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TMI Blog2006 (9) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... iven case, can be exasperating. We can neither be finical nor firm in this jurisdiction. No man shall be hit below the belt-that is the conscience of the matter were said in the light of issues as have arisen for consideration in the instant case. The impugned order and action of the respondents seeks to expand the requirement of compliance of principles of natural justice to exercise of purely administrative jurisdiction which results in no civil consequences. 2. By this writ petition, the petitioners assail the order and action of the respondents in requiring them to serve on the other side a copy of their application under section 399(4) seeking leave to maintain a petition under sections 397 and 398 of the Companies Act. The petitioners contend that they are not required to serve notice or grant hearing on such application to the company against whom the applicant is seeking permission to initiate such proceedings. 3. The petitioners are music companies carrying on business, inter alia, of producing, publishing and marketing music albums, cassettes and compact disks. 4. The Indian Performing Rights Society was incorporated on 23-8-1969 as a company limited by guarantees, hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct :Application under section 399(4) of the Companies Act, 1956 for Permission to file a Petition under sections 397 and 398 of the Act, in respect of the affairs of the Indian Performing Rights Society Limited. Sir, I am directed to refer to your application dated 10-1-2005 on the above subject and to request you to serve a copy of the petition on the subject Company at an early date under intimation to this Ministry. Thereafter, the matter will be processed further. Yours faithfully, Sd. (N.K. Vig) Under Secretary to the Government of India." 7. The petitioners contend that it has been indicated to their authorised representative that upon completion of service and pleading, there would be a full-fledged hearing of the application in order to determine whether the same should be granted or not. Aggrieved by this threatened action and the requirement of the respondents to serve a copy upon the society, the petitioners have filed the present writ petition. 8. Mr. Ashok Desai, learned senior counsel on behalf of the petitioners has submitted that section 399(4) of the Companies Act and rule 13 of the Companies (Central Government) General Rules and Forms, 1956 does not postu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be given to the other side under any statutory provision. 10. It was lastly urged that so far as several comparable statutory provisions which inter alia, include, section 92 of the Code of Civil Procedure; section 10 of the Industrial Disputes Act, 1947; section 197 of the Code of Criminal Procedure etc., where the authorities have been vested with powers similar to those under section 399(4) are concerned, it has been repeatedly held that no prior hearing has to be given to persons who are likely to be affected by the proceedings which are to be instituted if the prohibition is removed under section 399(4) of the Companies Act, 1956. 11. In support of its contention, the petitioners have also relied heavily on the pronouncement of a Single Judge of this Court in Sri Krishna Tiles & Potteries (Madras) (P.) Ltd. v. Company Law Board 1978 (48) Comp. Cas. 728 which was upheld by the Division Bench in the judgment in Sri Krishna Tiles & Potteries (Mad.) (P.) Ltd. v. Company Law Board 1979 (49) Comp. Cas. 409. 12. On the other hand, Mr. Rajiv Shakdhar, learned counsel appearing for the respondents has opposed the writ petition on the ground that the judicial pronouncements notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r) in a manner oppressive to any member or members (including any one or more of themselves) may apply to the (Tribunal) for an order under this section, provided such members have a right so to apply in virtue of section 399. (2) If, on any application under sub-section (1), the Court is of opinion- (a)that the company's affairs (are being conducted in a manner prejudicial to public interest or) in a manner oppressive to any member or members: and (b)that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up; the (Tribunal) may, with a view to bringing to an end the matters complained of, making such order as it thinks fit. 398. Application to (Tribunal) for relief in cases of mismanagement.-(1) Any members of a company who complaint- (a)that the affairs of the company (are being conducted in a manner prejudicial to public; interest or) in a manner prejudicial to the interests of the company; or (b)that a material change (not being a change brought about by, or in the interests of, any creditors includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which make it just and equitable so to do, authorise any member or members of the company to apply to the (Tribunal) under section 397 or 398, notwithstanding that the requirements of clause (a) or clause (b) as the case may be, of sub-section (1) are not fulfilled. (5) The Central Government may, before authorizing any member or members as aforesaid, require such member or members to give security for such amount as the Central Government may deem reasonable, for the payment of any costs which the (Tribunal) dealing with the application may order such member or members to pay to any other person or persons who are parties to the application." 16. Prior to the amendment being effected by Act 31 of 1988, the power to adjudicate on proceedings under section 397 was vested in the Court. Subsequently, by virtue of section 44 of the Companies (Second Amendment) Act, 2003, 'Court' was substituted by the 'Company Law Board' which is empowered to undertake proceedings under sections 397 and 398 of the Companies Act, 1956. 17. Examination of the statutory scheme shows that the Companies Act, 1956 vests executive of administrative powers in the Central Government as also quasi-judicial po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etion. It is statutorily mandated that it would have the powers vested in a Civil Court for the purposes stated in sub-section (4C) and shall be deemed to be a Civil Court for the specific purposes noted under sub-section (4D). 20. So far as proceedings in respect of complaints under sections 397 and 398 of the Companies Act, 1956 are concerned, section 399 enables a section of the members to bring a complaint thereunder provided they satisfy the conditions laid down in sub-sections (1), (2) and (3) thereunder. Sub-section (4) of section 399 enables any member or members to apply to the Company Law Board under sections 397 and 398 even if they do not satisfy the requirements of clause (a) or (b) of sub-section (1), if they are able to satisfy the Central Government that circumstances exist which make it just and equitable to authorise such member to so apply. 21. The powers of the Company Law Board on receipt of an application under section 397 or 398 of the Companies Act, 1956 have been delegated under section 402. Perusal of the statutory scheme shows that the Board is empowered to make any interim order which it thinks fit for regulating the conduct of the company's affairs up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of satisfying itself as to the truth of the allegations made in the application; or (b)for ascertaining any information which, in the opinion of the Central Government, is necessary for the purpose of enabling it to pass orders on the application." 23. The statutory rules clearly provide the manner in which the Central Government would function in consideration of the application under section 399(4). The applicants can be required to produce documentary evidence as considered necessary to enable the Central Government to form an opinion as to whether circumstances exist which would make it just and equitable to give the authorisation which has been sought. The manner in which the application is to be made and the contents thereof are clearly delineated. Sub-rule (5) of Rule 13 provides the nature of enquiry which the Central Government may conduct and requires production of evidence only by the applicant. 24. Having regard to the statutory scheme, more specifically, the provisions of sections 397, 398 and 399 of the Companies Act, 1956 coupled with the specific provisions of Rule 13 noticed hereinabove, it is therefore noteworthy that diverse functions are to be performed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sive manner. Other circumstances have been set out in section 237(b). 29. Under section 237 of the Companies Act, the Central Government, inter alia thus may appoint inspectors to investigate the prayers of the company, if, in its opinion, there are circumstances suggesting that the business of the company is being conducted with intend to defraud its creditors, members or other persons etc. Undoubtedly the same is as serious a matter as an application under section 397 or section 398 of the Companies Act, 1956. The expression 'in the opinion of' used in clause (b) of section 237 are similar to the words used in sub-section (4) of section 399 of the Companies Act, 1956. It is a basic principle of statutory interpretation that the words used in the enactment in its various provisions have to be construed as having been used in the same sense at all places where they occur unless the Legislature has specifically otherwise so provided or the context justifies any other interpretation. 30. It is equally well-settled that observations made in a judicial precedent with reference to one statute cannot be applied with reference to the provisions of another statute which is not in pari ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds and was beyond the scope of the statute. Thereby, the Apex Court recognised the permissibility of the scrutiny by a Court as to existence of some circumstances within limited parameters and not as to the sufficiency thereof. 32. The same expression also arose for consideration before the Apex Court in Rohtas Industries Ltd. v. S.D. Agarwal AIR 1969 SC 707, wherein the Court was also considering the scope of judicial scrutiny into the opinion formed by the Government under section 237 of the Companies Act. After detailed consideration of the judicial dicta, the Court reconciled the law laid down in various decisions. The court noticed that the subject-matter of a legislation has an important bearing on the interpretation of a provision. It is well-settled that when something is to be done which is within the discretion of the authorities, then that something is to be done according to the rules of reason and justice and not according to private opinion. Discretion necessarily implies good faith in discharging a public duty. There is always a perception within which a statute is intended to operate. It is to be done according to law and is to be legal and regular and not arbit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant or applicants to give security for the payment of any costs which the Court dealing with the application may order, such member or members to pay to any other person or persons who are party to that application. This is adequate protection for preventing frivolous application being moved or if moved, then from being granted; (iii)Rule 13 above noticed provides sufficient safeguards. The application of the member/members has to be accompanied by documentary evidence in support of the statements made in the application. The application is required to be signed and verified by an affidavit and the Central Government may, before passing orders thereon, require the applicant(s) or all or one or more of them to produce further documentary or other evidence considered necessary for satisfying itself as to the truth of the allegations made by the applicant; (iv)the Central Government, upon a report being made to it by a member or members, is empowered to itself move an application under section 397 or 398 by virtue of the provisions of section 401. This being the position, there is no legal basis as to why the company has to be heard prior to grant of an authorisation contemplate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hirdly, the nature of the right or interest of the company to be heard before the decision was taken by the Government or the Board under section 399(4). The Division Bench rejected all contentions raised on behalf of the company on a consideration of the relevant provisions of the Act and the rules and even on first principles. 36. It is noteworthy that at the relevant point of time when the aforesaid judgments came to be pronounced, the statute contained section 10A to section 10D in the Companies Act, 1956 wherein further powers and functions of the Government were envisaged. So far as the present case is concerned, the amendment to the statute has made no material difference to the state of position as was before the Court in Sri Krishna Tiles and Potteries (Mad.) (P.) Ltd.'s case (supra) and now. There is no change in the provisions of section 399(4) of the Companies Act, 1956. The only difference which has come into effect is that whereas earlier the petition under sections 397 and 398 had to be filed before the Company Court, however by virtue of statutory amendment, the same now has to be brought before the Company Law Board. Otherwise the principles laid down by the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m being sued. Immunity of persons who could not fairly be sued has been whittled down. For instance, even a sovereign can be sued in respect of non-sovereign functions discharged by him or by a foreign government. (iv)There are no parties while considering of the application under section 399(4) and there is no lis in these proceedings. (v)In fact, it is well-settled that no hearing is given to a person in a preliminary inquiry which is to lead to a regular inquiry or action against such a person during which a full hearing would be available to him. The Bench noticed that this conclusion was arrived at by a Division Bench of this Court and placed upon G.S. Harmal v. Union of India ILR [1971] 2 Delhi 129 wherein reliance was upon Amalendu Ghosh v. District Traffic Superintendent, North Eastern Railway AIR 1960 SC 992; Champaklal Chimanlal Shah v. Union of India AIR 1964 SC 1854; State of U.P. v. Akbar Ali Khan AIR 1966 SC 1842 and Parry Jones v. Law Society (1968) 2 WLR 397 (CA). 38. Placing reliance on Raja Narain Lal Bansi Lal v. Manik Feroz Mistri AIR 1961 SC 29, the Division Bench in Sri Krishna Tiles and Potteries (Mad.) (P.) Ltd.'s case (supra) also noticed that the Apex C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lature has recognised more and more that immunity to protection from judicial scrutiny of the responsibility and actions of a person or body has to be restricted. Such examination would certainly facilitate an understanding of the permissible limits of judicial review when discretion is conferred by legislative exercise on various authorities. In this behalf, an examination of the provisions of sections 92 and 86 of the Code of Civil Procedure and sections 195 and 197 of the Code of Criminal Procedure which envisage authorisation or permission or sanctions to sue or prosecute would be of some relevance. It has been repeatedly held that the authorities who are to give the sanction, authorisation or permission are acting in administrative capacities and not in quasi-judicial capacity. In a Full Bench decision of the Kerala High Court in Mayer Simon v. Advocate General of Kerala AIR 1975 Ker. 57, the Court held that no civil rights of the applicant are affected nor can anyone said to be prejudicially affected by a grant or refusal of consent under section 92(1) of the Code of Civil Procedure. Under section 92 of the Code, consent of the Advocate General is necessary to file a suit in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al injury at times : preventing the taking of a step in aid of vindicating a right and this can cause injury for section 92(2) bars any action for the reliefs mentioned in section 92(1). Nor are we able with equal respect to agree with the decision in AIR 1962 Ker. 90 (FB). The support sought to be derived for the conclusion arrived at in that decision from the decision in State of Madras v. C.P. Sarathy AIR 1953 SC 53 is no more available. The Supreme Court in Rohtas Industries Ltd. v. S.D. Agarwal AIR 1969 SC 707 has explained that decision. The Court said that the decision in AIR 1953 SC 53 'cannot be considered as an authority for the proposition that whenever a provision of law confers certain power on an authority on its forming a certain opinion on the basis of certain facts, the Courts are precluded from examining whether the relevant facts on the basis of which the opinion is said to have been formed were in fact existed.' And the rejection of the argument of Counsel that even treating the order as an administrative one, it is amenable to be corrected in proceedings under Article 226 of the Constitution on the ground that the Advocate-General decides nothing, does not, wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the parameters of administrative law governing the judicial review of administrative action are well-settled. Such power to review administrative action shall be undertaken when the exercise of power is shown to have been vitiated by mala fides or is found to be a clear case of colourable exercise of/or abuse of power or what is sometimes called fraud power i.e., where the power is exercised for achieving an oblique end. The truth of correctness or the adequacy of the material available before the authority exercising the power cannot be revalued or weighed by the Court while exercising power of judicial review. Even if some of the material, on which the action is taken is found to be irrelevant, the Court would still not interfere so long as there is some relevant material available on which the action can be sustained. The Court would presume the validity of the exercise of power but shall not hesitate to interfere if the invalidity or unconstitutionality is clearly demonstrated. If two views are possible, the Court shall not interfere by substituting its own satisfaction or opinion for the satisfaction or opinion of the authority exercising the power. It is well-settled t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be passed by the Government on forming the opinion that it was in public interest to retire the Government servant. The order was passed on the subjective satisfaction of the Government. The Court held that therefore principles of natural justice would have no place in the context of the order of compulsory retirement. Judicial scrutiny would not be excluded altogether. The Court can interfere if it was satisfied that the order was passed mala fide or that it was based on no evidence or was arbitrary in the sense that no reasonable person would form the requisite opinion on the given material; in short, if it was found to be a perverse order. The Court held that the nature of the notification of the Government was not quasi-judicial in nature and because action had to be taken on the subjective satisfaction of the Government, there was no room, for importing the facet of natural justice in such a case, more particularly when the order was not a punishment and did not involve stigma. 44. Similar questions have arisen for consideration in respect of the scope of power of the appropriate Government under section 17(4) of the Land Acquisition Act. Under section 17(4) of the Land Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not warrant initiation of proceedings. However, if the grounds are relevant and have a nexus with the formation of the belief, then the authority would be clothed with the jurisdiction to take action under the statutory provisions. [Re: CST v. Bhagwan Industries (P.) Ltd. AIR 1973 SC 370]. The expression 'reasons to believe' means that even though the formation of the opinion may be subjective, it must be based on material on the record. There is thus a check on the exercise of peremptory powers. [Re: N. Nagendra Rao & Co. v. State of A.P. AIR 1994 SC 2663]. Therefore, sufficiency of reasons is not a justiciable issue but existence of reasons is. These principles would guide examination of a challenge to the exercise of discretion and formation of opinion by an authority as well. 46. In the opinion of signifies the subjective opinion of the Government and not an opinion subject to objective tests. In Hubli Electricity Co. Ltd. v. Province of Bombay AIR 1949 PC 136, the Court was required to consider the opinion of the Government under section 4(1)(a) of the Electricity Act, 1910. It was observed that there was nothing in the language of the sub-section or in the subject-matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the pronouncement of the Apex Court in Dr. (Miss) Binapani Dei's case (supra) was concerned, the case related to an inquiry conducted by the Government of Orissa on the issue relating to the correctness of the date of birth of the respondent who was employed with it. The State of Orissa conducted the enquiry but the report of the enquiry was not made available to the respondent and an order of compulsory retirement based on such enquiry was passed. This order of compulsory retirement was challenged by the petitioner on the ground that the same was arbitrary and mala fide and violative of the principles of natural justice inasmuch as the order of retirement amounted to a punishment involving consequences such as loss of pay, status and deprivation of service. It was in these circumstances held by the Apex Court that the decision of the State could be based upon the result of an enquiry which is conducted in a manner consonant with the basic concept of justice. As per the Apex Court, an order by the State to the prejudice of a person in derogation of his vested rights may be made only in accordance with the basic rules of justice and fair play. The deciding authority, it is true, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing gradually obliterated. So far as the submission that the selection was in violation of rules of natural justice was concerned, the Court held thus : "20. The aim of the rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. In other words they do not supplant the law of the land but supplement it. 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 : (1) no one shall be a Judge in his own case (Nemo debet esse judex propria causa) and (2) no decision shall 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 or unreasonably. But in the course of years many more subsidiary rules came to be added to the rules of natural justice. Till very recently it was the opinion of the Courts that unless the authority concerned was required by the law under which it functioned to act j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable opportunity the Court will decline to be punctilious or fanatical as if the rules of natural justice sacred scriptures. 54. The petitioner before this Court has approached this Court at the stage when the Government of India vide a communication dated 19-1-2005 has required it to serve a copy of the petition on the special company and it stated that the matter would be processed thereafter. The petitioner has contended that it was informed that the Government would follow principles of natural justice in deciding upon the application filed by them under section 399(4) of the Companies Act, 1956. 55. Before this Court, Mr. Shakdhar, learned counsel for the respondent has submitted that in the light of the Supreme Court in Dr. Binapani's case (supra) and A.K. Kraipak's case (supra), the requirement to comply with the principles of natural justice is essential. The principles governing requirement of compliance of principles of natural justice in administra- tive action and judicial function have fallen for consideration in several later judgments of the Apex Court and now are well-settled. The Apex Court has clearly delineated the exceptions to the requirement of excepti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... list. 58. This issue has been elaborated in later judgments wherein the Courts have been called upon to consider as to what would constitute adequate opportunity to represent against impugned action. 59. In Union of India v. G.R. Prabhavalkar AIR 1973 SC 2102, the Apex Court held that it is not implicit in every decision that there is an obligation on the authority to give personal hearing to the officers concerned in the matter. Principles of natural justice cannot be put in any straitjacket. Their applicability depends upon the context and the facts and circumstances of each case, the objective being to ensure a fair hearing and a fair deal to a person whose rights are going to be affected. In Ganesh Santa Ram Sirur v. State Bank of India AIR 2005 SC 314, the Court cited with approval the principles laid down in ECIL v. B. Karunakar AIR 1994 SC 1074, which approach and test should govern all cases where the complaint is not that there was no notice, no opportunity and no hearing but one of not affording a proper hearing, that is adequate or a full hearing or violation of a procedural rules or requirement governing the enquiry. As back as in Union of India v. Col. J.N. Sinha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration before the Courts. In James Edward Jeffs v. New Zealand Dairy Production & Marketing Board [1966] 3 All ER 863, the Court made observations of a general nature indicating circumstances when evidence could be recorded and submissions of the parties heard by a person other than the decision making authority. 65. In Chandra Bhavan Boarding & Lodging v. State of Mysore AIR 1970 SC 2042, the Supreme Court found that the procedure adopted by the Government in fixing the minimum wage under section 5(1) of the Minimum Wages Act, 1948 was not vitiated merely on the ground that the Government had failed to constitute a committee under section 5(1)(a) of the Statute. In this case, the Court found that reasonable opportunity had been given to all the concerned parties to read their case before the Government made the impugned order. 66. In K.L. Tripathi v. State Bank of India [1984] 1 SCC 43/AIR 1984 SC 273, the petitioner complained of prejudice to the principles of natural justice on the ground that he was not given an opportunity to rebut the material gathered in his absence. In this case, the Supreme Court held that no real prejudice had been suffered by the complainant in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh any appellate decision, unlike restitution in the case of a money decree where interest etc. may adequately compensate or cause restitution of the loss suffered. 70. In this behalf, Sir William Wade in his classic treatise "Administrative Law" 5th edition observed at page 487 "in principle there ought to be an observance of natural justice equally at both stages". It was so observed because the erudite author observed that "if natural justice is violated at the first stage, the right of appeal is no so much a true right of appeal as a corrected initial hearing : instead of fair trial followed by appeal, the procedure is reduced to unfair trial followed by fair trial. Such a view was taken by Megarry, J. in Leary v. National Union of Vehicle Builders [1971] Ch 34, 49, wherein it was held by the learned Judge that an unfair trial, though not resulting in the valid expulsion would nevertheless have the effect of depriving the member of his right of appeal when a valid decision to expel him is subsequently made. Therefore, it appears that it is the impact and consequences of the initial order as soon as it is passed which would require to be considered to decide as to whether a b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e be bound to give a person who is affected by their decision, an opportunity of making representation. But all depends on whether he has some right or interest or some legitimate expectation of which it would not be fair to deprive him. Similarly, the Privy Council's decision in Alfred Thangarajah Jaurayappah v. W.J. Fernado has also been referred to show that there are three matters which should always be borne in mind while considering whether the principle audi alteram partem should be complied with or not. First, what is the nature of property, the office held, the status enjoyed or services to be performed by the complainant of injustice. Secondly, in what circumstances or upon what occasions is the person claiming to be entitled to exercise the measure of control entitled to intervene. Thirdly, when the right to intervene is proved, what sanctions in fact is the latter entitled to impose upon the other. It is only upon a consideration of all these matters that the question of the application of the principle can properly be determined. (14) However, in S.L. Kapoor v. Jagmohan (AIR 1981 SC 136) this Court has also observed as under (para 24) : 'In our view the principles of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince the prescribed qualifications had not been satisfied, the appointment and training was per se illegal and therefore, the Tribunal was not right in directing their reinstatement. Shrawan Kumar case was distinguished on the ground that they were not disqualified to be appointed but they had not undergone the training and the appointment was set aside on the ground of want of training. The Court has drawn a distinction between the initial disqualification for appointment and irregularity in the appointment and subsequent training for application of the principle of natural justice. (17) In M.C. Mehta v. Union of India (AIR 1999 SC 2583) this Court has laid down that there can be a certain situation in which an order passed in violation of natural justice need not be set aside under Article 226 of the Constitution. For example, where no prejudice is caused to the person concerned, interference under Article 226 is not necessary. (18) In Aligarh Muslim University v. Mansoor Ali Khan (AIR 2000 SC 2783) this Court considered the question whether on the facts of the case the employee can invoke the principle of natural justice and whether it is a case where even if notice has been g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effected under the Industrial Disputes Act, the question of complying with the principles of natural justice would not arise. The principles of natural justice would be attracted only when the services of some persons are terminated by way of a punitive measure or thereby a stigma is attached. Applying this principle, it could very well be seen that discontinuation of the service of the appellants in the present case was not as a punitive measure but they were discontinued for the reason that they were not qualified and did not possess the requisite qualifications for appointment." Upon consideration of the case of the petitioners, it was held that no prejudice had been caused by the appellants in similar circumstances by not serving notice for the date of hearing before the order of cancellation of appointment was made in this case. 73. It would also be useful to notice the observations of the Apex Court wherein the Court was called upon to consider the question as to whether the failure to observe the principles of natural justice would mandate issuance of a writ in every case. In this behalf, in S.L. Kapoor v. Jagmohan [1980] 4 SCC 379 : AIR 1981 SC 136, the Court held thus :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not defined but in the context it means no more than the process of collection of evidence or the gathering of material. It is not necessary that it should commence with the communication of an accusation to the person whose affairs are to be investigated. That may follow later." We do not think that it is permissible to interpret any statutory instrument so as to exclude natural justice, unless the language of the instrument leaves no option to the Court. Procedural fairness embodying natural justice is to be implied whenever action is taken affecting the rights of parties. It may be that the opportunity to be heard may not be pre-decisional: It may necessarily have to be post-decisional where the danger to be aerated or the act to be prevented is imminent or where the action to be taken can brook no delay, if an area is devastated by flood, one cannot wait to issue show-cause notices for requisitioning vehicles to evacuate population. If there is an outbreak of an epidemic, we presume one does not have to issue show-cause notices to requisition beds in hospitals, public or private. In such situations, it may be enough to issue post-decisional notices providing for an opportunit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inguished the observations of Megarry, J. in John v. Rees [1969] 2 All ER 274 to point out the difference between suspension which is inflicted by way of punishment, as for instance when a member of the Bar is suspended from practice for six months when principles of audi alteram partem would mandatorily apply. But they would not apply to suspensions made pending enquiries as for irregularities allegedly done by an employee in a Government department or in a business house. In the later case, the suspension is effected only by way of good administration. The Apex Court also considered the decision rendered by the High Court of Australia (Dixon, C. J. and Webb, J.) in the Tanos' case (supra). The Court was considering the question whether an ex parte order of closure of a Disorderly House may be made. It was held that it is in a broad sense a procedural matter and while the general principle must prevail, it is apparent that exceptional cases may be imagined in which because of some special hazard or cause of urgency an immediate declaration is demanded. 77. Upon noticing the principles laid down in the aforenoticed cases, the Apex Court in Liberty Oil Mills' case (supra) held thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IR 1974 SC 2249), and the recent cases of Shalini Soni v. Union of India MANU/SC/0227/1980 : (AIR 1981 SC 431), and CIT v. Mahindra and Mahindra Ltd. MANU/SC/0181/1983 : (AIR 1984 SC 1182) and we have considered all of them in arriving at our conclusion." 78. A question arose before the Apex Court as to whether the power exercised by the Chief Justice of India or by the Chief Justice of the High Court under section 11(6) of the Arbitration & Conciliation Act, 1996 is a judicial power or exercise of merely administrative power. The reasons and findings of the Apex Court in this case have material bearing on the questions raised before this Court as well. In the Constitution Bench pronouncement in SBP & Co. v. Patel Engineering Ltd. [2005] 8 SCC 618, it was held that the Chief Justice or his designate while functioning under section 11(6) of the Arbitration & Conciliation Act, 1996 is bound to decide whether he has jurisdiction; decide also on the validity of an arbitration agreement; whether the person requesting the arbitration is a party to the arbitration agreement; whether there is a live claim/dispute subsisting capable of being arbitrated upon and other such like issues. Hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d down by the section for the exercise of that power or the performance of that duty exist. Therefore, unaided by authorities and going by general principles, it appears to us that while functioning under section 11(6) of the Act, a Chief Justice or the person or institution designated by him, is bound to decide whether he has jurisdiction, whether there is an arbitration agreement, whether the applicant before him is a party, whether the conditions for exercise of the power have been fulfilled, and if an arbitrator is to be appointed, who is the fit person, in terms of the provision. Section 11(7) makes his decision on the matters entrusted to him, final. 10. The very scheme, if it involves an adjudicatory process, restricts the power of the Chief Justice to designate, by excluding the designation of a non-judicial institution or a non-judicial authority to perform the functions. For, under our dispensation, no judicial or quasi-judicial decision can be rendered by an institution if it is not a judicial authority, Court or a quasi-judicial Tribunal. This aspect is dealt with later while dealing with the right to designate under section 11(6) and the scope of that designation. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Justice is merely exercising an administrative function when called upon to appoint an arbitrator and that he need not even issue notice to the opposite side before appointing an arbitrator. 37. It is fundamental to our procedural jurisprudence, that the right of no person shall be affected without he being heard. This necessarily imposes an obligation on the Chief Justice to issue notice to the opposite party when he is moved under section 11 of the Act. The notice to the opposite party cannot be considered to be merely an intimation to that party of the filing of the arbitration application and the passing of an administrative order appointing an arbitrator or an Arbitral Tribunal. It is really the giving of an opportunity of being heard. There have been cases where claims for appointment of an arbitrator based on an arbitration agreement are made ten or twenty years after the period of the contract has come to an end. There have been cases where the appointment of an arbitrator has been sought, after the parties had settled the accounts and the party concerned had certified that he had no further claims against the other contracting party. In other words, there have been cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which they appear. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes, their words are not to be interpreted as statutes. In London Graving Dock Co. Ltd. v. Horton (1951 AC 737 at p. 761), Lord Mac Dermot observed :- 'The matter cannot, of course, be settled merely by treating the ipsissima verira of Willes, J. as though they were part of an Act of Parliament and applying the rules of interpretation appropriate thereto. This is not to detract, from the great weight to be given to the language actually used by that most distinguished judge.' In Home Office v. Dorset Yacht Co. [1970 (2) All ER 294] Lord Reid said, "Lord Atkin's speech.........is not to be treated as if it was a statute definition. It will require qualification in new circumstances". Megarry, J. in (1971) 1 WLR 1062 observed : 'One must not, of course, construe even a reserved judgment of even Russell L. J. as if it were an Act of Parl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s case (supra) has to be rejected. It was already been noticed hereinabove that while granting the permission under section 399(4), the Central Government merely removes the prohibition which would obstruct an opportunity to the members of a company from making a complaint against the company with regard to matters set out in sections 397 and 398 of the Companies Act, 1956. There is no adjudication on the merits of the case or of the dispute. So far as the jurisdiction of the Government under section 399 is concerned, there is no finality to its order. This is also no adjudication nor is there any binding decision affecting rights of any party rendered by the Government on the matters raised by the petitioner seeking leave to agitate the matter before the Company Law Board. Therefore, it cannot at all be contended that the rights of the other side are in any manner impinged or affected. The adjudication has to be undertaken by the Company Law Board which issues notices to the other side and grants full opportunity to it to place its defence and its side of the case before a decision affecting rights of the parties is taken. The company would have the right of being heard before ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the management of the company that no observations on merits should be made by the Government at that stage. 84. I am in respectful agreement with the reasoning given by the learned Single Judge in Sri Krishna Tiles & Potteries (Madras) (P.) Ltd.'s case (supra) and I am bound by the authoritative pronouncement by the Division Bench in the appeal which was filed assailing the judgment of the learned Single Judge. As noticed hereinabove, there is nothing which affects the reasoning or the principles of law laid down by the Bench in Sri Krishna Tiles & Potteries (Madras.) (P.) Ltd.'s case (supra) which could make any material difference to the conclusions which I have arrived at. In the light of the detailed discussion herein above, I have no hesitation in rejecting the submission on behalf of the respondent that the judgments of the Division Bench and the Single Bench are per incuriam for the reason that they have ignored the law laid down by the Apex Court in A.K. Kraipak's case (supra) on in Dr. Binapani's case (supra). 85. The petitioners have further placed before this Court that apprehending interpolation in the lists of members and other actions which would have impacted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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