding space for modern day monarchs.

End-Notes:

  1. State Bank of India v. D.C. Aggarwal, AIR 1993 SC 1197
  2. Prem Chandra v. Central Tax Officer, AIR 1958 SC 667
  3. Sirpur Paper Mills v. Commissioner of Wealth Tax, AIR 1970 SC
  4. Sirpur Paper Mills v. Commissioner of Wealth Tax, AIR 1970 SC
  5. Ram Singh v. KaziMohiuddin And Ors., AIR 1988 All 210
  6. Mr. V. Narayanaswamy v. Mr. C.P.Thirunavukkarasu, 4 (2002) 2 SCC 294
  7. Vol.I (4thEdn.)
  8. Wade & Forsyth, Administrative Law (2009) 269
  9. R v. Vestry of St. Pancras, (1890) 24 QBD 371
  10. State of Bihar v. P.P. Sharma, AIR 1991 SC 1260
  11. Cooper v. Wandsworth District Board of Works, (1863) 14 CBSN 180
  12. MansukhlalaVithaldasChauhan v. State of Gujarat, AIR 1997 SC 3400
  13. Union Of India v. Mohan LalCapoor& Others, 1974 SCR (1) 797

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