1981 (1) TMI 250 - SC - Indian Laws

Whether Sec. 18-AA excludes natural justice by necessary implication? Held that - Appeal allowed. Neither Sec. 18-F of the Industries (Development and Regulation) Act nor Sec. 21 of the General Clauses Act by itself excludes natural justice. The exclusion of natural justice where such exclusion is not express has to be implied by reference to the subject the statute and the statutory situation. Where an express provision in the statute itself provides for a post decisional hearing the other provisions of the statute will have to be read in the light of such provision and the provision for post decisional hearing may then clinch the issue where pre-decisional natural justice appears to be excluded on the other terms of the statute. That a post-decisional hearing may also be had by the terms of Sec. 21 of the General Clauses Act may not necessarily help in the interpretation of the provisions of the statute concerned. On the other hand even the general provision contained in Sec. 21 of the General Clauses Act may be sufficient to so interpret the terms of a given statute as to exclude natural justice. As I said it depends on the subject statute and the statutory situation. Therefore satisfied that the principles of natural justice are not attracted to the situations contemplated by Sec. 18-AA of the Industries (Development and Regulation) Act.

Summary

Issues Involved:
1. Applicability of natural justice principles before issuing a notified order under Section 18AA of the Industries (Development and Regulation) Act, 1951.
2. Whether the provisions of Section 18AA and/or Section 18F exclude the rules of natural justice relating to prior hearing.
3. Validity of the Government's order dated April 13, 1978, taking over the management of the industrial undertakings.

Detailed Analysis:

1. Applicability of Natural Justice Principles:
The primary issue was whether the principles of natural justice, specifically the audi alteram partem rule, should be observed before issuing a notified order under Section 18AA of the Industries (Development and Regulation) Act, 1951. The Court examined whether the statutory language or the necessity for immediate action impliedly excluded this principle.

Key Findings:
- The Court emphasized that natural justice is a flexible, adaptable concept that aims to ensure fair play in action.
- The phrase "immediate action" in Section 18AA(1)(a) should be construed in the context of the statute's marginal heading and the legislative intent, which indicates that it means "without prior investigation" under Section 15, rather than excluding natural justice altogether.
- The Court acknowledged that while extreme urgency might justify bypassing a full hearing, in most cases, a minimal but real hearing could be provided without delaying necessary action.

2. Exclusion of Natural Justice by Sections 18AA and 18F:
The Court considered whether the provisions of Section 18AA and Section 18F of the Act impliedly excluded the application of natural justice principles.

Key Findings:
- Section 18AA allows the Government to take immediate action without prior investigation if certain conditions are met, but it does not explicitly exclude the application of natural justice.
- Section 18F provides for a post-decisional hearing but does not offer a full right of appeal or review on the merits of the original decision, which is inadequate as a substitute for a pre-decisional hearing.
- The Court held that the statutory scheme did not unequivocally exclude the audi alteram partem rule at the pre-decisional stage.

3. Validity of the Government's Order Dated April 13, 1978:
The Court evaluated whether the Government's order taking over the management of the industrial undertakings was valid, considering the non-observance of natural justice principles.

Key Findings:
- The Court found that the Government had sufficient time between receiving the Official Group's Report and issuing the order to provide a minimal hearing to the Company.
- The failure to observe the audi alteram partem rule rendered the order invalid, as it violated the principles of natural justice.
- However, the Court refrained from quashing the order due to the commitment made by the Solicitor-General to provide a full and fair post-decisional hearing to the Company under Section 18F.

Conclusion:
The Supreme Court held that the principles of natural justice, specifically the audi alteram partem rule, were not universally excluded by Section 18AA of the Industries (Development and Regulation) Act, 1951. The Government was required to provide a minimal hearing to the affected party before taking over the management of the industrial undertakings. The Court directed the Central Government to give the Company a full, fair, and effective hearing within a reasonable time and to reconsider the impugned order based on this hearing. The appeals were disposed of accordingly, with no order as to costs.