P.V.Ragunathan. v. The Commissioner, Prohibition and Excise Department, Chepauk, Chennai 600 005

IN THE HIGH COURT OF JUDICATURE AT MADRASDated : 26.11.2012CORAMThe Hon'ble Mr.Justice R.SUDHAKAR W.P.No.30954 of 2012 and M.P.No.1 of 2012P.V.Ragunathan. ... Petitioner Vs.1.The Commissioner, Prohibition and Excise Department, Chepauk, Chennai 600 005.2.The Deputy Excise Officer (Prohibition and Excise), Theni.3.The Assistant Commissioner (Prohibition and Excise), Theni.4.The District Collector, Theni. ... Respondents Writ Petition is filed under Article 226 of the Constitution ofIndia praying to issue a Writ of Certiorari, calling for the recordsof the first respondent's proceedings in k(k)M/2(1)/457/2012 dated05.10.2012 signed on 5.11.2012 served the petitioner on 12.11.2012and quash the same. For Petitioner: Mr.A.Sivaji For Respondents: Mr.N.Srinivasan,Additional Government Pleader.O R D E RThis Writ Petition is filed praying to issue a Writ ofCertiorari, calling for the records of the first respondent'sproceedings in k(k)M/2(1)/457/2012 dated 05.10.2012 signed on5.11.2012 served the petitioner on 12.11.2012 and quash the same. https://hcservices.ecourts.gov.in/hcservices/

2. Heard the spirited arguments of Mr.A.Sivaji, learned counselappearing for the petitioner and Mr.N.Srinivasan, learned AdditionalGovernment Pleader, appearing for the respondents.3. The writ petition deserves to be allowed on the short pointthat the impugned order has been passed without application of mindand without stating any reasons. In this case the show-cause noticehas been issued on 3.7.2012 and the petitioner submitted anexplanation together with records on 24.7.2012. Thereafter, hesubmitted another detailed explanation on 16.8.2012 together withrecords, which was acknowledged by the authority. A personalhearing was granted on 10.9.2012. Further explanation was given on14.9.2012. Thereafter, the impugned order came to be passed on5.10.2012 and signed on 5.11.2012.4. Learned counsel for the petitioner pointed out that all theexplanations supported by records produced by the petitioner were notconsidered at all while coming to the conclusion that the licencerequires to be cancelled. In addition to that, the petitioner's pleais that the impugned order suffers on account of total nonapplication of mind and non consideration of the replies/explanationsand records. An English translated copy of the impugned order issubmitted to this court and verified. Para 7 of the impugned orderreads as follows:-“7. All the documents and statements wereperused. The sale of liquor at 9.00 AM itself,and taking excess delivery over the permittedstock of 700 units by stating wrong stocks areproved as the stock was not recorded in the stockRegister on 23.12.2011. The action of the aboveowner is against the rules and regulations of theProhibition and Excise (Licence and permit).Hence it is ordered by cancelling the licence(Licence No.1/04-05) in F.L.3 under rule 22(1) ofTamil Nadu Liquor (Licence and Permit) Rules ofMeenakshi Bar and Restaurant of this RajendiraLodge of Periakulam Taluk of Theni District.”5. While passing the impugned order, the first respondent wasconscious of the reply/explanation given by the petitioner on24.7.2012 with records. However, it is to be noticed that thefurther replies/explanations given with records on 16.8.2012 and14.9.2012 have been totally ignored and have not been considered atall. Therefore, the impugned order suffers from total nonapplication of mind. https://hcservices.ecourts.gov.in/hcservices/

6. Even on going through the impugned order, the findings givenwhich has been extracted above, are not supported by reasons.There is no discussion on the records produced nor the explanationsgiven. This is a classic case of total non application of mind andfailure to consider the relevant records produced which is a mandateon an executive authority exercising administrative power. 7. The principle of audi alteram partem is the basic concept ofprinciple of natural justice and it connotes that a person must begiven an opportunity to defend himself. This principle coversvarious phases right from issuing of notice to the passing of thefinal order. The principle of audi alteram partem contemplates that aperson against whom action is sought to be taken should be given afair hearing, which includes:(i) a notice giving sufficient time clearly indicating theallegations against the person;(ii) such person should be permitted to present his case andproduce evidence;(iii) all the adverse evidence relied on should be disclosedto the person;(iv) he should be permitted to rebut the evidence putagainst him; and(v) thereafter, a speaking order with reasons should bepassed.Any violation of any one of the phases enunciated above, would causesubstantial prejudice to the affected party and would result inviolation of the principle of audi alteram partem. 8. To fortify the said view, it is appropriate to refer to adecision of the Supreme Court in K.I.Shephard - vs. - Union of India,(1987) 4 SCC 431, wherein after referring to a plethora of earlierjudgments, it was held as under:"12. Mullan in Fairness: The New Natural Justicehas stated: https://hcservices.ecourts.gov.in/hcservices/ “Natural justice co-exists with, orreflected, a wider principle of fairness indecision-making and that all judicial andadministrative decision-making and that alljudicial and administrative decision-makershad a duty to act fairly.”In the case of State of Orissa v. Dr (Ms) BinapaniDei, AIR 1967 SC 1269, this Court observed:"It is true that the order isadministrative in character, but even anadministrative order which involves civilconsequences as already stated, must be madeconsistently with the rules of naturaljustice after informing the first respondentof the case of the State, the evidence insupport thereof and after giving anopportunity to the first respondent of beingheard and meeting or explaining theevidence. No such steps were admittedlytaken: the High Court was, in our judgment,right in setting aside the order of theState."In A.K. Kraipak v. Union of India, (1969) 2 SCC262, a Constitution Bench quoted with approval theobservations of Lord Parker in Re: (H) K (an infant),(1967) 1 All ER 226 (QBD). Hegde, J. speaking for theCourt stated: (SCC p. 272, para 20)“Very soon thereafter a third rule wasenvisaged and that is that quasi-judicialenquiries must be held in good faith,without bias and not arbitrarily orunreasonably. But in the course of yearsmany more subsidiary rules came to be addedto the rules of natural justice. Till veryrecently it was the opinion of the courtsthat unless the authority concerned wasrequired by the law under which itfunctioned to act judicially there was noroom for the application of the rules ofnatural justice. The validity of thatlimitation is now questioned. If the purposeof the rules of natural justice is to https://hcservices.ecourts.gov.in/hcservices/ prevent miscarriage of justice one fails tosee why those rules should be madeinapplicable to administrative enquiries.Oftentimes it is not easy to draw the linethat demarcates administrative enquiriesfrom quasi-judicial enquiries. Enquirieswhich were considered administrative at onetime are now being considered as quasi-judicial in character. Arriving at a justdecision is the aim of both quasi-judicialenquiries as well as administrativeenquiries. An unjust decision in anadministrative enquiry may have more far-reaching effect than a decision in a quasi-judicial enquiry.”These observations in A.K. Kraipak case were followedby another Constitution Bench of this Court in ChandraBhavan Boarding and Lodging, Bangalore v. State ofMysore, (1969) 3 SCC 84. In Swadeshi Cotton Mills v.Union of India, (1981) 1 SCC 664, a three Judge Benchof the Apex Court examined this aspect of naturaljustice. Sarkaria, J. who spoke for the court, stated:“During the last two decades, theconcept of natural justice has made greatstrides in the realm of administrative law.Before the epoch-making decision of theHouse of Lords in Ridge v. Baldwin, 1964 AC40 it was generally thought that the rulesof natural justice apply only to judicial orquasi-judicial proceedings; and for thepurpose, whenever a breach of the rule ofnatural justice was alleged, courts inEngland used to ascertain whether theimpugned action was taken by the statutoryauthority or tribunal in the exercise of itsadministrative or quasi-judicial power. InIndia also, this was the position before thedecision dated February 7, 1967, of thisCourt in Dr Binapani Dei case; wherein itwas held that even an administrative orderor decision in matters involving civilconsequences, has to be made consistentlywith the rules of natural justice. Thissupposed distinction between quasi-judicialand administrative decisions, which wasperceptibly mitigated in Binapani Dei case https://hcservices.ecourts.gov.in/hcservices/ was further rubbed out to a vanishing pointin A.K. Kraipak v. Union of India. . . .”On the basis of these authorities it must be heldthat even when a State agency acts administratively,rules of natural justice would apply. As stated,natural justice generally requires that personsliable to be directly affected by proposedadministrative acts, decisions or proceedings begiven adequate notice of what is proposed so thatthey may be in a position (a) to make representationson their own behalf; (b) or to appear at a hearing orenquiry (if one is held); and (c) effectively toprepare their own case and to answer the case (ifany) they have to meet." 9. Further, it is well established principle in law thatAdministrative authority exercising judicial or quasi-judicialfunctions is required to record reasons for its decision. InS.N.Mukherjee – v. Union of India reported in AIR 1990 Supreme Court1984, the Hon'ble Supreme Court held in paragraphs 35, 38 and 39 asfollows:-"35. Reasons, when recorded by anadministrative authority in an order passed by itwhile exercising quasi-judicial functions, wouldno doubt facilitate the exercise of itsjurisdiction by the appellate or supervisoryauthority. But the other considerations, referredto above, which have also weighed with this Courtin holding that an administrative authority mustrecord reasons for its decision are of no lesssignificance. These considerations show that therecording of reasons by an administrativeauthority serves a salutary purpose, namely, itexcludes chances of arbitrariness and ensures adegree of fairness in the process of decisions-making. The said purpose would apply equally toall decisions and its application cannot beconfined to decisions which are subject toappeal, revision or judicial review. In ouropinion, therefore, the requirement that reasonsbe recorded should govern the decisions of anadministrative authority exercising quasi-judicialfunctions irrespective of the fact whether thedecision is subject to appeal, revision orjudicial review. It may, however, be added thatit is not required that the reasons should be as https://hcservices.ecourts.gov.in/hcservices/ elaborate as in the decision of a Court of law.The extent and nature of the reasons would dependon particular facts and circumstances. What isnecessary is that the reasons are clear andexplicit so as to indicate that the authority hasgiven due consideration to the points incontroversy. The need for recording of reasons isgreater in a case where the order is passed at theoriginal stage. The appellate or revisionalauthority, if it affirms such an order, need notgive separate reasons if the appellate orrevisional authority agrees with the reasonscontained in the order under challenge.""38. The object underlying the rules ofnatural justice "is to prevent miscarriage ofjustice" and secure "fair play in action". Aspointed out earlier the requirement aboutrecording of reasons for its decision by anadministrative authority exercising quasi-judicialfunctions achieves this object by excludingchances of arbitrariness and ensuring a degree offairness in the process of decision-making.Keeping in view the expanding horizon of theprinciples of natural justice, we are of theopinion, that the requirement to record reason canbe regarded as one of the principles of naturaljustice which govern exercise of power byadministrative authorities. The rules of naturaljustice are not embodied rules. The extent oftheir application depends upon the particularstatutory framework whereunder jurisdiction hasbeen conferred on the administrative authority.With regard to the exercise of a particular powerby an administrative authority including exerciseof judicial or quasi-judicial functions thelegislature, while conferring the said power, mayfeel that it would not be in the larger publicinterest that the reasons for the order passed bythe administrative authority be recorded in theorder and be communicated to the aggrieved partyand it may dispense with such a requirement. Itmay do so by making an express provision to thateffect as those contained in the AdministrativeProcedure Act, 1946 of U.S.A. and theAdministrative Decisions (Judicial Review) Act,1977 of Australia whereby the orders passed bycertain specified authorities are excluded fromthe ambit of the enactment. Such an exclusion can https://hcservices.ecourts.gov.in/hcservices/ also arise by necessary implication from thenature of the subject matter, the scheme and theprovisions of the enactment. The public interestunderlying such a provision would outweigh thesalutary purpose served by the requirement torecord the reasons. The said requirement cannot,therefore, be insisted upon in such a case.""39. For the reasons aforesaid, it must beconcluded that except in cases where therequirement has been dispensed with expressly orby necessary implication, an administrativeauthority exercising judicial or quasi-judicialfunctions is required to record the reasons forits decision."10. In view of the above, the impugned order, which is a nonspeaking order and passed totally without application of mind torelevant issues and without reasons, is set aside and the matter isremitted to the first respondent to consider and pass a reasonedorder on all issues raised by the petitioner expeditiously. 11. This Writ Petition is allowed by way of remand as above. Nocosts. Consequently, connected miscellaneous petition is closed. Sd/Deputy Registrar/true copy/Sub Asst.RegistrartsTo1.The Commissioner, Prohibition and Excise Department, Chepauk, Chennai 600 005.2.The Deputy Excise Officer (Prohibition and Excise), Theni. https://hcservices.ecourts.gov.in/hcservices/

3.The Assistant Commissioner (Prohibition and Excise), Theni.4.The District Collector, Theni. + 1 cc to the Mr.A.Sivaji Advocate Sr.71646+ 1 cc to the Government Pleader Sr.71927 W.P.No.30954 of 2012SCD(CO)Eu 4.12.12