Principles of Natural Justice*
Justice Smt. Sujata V. Manohar, Supreme Court of India (Retd.)
The learned Judge has made a succinct analysis of the basic and fundamental principles of natural justice
Those of you who have practiced as lawyers must have come across the concept of natural justice. Of course, the laws of nature are designed to promote survival rather than justice. Nature is governed by principles such as the survival of the fittest and prevalence of might over right. When a herd leaves its weak members behind there is no question of the weak being supported or protected. Therefore, ‘natural’ justice is not justice found in nature; it is a compendium of concepts which must be naturally associated with justice, whether these concepts are incorporated in law or not. Justice is a great civilizing force. It ensures that the rule of law rather than the rules of nature prevail in regulating human conduct.
The principles of natural justice have evolved under common law as a check on the arbitrary exercise of power by the State. As the State powers have increased, taking within their ambit not just the power of governance but also activities in areas such as commerce, industry, communications and the like, it has become increasingly necessary to ensure that these powers are exercised in a just and fair manner. The common law, which is a body of unwritten laws which govern the legal systems of England, USA, Canada, Australia and other commonwealth countries including India, has responded to this need to control the exercise of State powers through applying the principles of natural justice to the exercise of such powers.
There is only one more principle that has slowly taken root as a part of natural justice. This is the principle that every decision must contain reasons for the decision. Reasons may be elaborate or may be brief. But these are beginning to be considered necessary to ensure fair decision making.
What exactly are these principles? Basically, these are principles which are necessary for a just and fair decision making. These principles are often embedded in the rules of procedure which govern the judiciary. For example, the Civil Procedure Code prescribes a detailed procedure under which the Defendant has the right to reply to the Plaint; both sides have the right to inspect the documents relied upon by the other side and both sides have the right to cross-examine one another’s witnesses. The judgment must give reasons for the decision.
In the case however, of quasi-judicial or administrative Tribunals or bodies, the common law has laid down some basic principles which such bodies must follow. If there is any substantial departure from these principles of natural justice, the decision can be challenged and set aside through the judicial process. One of the well known enunciations of the principles of natural justice is in the case of Ridge vs. Baldwin (1963) 2 AER 66 (HL). In that case Lord Hudson observed:
“No one, I think, disputes that three features of natural justice stand out.
(i) The right to be heard by an unbiased Tribunal,
(ii) The right to have notice of charges of misconduct,
(iii) The right to be heard in answer to that charge.”
Thus decisions of quasi-judicial bodies became open to scrutiny to ensure that these rights are not violated. This was in sharp contrast to the old traditional dictum to the effect that King can do no wrong. Officers of the King became subject to judicial scrutiny when they delivered quasi-judicial decisions. For a long time considerable judicial effort was spent on making a distinction between quasi-judicial bodies and administrative bodies because it was held for a long time that administrative decisions were not subject to such scrutiny. Indian judiciary was the first to do away with the distinction between administrative decisions and quasi-judicial decisions, realizing that the line between administrative decisions and quasi judicial decisions was very thin. It also shows how administrative law has evolved from case to case as a response to the need to have a check over arbitrary exercise of power. In the famous case of A.K. Kripak vs. Union of India AIR 1970 SC 150 the Supreme Court held that administrative decisions were also subject to judicial scrutiny and could be tested on the anvil of natural justice. In the case of Kripak, the acting Chief Conservator of Forest was a part of the Selection Committee along with the Members of the Union Public Service Commission to select a permanent incumbent to the post of Chief Conservator. He was also one of the candidates for the post. When his file was scrutinized he excused himself from the Selection Committee saying that he cannot be a party to a decision which would affect him. He, however, remained on the Selection Committee which looked at the files of other candidates. The acting Chief Conservator of Forests was selected by this Committee for the post of Chief Conservator. The Supreme Court came down heavily against this decision calling it contrary to the principles of natural justice. The Court also held that it would no more accept in this country any distinction between administrative decision making and quasi-judicial decision making.
Other countries have slowly come around to the same view. In another classic decision in the case of Maneka Gandhi vs. Union of India (1978)1 SCC 248 the Supreme Court discussed in detail the various aspects of the rule of natural justice. Basically there are two norms which a decision-making body must follow. Both are expressed in Latin maxims but are in essence very simple principles; audi alteram partem which means that the person concerned must be heard before a decision is taken; and the second principle is nemo judex in causa sua which means a person will not judge a case in which he is himself interested. Recently a third principle has also been added which is in plain English because it is a more recent development. It says that the decision must give reasons.
Unless the laws are fair and are fairly implemented, there cannot be justice in the true sense. Secondly, procedural safeguards do not necessarily ensure a fair outcome. Procedural lapses may result in upsetting even good decisions against individuals who may be guilty of a breach of law.
There are several refinements or facets to these principles which have evolved as a result of extensive case law dealing with an amazing variety of circumstances. Many of these refinements or variations have evolved in cases dealing with service matters – selection of candidates, disciplinary enquiries, dismissal or discharge of employees and so on. Other decisions have dealt with granting of licences or permissions by public authorities, allotment of petrol pumps and the like. I must make it clear that these principles do not apply to legislative decision-making although it may affect the rights of citizens. Legislatures do not have to hear the persons whose rights are affected. This is under a belief that different view points are represented by the legislators in Parliament since the legislators represent the people. There are, however, areas where the power of legislation is delegated to subordinate authorities, usually to the executive. Is it necessary to hear the persons affected before such subordinate legislation is framed? This is a grey area where any clear judicial authority is absent.
Let us therefore come back to the decision-making process of quasi-judicial and administrative bodies. Natural Justice requires that the person who is likely to be affected by the decision must be heard before a decision is given. The hearing may be oral or it can be through a written representation. This, in turn entails that such a person must be informed about the nature of the enquiry and if any charges have been framed against him, of the charges. There are many income tax cases where it has been said that the documents on which the Department relies must be disclosed to the other party. What is more, the Department should disclose to the other parties not just the documents on which it relies but all relevant documents on which it may be able to rely. So from the right to be heard, one travels to the right to disclosure of documents because without such documents a proper representation cannot be made.
Then, one comes to the right of cross examination. If one is relying on a document of a third party, an opportunity should be given to cross examine the third party. The right of cross examination may not be absolute or available in all circumstances. In fact principles of natural justice cannot be put in a straitjacket. These will have to be applied depending upon the facts and circumstances of the case. The right of cross examination can be more readily inferred in the case of a formal enquiry. But when the enquiry is informal and is conducted in the presence of all concerned, a formal right of cross examination may not be inferred. The judicial trend appears to be towards expanding the application of principles of natural justice to cover the right of cross examination. However, there have been cases where the Court has declined to infer such a right. In a case where the inmates of a girl’s hostel had complained to the Principal about misbehaviour and molestation by boys of the adjoining hostel, the Court accepted the plea that the request of the boys to cross examine the girls could not be granted in public interest.
Does the right to be heard imply the right to engage a lawyer who will represent the concerned person? The case law has clearly laid down that there is no right to engage a lawyer in a Departmental enquiry unless the other side is represented by a lawyer. In a matter involving complex legal issues, the Tribunal may permit both sides to engage lawyers. But this is not normally done.
There are also exceptions to the doctrine of audi alteram partem. In a case of urgency, action can be taken without a hearing. For example, if a smuggler is about to abscond to another country, his passport can be seized without waiting for a hearing. Therefore, in an emergency, if you have to do something so quickly that the very mischief sought to be averted will take place unless the principles of natural justice are waived, such waiver is permissible. Even here, the Courts have introduced the principle of a post-decisional hearing so that the person against whom the order is passed gets a right to make a representation to have the decision revoked or altered. In the Maneka Gandhi case, where the passport was cancelled, the Supreme Court ultimately sustained the cancellation subject to a post decisional hearing being given.
There are also other cases where the decision may be upheld although no hearing has been given. For example, if the conclusion which is arrived at is obvious and no amount of hearing could have made any difference to the decision, the decision will not be invalidated because a hearing is not given. In another case, where pursuant to the Supreme Court’s order the status quo ante was restored without giving a hearing to the party who had benefited in the meanwhile, the Court refused to set aside the action although no hearing had been given to the benefited party.
Article 311 (2)(b) of the Constitution has also expressly permitted a departure from holding an enquiry in cases where it is not reasonably practical in public interest to hold an enuiry. However, in such cases, reasons for the decision have to be given in writing.
Another test which has been laid down for departure from the principles of natural justice is where violation of the facets of the principles of natural justice has not caused any prejudice. These are usually cases where the party aggrieved contends that an adequate opportunity was not given for a hearing. The Court in such circumstances must ascertain whether the aggrieved person did get a fair hearing and whether the lack of opportunity vitiates the final order. These are cases where an opportunity was in fact given but was considered inadequate by the aggrieved party. The test of prejudice has been explained in detail in Karunakar’s case reported in AIR 1994 SC 1074. The test of prejudice can also be applied to cases where a procedural provision is not followed which is not mandatory. For example, if a person is dismissed without supplying him with a copy of the enquiry officer’s report, it will have to be examined whether any prejudice has been caused to the aggrieved person as a result. It is not always easy to decide whether a procedural provision is mandatory or not. The Courts will have to see whether non-observance of these principles has resulted in deflecting the course of justice. Grievances such as enough time not being given to prepare the case, lawyer not being allowed or entire material not being given, have to be examined on this touchstone of prejudice. One may also have to examine whether the procedural provision is in public interest or whether the aggrieved party has waived the procedural provision or such other circumstances.
The second important maxim is to the effect that a person will not be a judge in his own cause. In fact, the Kripak case is a typical example of a decision-maker being personally interested in the decision. In the Bombay High Court, we have the convention of a Judge not hearing the case of a company in which he has purchased shares. This convention has resulted in a judge recusing himself from a case because in a multi-crore company he holds a few hundred shares. But it is always preferable to err on the safe side rather than invite the comment of being an interested person. Interest, of course, can be of various kinds. And it is best to bear in mind that justice must not merely be done but must be seen to be done.
A fair and impartial hearing is at the root of this principle. You might remember the famous Pinochet’s case in the House of Lords where one of the Law Lords who had heard the case was a trustee of a charity which was associated with one of the parties. The entire case had to be re-heard. On a smaller scale, we have many cases where committees appointed to select, for example, text books for educational institutions, have as their members, authors of some of these books. Clearly the decision of such committees is vulnerable. There are also cases where the decision of the committee is arrived at on the basis of dictates of third parties such as Ministers. Allotment of flats in public housing schemes or petrol pumps can be thus affected and would be susceptible to challenge.
There is only one more principle that has slowly taken root as a part of natural justice. This is the principle that every decision must contain reasons for the decision. Reasons may be elaborate or may be brief. But these are beginning to be considered necessary to ensure fair decision making. There are many grounds for requiring reasons. In the first place, it ensures application of mind by the decision maker to the material before them which will be reflected in the reasons given. A non-speaking order does not do this. That is why under the new Arbitration and Conciliation Act, it is now mandatory for Arbitrators to give reasons. Secondly, the exercise of giving reasons prevents prejudices from creeping into the decision making process. The decision maker is forced to examine the material and apply appropriate principles to the decision. It also makes it easy for the Appellate Body if there is one, or the Court exercising writ jurisdiction to ascertain the reasons which prompted the decision impugned before it. There is, therefore, an increasing tendency to insist on reasons for administrative and quasi-judicial decisions. Of course, not all decisions are reasoned decisions. When the cricket captain opts for heads or tails, he cannot be expected to give reasons for his choice. Fortunately, one hopes that administrative decisions which affect others are not decisions of this kind. In fact, asking for reasons ensures that they are not just ipse dixit of the decision maker. It is in this context that Article 14 of the Constitution must also be looked at because Article 14 has been interpreted as a protection against arbitrary action.
It is also interesting to note that the protection of the principles of natural justice is available not just to citizens but also to non-citizens in our country. In the case of Det Norske Veritas vs. Reserve Bank of India 1989 Mah. Law Journal 107. the Bombay High Court held that the refusal of a licence to a non citizen who had been operating in India for some years must comply with the principles of natural justice. This is in sharp contrast to the decisions, for example, of English Courts while dealing with orders of immigration authorities in their country or the decisions of the U.S. Courts while dealing with protection to non-citizens. We have rightly held that the principles of natural justice relate to fair and impartial decision making. Such decisions must be made in all cases, whether they pertain to citizens or non-citizens.
To conclude, I will only remind you once again that these are procedural laws to ensure fair decision making. They do not contain any guarantee of fair laws or fair rules. Unless the laws are fair and are fairly implemented, there cannot be justice in the true sense. Secondly, procedural safeguards do not necessarily ensure a fair outcome. Procedural lapses may result in upsetting even good decisions against individuals who may be guilty of a breach of law. Therefore, one must apply these principles in a balanced way in the circumstances of each case. The considerable body of case law indicates that this is not always easy or obvious.
Source : Speech delivered at programme for Orientation & Training of New Members, Income Tax Appellate Tribunal, Mumbai. held from 12th November, 2007 to 28th November, 2007.
Acknowledgement: We are thankful to Hon’ble Presidents, Vice Presidents of ITAT, Mumbai for granting us permission to print the article for the benefit of Tax Professionals.