MIS. DHARAMPAL SATYAPAL LTD. versus DEPUTY COMMISSIONER OF CENTRAL EXCISE,  GAUHATI & ORS.
[2015] 6 S.C.R. 437, Supreme Court of India, 2015
Outcome: Dismissed (Dismissed)
Segment: Facts
[2015] 6 S.C.R. 437 
MIS. DHARAMPAL SATYAPAL LTD. 
v. 
DEPUTY COMMISSIONER OF CENTRAL EXCISE, 
GAUHATI & ORS. 
(Civil Appeal Nos.4458-4459 of 2015) 
MAY 14, 2015 
A 
B 
[A.K. SIKRI AND ROHINTON FALi NARIMAN, JJ.] 
Central Excise Act, 1944 - s. 11A - Finance Act, 2003 ~ s. c 
154- Initiation of recovery proceedings without show cause 
notice - Exemption of excise duty for certain tobacco 
products to new industrial units in North-Eastern region -
Said exemption withdrawn - Withdrawal challenged by 
assessee - Subsequently, vide s. 154, withdrawal of benefit D 
effected from retrospective effect - In R. C. Tobacco's case 
this Court upheld the constitutional validity of s. 154 -
Thereafter, recovery order passed by the Department against 
assessee for the benefit drawn by the assessee - Said order 
passed without issuing notice - Challenge to, on the ground E 
of violation of principles of natural justice - Held: Every 
violation of a facet of natural justice may not lead to the 
conclusion that order passed is always null and void- Validity 
of the order has to be decided on the touchstone of 'prejudice' 
- Ultimate test is always the same, viz., the test of prejudice F 
or the test of fair hearing- On facts, issuance of notice would 
be an empty formality and the case stands covered by 
'useless formality theory' - Thus, non-issuance of notice 
before sending communication did not result in any prejudice G 
to assessee and it may not be feasible to direct the 
Department to
take fresh action after issuing notice as that 
would be a mere formality. 
Natural justice - Concept and doctrine of - ExplaiRed and 
discussed. 
H 
437
438 
SUPREME COURT REPORTS 
[2015] 6 S.C.R. 
A 
Dismissing the appeals, the Court 
HELD: 1.1 The principles of natural justice have 
sound jurisprudential basis. Since the function of the 
judicial and quasi-judicial authorities is to secure justice 
B with fairness, these principles provide great humanising 
factor intended to invest law with fairness to secure 
justice and to prevent miscarriage of justice. The 
principles are extended even to those who have to take 
administrative decision and who are not necessarily 
C discharging judicial or quasi-judicial functions. The 
principles of natural justice are grounded in procedural 
fairness which ensures taking of correct decision and 
procedural fairness is fundamentally an instrumental 
good, in the sense that procedure should be designed 
D to ensure accurate or appropriate outcomes. In fact, 
procedural fairness is valuable in both instrumental and 
non-instrumental terms. It is on the said jurisprudential 
premise that the fundamental principles of natural 
justice, including audi alteram partem, have developed. 
E It is for this reason that the courts have consistently 
insisted that such procedural fairness has to be adhered 
to before a decision is made and infraction thereof has 
led to the quashing of decisions taken. In many statutes, 
F provisions are made ensuring that a notice is given to a 
person against whom an order is likely to be passed 
before a decision is made, but there may be instances 
where
though an authority is vested with the powers to 
pass such orders, which affect the liberty or property of 
G an individual but the statute may not contain a provision 
for prior hearing. But what is important to be noted is 
that the applicability of principles of natural justice is 
not dependent upon any statutory provision. The 
principle has to be mandatorily applied irrespective of 
H the fact as to whether there is any such statutory
MIS. DHARAMPAL SATYAPAL LTD. v. DY. COMMNR. OF 439 
CENTRAL EXCISE, GAUHATI 
provision or not. [Para 22, 24, 25] [455-D-F; 457-H; 458-
A 
A-F] 
1.2 It becomes clear that the opportunity to 
provide hearing before making any decision was 
considered to be a basic requirement in the Court B 
proceeding. Later on, this principle was applied to other 
quasi-judicial authorities and other tribunals and 
ultimately it is now clearly laid down that even in the 
administrative actions, where the decision of the 
authority may result in civil consequences, a hearing C 
before taking a decision is necessary. Therefore, there 
was a requirement of issuance of show-cause notice by 
the Deputy Commissioner before passing the order of 
recovery, irrespective of the fact whether s. 11A of the 
Act is attracted in the instant case or not. [Paras 27, 29] D 
[462-8-C; 463-F] 
1.3 Even if it is found by the Court that there is a 
violation of principles of natural justice, the Courts have 
held that it may not be necessary to strike down the E 
action and refer the matter back to the authorities to 
take fresh decision after complying with the procedural 
requirement in those cases where non-grant of hearing 
has not caused any prejudice to the person against 
whom the action is taken. Therefore, every violation of a F 
facet of natural justice may not lead to the conclusion 
that order passed is always null and void. The validity 
of the order has to be decided on the touchstone of
'prejudice'. The ultimate test is always the same, viz., 
the test of prejudice or the test of fair hearing. [Para 31] G 
[465-E-G] 
1.4 As regards whether it is open to the authority, 
which has to take a decision, to dispense with the 
requirement of the principles of natural justice on the H
440 
SUPREME COURT REPORTS 
[2015] 6 S.C.R. 
A ground that affording such an opportunity will not make 
any difference, to put it otherwise, can the administrative 
authority dispense with the requirement of issuing notice 
by itself deciding that no prejudice would be caused to 
the person against whom the action is contemplated, 
B answer has to be in the negative. It is not permissible 
for the authority to jump over· the compliance of the 
principles of natural justice on the ground that even if 
hearing had been provided it would have served no 
useful purpose. The opportunity of hearing will serve 
C the purpose or not has to be considered at a later stage 
and such things cannot be presumed by the authority. 
[Para 33] [467-B-E] 
1.5 It cannot be denied that as far as Courts are 
D concerned, they are empowered to consider as to 
whether any purpose would be served in remanding the 
case keeping in mind whether any prejudice is caused 
to the person against whom the action is taken. Keeping 
in view the said principles in mind, even when it is found 
E that there is an infraction of principles of natural justice, 
a further question is addressed as to whether any 
purpose would be served in remitting the case to the 
authority to make fresh demand of amount recoverable, 
F only after issuing notice to show cause to the appellant. 
In the facts of the instant case, it is found that such an 
exercise would be totally futile having regard to the law 
laid down in R.C.
Tobacco's case.[Para 34-36] [468-D-E; 
469-D-E] 
G 
1.6 The legal consequence of s. 154 is that the 
amount with which the appellant was benefitted under 
the said Notification becomes refundable. Even after the 
notice is issued, the appellant cannot take any plea to 
H retain the said amount on any ground whatsoever as it 
is bound by the dicta in R.C. Tobacco's case. Likewise,
MIS. DHARAMPAL SATYAPAL LTD. v. DY. COMMNR. OF 441 
CENTRAL EXCISE, GAUHATI 
even the officer who passed the order has no choice A 
but to follow the dicta in R.C. Tobacco's case. 
Quantification of the amount is not disputed at all. In 
such a situation, issuance of notice would be an empty 
formality and that the case stands covered by 'useless 
formality theory'. Therefore, non-issuance of notice B 
before sending communication did not result in any 
prejudice to the appellant and it may not be feasible to 
direct the respondents to take fresh action after issuing 
notice as that would be a mere formality. [Paras 37,39] 
[469-G-H; 470-A; 471-A-B] 
C 
1.7 The judgment in J.K. Cotton's case was 
-specifically taken note of and discussed in R. C. 
Tobacco's case. The judgment in R.C. Tobacco's case 
would reflect that the appellant therein had specifically D 
relied upon the judgment in J.K. Cotton's case in 
support of the submission that retrospectivity was 
harsh and excessive since there is, in fact, a 
retrospective imposition of excise duty. Another E 
submission, that the demand which was raised could 
not be sustained as it was made without issuing any 
show-cause notice and was in contravention of s.11A 
of the Act. The Court, however, did not find any merit 
in the submissions. When the Court was conscious of F 
the principle laid down in J.K. Cotton's case and 
explained the same in a particular manner while 
deciding the appeal in R.C. Tobacco's case, it cannot
be argued that the judgment in R.C. Tobacco runs 
contrary to J.K. Cotton's case.[Para 40A] [471-C-G] 
R. C. Tobacco Private Ltd. & Anr v. Union of India & 
Anr. 2005 (3) Suppl. SCR 342 : (2005) 7 sec 725; Ml 
s. J.K. Cotton Spinning and Weaving Mills Ltd. v. Union 
G 
H
442 
A 
B 
c 
D 
E 
F 
G 
SUPREME COURT REPORTS 
[2015) 6 S.C.R. 
of India 1988 SCR 700 : (1987) Supp SCC 350; 
Collector of Central Excise, Patna & Ors. v. 
I. T.C. 
Limited & Anr. (1995) 2 SCC 38; Mohinder Singh Gill & 
Anr. v. The Chief Election Commissioner, New Delhi & 
Ors. 1978 (2) SCR 272: (1978) 1 SCC 405; Cooper v. 
Sandworth Board of Works (1863) 14 GB (NS); 
Managing Director, ECIL, Hyderabad & Ors. v. B. 
Karunakar& Ors. 1993 (2) Suppl. SCR 576: (1993) 4 
SCC 727; C.B. Gautam v. Union of India & Ors. 1992 
(3) Suppl. SCR 12: (1993) 1SCC78; Maneka Gandhi 
v. Union of India & Anr. 1978 (2) SCR 621: (1978) 1 
SCC 248; Maharashtra State Financial Corporation v. 
Mis. Suvarna Board Mills & Anr. 1994 (2) Suppl. SCR 
754: (1994) 5 SCC 566; East India Commercial 
Company Ltd., Calcutta & Anr. v. The Collector of 
Customs, Calcutta AIR 1962 SC 1893: 1963 SCR 338; 
U.0.1. & Ors. v. Madhumilan Syntex Pvt. Ltd. & Anr. 
1988 (3) SCR 838: (1988) 3 SCC 348;' Morarji Goculdas 
B&W Co. Ltd. & Anr. v. U.0.1. & Ors. (1995) Supp 3 
SCC 588; Metal Forgings & Anr. v. U. 0.1. & Ors. (2003) 
2 SCC 36; U.0.1. & Ors. v. Tata Yodogawa Ltd. &Anr. 
19.88 (38) EL T 739 (SC); Malloch v. Aberdeen 
Corporation (1971) 1WLR1578at1595; Cinnamond 
v. British Airports Authority (1980) 1 WLR 582 at 593; 
General Medical Council v. Spackman 1943 AC 627; 
The Board of High School and Intermediate Education, 
U.P. & Ors. v. Kumari Chittra Srivastava & Ors. AIR 
1970 SC 1039: 1970 (3) SCR 266: 1970) 1SCC
121; 
Escorts Farms Ltd. (Previously known as Mis. Escorts 
Farms (Ramgarh) Ltd.) v. Commissioner, Kumaon 
Division, Nainital, U.P. & Ors. 2004 (2) SCR 543: (2004) 
4 sec 281 - referred to. 
Case Law Reference 
H 2005 (3) Suppl. SCR 342 Referred to. 
Para 5
M/S. DHARAMPAL SATYAPAL LTD. v. DY. COMMNR. OF 443 
CENTRAL EXCISE, GAUHATI 
1988 SCR 700 
Referred to. 
Para 9 
A 
(1995) 2 sec 38 
Referred to. 
Para 16 
1978 (2) SCR 272 
Referred to. 
Para 20 
(1863) 14 GB (NS) 
Referred to. 
Para 25 
1993 (2) Suppl. SCR 576 Referred to. 
Para 25 
B 
1992 (3) Suppl. SCR 12 
Referred to. 
Para 26 
1978 (2) SCR 621 
Referred to. 
Para 27 
1994 (2) Suppl. SCR 754 Referred to. 
Para 27 
1963 SCR 338 
Referred to. 
Para 28 
c 
1988 (3) SCR 838 
Referred to. 
Para 28 
(1995) Supp 3 sec 588 
Referred to. 
Para 28 
(2003) 2 sec 36 
Referred to. 
Para 28 
1988 (38) ELT 739 (SC) 
Referred to. 
Para 28 
(1971) 1 WLR 1578 
Referred to. 
Para 31 
D 
(1980) 1 WLR 582 
Referred to. 
Para 31 
1943 AC 627 
Referred to. 
Para 33 
1970 (3) SCR 266 
Referred to. 
Para 33 
2004 (2) SCR 543 
Referred to. 
Para 38 
E 
CIVIL APPELLATE JURISDICTION: Civil Appeal 
No. 4458 - 4459 of 2015. 
From the Judgment and Order of the High Court of 
F 
Gauhati dated 05.06.2012 and 01.12.2011 in Review Petition 
No. 176560 of 2012 in Central Excise Tax Reference No. 1 
of 2008 and Central Excise Tax Reference No. 1 of 2008 
respectively. 
Mukul Rohtagi, Rupesh Kumar, Ms. Madhvi Diwan, G 
Charul Sarin, B. Krishna Prasad for the Appellant. 
Soli J. Sorabjee, Preetesh Kapur, S. Kashyap, Abaya 
Kashyap, Raghav Narayan (For Mitter & Mitter Co.), Gopal 
Singh, Corporate Law Group for the Respondents. 
H
444 
SUPREME COURT REPORTS 
[2015) 6 S.C.R. 
A 
The Judgment of the Court was delivered by 
A.K. SIKRI, J. Leave granted. 
2. Union of India, vide Memorandum dated December 
8 
24, 1997, unveiled a new industrial policy for the North-
Eastern region. In the said policy, in order to give stimulation 
to the development of industrial infrastructure in the North-
Eastern region, the said region was made tax free zone for 
a period of ten years giving incentives to those who wanted 
c to establish industries in that region. Pursuant thereto, the 
Notification dated July 08, 1999 was issued granting new 
industrial units that had commercial production on or after 
December 24, 1997 and certain types of industrial units that 
increased their installed capacity after that date, exemption 
D on goods cleared from units located in growth centres and 
integrated infrastructure centres. 
3. The aforesaid Notification was issued under the 
provision of Central Excise Act, 1944 as well as Additional 
E Duties of Excise (Goods of Special Importance) Act, 1957 
and Additional Duties of Excise (Textiles and Textile Articles) 
Act, 1978. However, on December 31, 1999, another 
Notification was issued whereby exemption of central excise 
was withdrawn in respect of goods falling under Chapter 
F 21.06 (pan masa/a) and Chapter 24 (tobacco and tobacco 
substitutes, including cigarettes, chewing tobacco etc.). 
4. This withdrawal Notification was challenged by the 
appellant by filing the writ
petition in the High Court of 
G Gauhati. The learned Single Judge dismissed the writ 
petition. However, appeal preferred. by the appellant was 
allowed by the Division Bench vide judgment dated 
December 03, 2012. In nutshell, the High Court held that 
the principal of Promissory Estoppel shall apply and once a 
H promise was given by the Union of India assuring that no
DHARAMPAL SATYAPAL LTD. v. DY. COMMNR. OF 
445 
CENTRAL EXCISE, GAUHATI [A.K. SIKRI, J.] 
such duty would be charged for a period of ten years, it was A 
not open for the Union of India to withdraw. the same. 
Challenging that judgment, Union of India filed petitions for 
special leave. Leave was granted and the petitions were . 
registered as Civil Appeal Nos. 8841-8844 of 2003. 
5. After the filing of the aforesaid appeals, certain 
subsequent events took place. It so happened that vide 
Section 154 of the Finance Act, 2003 (hereinafter referred 
B 
to as the 'Act of 2003'), withdrawal of the benefit was effected 
from retrospective effect. Effect thereof was to withdraw the C 
benefit given under the Notification issued earlier. Validity . 
of Section 154 was questioned and the issue was considered 
by this Court in R. C. Tobacco Private Ltd. & Anr. v. Union 
of India & Anr.' This Court upheld the constitutional validity 
of the aforesaid provision and repelled the challenge so laid. 
D 
The effect was to disentitle the appellant and other similarly 
. situated from getting any such benefit by virtue of Section 
154 of the Act of 2003 and knocking down the basis of the 
judgment of the High Court, which lost its validity on the 
aforesaid ground. 
E 
6. So far so good. The grievance of the appellant 
and other similarly situated industries for not extending the 
benefit of Notification dated July 08, 1999 is buried down. 
However, after notifying Section 154 of the Act of
2003, which F 
had nullified the effect of Notification No. 32 of 1999 
retrospectively thereby annulling the effect thereof altogether, 
respondent No.1 herein passed recovery order dated June 
03, 2003 for recovery of a sum of 2,93,43,244 (rupees two 
crores ninety three lakhs forty three thousand two hundred G 
and forty four only) from the appellant, which was the benefit 
that had been drawn by the appellant for the period 
November 1999 till February 2001 in terms of the Notification 
No. 32of1999. By another order dated June 06, 2003 issued H 
1 c2005) 1 sec 125
446 
SUPREME COURT REPORTS 
[2015] 6 S.C.R. 
A by respondent No.1 , the appellant was directed to pay the 
excise duty for the said period for which the benefit had been 
availed. He also rejected the pending claim of refund for 
the period from March 2001 till May 31, 2003. These recovery 
orders were challenged by the appellant by filing appeal 
B before the Commissioner (Appeals). Along with the appeal, 
the appellant also filed an application for interim order 
seeking stay against the pre-deposit. On this application, 
orders dated March 31, 2004 were passed by the 
Commissioner (Appeals) directing the appellant to deposit 
C entire duty amount within a period of thirty days. This order 
of pre-deposit was challenged by the appellant by filing four 
writ petitions in the High Court of Gauhati. The learned Single 
Judge of the High Court, h~w;:;·;;:;o, .:!ismissed these writ 
D petitions vide orders dated May 18, 2004. The appellant 
carried this issue of pre-deposit to a higher forum in the form 
of writ appeals before the Division Bench of the said Court. 
Interim orders dated June 11, 2004 were passed in the writ 
appeals directing the Commissioner (Appeals) not to dismiss 
E the appeals preferred by the appellant before him for non-
deposit of the duty amount. In other words, interim stay 
against the pre-deposit was given. The Commissioner 
(Appeals) heard the appeals and passed the orders dated 
June 15, 2005 deciding the appeals in favour of the appellant. 
F He
held that issuance of show-cause notice was mandatory 
before a valid recovery of demand could be made from the 
appellant and, thus, remitted the matter to the adjudicating 
authority. After this final order was passed by the 
Commissioner (Appeals), writ appeals of the appellant before 
G the Division Bench were disposed of as infructuous in view 
of the fact that the Commissioner (Appeals) had passed an 
order on merits and, therefore, no cause survived which 
required further adjudication in those appeals. 
H 
7. Insofar as ~he order of the Commissioner (Ap!Jeals)
DHARAMPAL SATYAPAL LTD. v. DY. COMMNR. OF 
447 · 
CENTRAL EXCISE, GAUHATI [A.K. SIKRI, J.) 
is concerned, both the appellant as well as the Revenue felt A 
aggrieved thereby. The appellant was not satisfied with the 
order of remand and the nature of relief granted even after 
accepting that issuance of show-cause notice was mandatory 
before passing a valid recovery of demand. The respondents 
were aggrieved of the order passed on merit holding that B 
show-cause notice was mandatory. Therefore, both the 
appellant as well as the Revenue filed appeals aggrieved 
against the order dated June 15, 2005 passed by the 
Commissioner,{Appeals). The Customs Excise & Service 
Tax Appellate Tribunal (for short 'CESTAT') decided these C 
appeals vide common order dated My 28, 2007. It reversed 
the orders of the Commissioner (Appeals), which resulted 
in allowing the appeal filed by the Revenue and dismissing 
the appeal preferred by the appellant. A perusal ·of the D 
judgment of the CESTAT would reveal that it has primarily 
referred to the judgment of this Court in R.C. Tobacco and 
held that the matter stood concluded by the said judgment. 
The appellant challenged the order of CESTAT by filing 
Central Excise Tax Reference No. 1 of 2008 before the High E 
Court of Gauhati. This Reference was cdismissed by the 
High Court on December 01, 2011 on the ground of res 
judicata holding that orders dated May 18, 2004 passed by 
the Single Judge dismissing the writ petitions of the
appellant 
had attained finality. The appellant preferred Review Petition 
F 
seeking review of the said order, which has also been 
dismissed by the High Court on June 05, 2012. In the present 
appeals, the appellant has challenged both the orders dated 
December 01, 2011 passed in the Tax Reference as well as 
the order dated June 05, 2012 passed in the Review Petition. G 
8. From the brief narration of the background facts 
mentioned above, it is apparent that the frontal attack of the 
appellant against the recovery orders passed by the 
respondents is premised on the plea that no such recovery H
448 
SUPREME COURT REPORTS 
[2015] 6 S.C.R. 
A proceedings could be initiated without a show-cause notice 
under Section 11-A of the Excise Act. The appellant has also 
taken a plea in these appeals that order of the Single Judge 
at pre-deposit stage could not operate as res judicata on 
merits and, therefore, dismissal of the Tax Reference by the 
B High Court, and consequently the Review Petition, is clearly 
erroneous and the High Court should have gone into the 
merits of the issue decided by CESTAT. 
9. As noted above, CESTAT has decided the case 
C against the appellant on the ground that issue now raised is 
covered by the judgment of this Court in R.C. Tobacco 
(supra). As pointed out, in R.C. Tobacco (supra), this Court 
has already upheld the validity of Section 154 of the Act of 
2003 thereby taking away the benefit of Notification No. 32 
D of 1999 retrospectively insofar as excisable goods falling 
under Chapter 24 are concerned. Conscious of the position 
that judgment in R.C. Tobacco (supra) stares at the face of 
the appellant, Mr. Soli Sorabjee, learned senior counsel who 
appeared for the appellant, has also made an endeavour to 
E show that the said judgment in R.C. Tobacco (supra) is in 
clear conflict with earlier three Judge Bench judgment of 
this Court in Mis. J.K. Cotton Spinning and Weaving Mills 
Ltd. v. Union of lndia2. Thus, following three issues have 
F arisen for consideration in these appeals: 
(a) 
Whether order of the Single Judge at
pre-deposit 
stage can operate as res judicata on merits? 
(b) 
Whether recovery proceedings can be initiated without 
G 
show-cause notice under Section 11A of the Excise 
Act, which is mandatory? 
(c) 
Whether there is a conflict between the three Judge 
Bench judgment in J.K. Cotton (supra) and R.C. 
H 
Tobacco (supra)? 
2 (1987) supp sec 350
DHARAMPAL SATYAPAL LTD. v. DY. COMMNR. OF 
449 
CENTRAL EXCISE, GAUHATI [AK. SIKRI, J.] 
First issue is the basis for the judgment of the High A 
Court. 
10. For answering this issue,.it would be necessary 
to take into account the complete implication thereof with 
reference to the nature of recovery orders passed by B 
respondent No.1, challenge thereto before the Commissioner 
(Appeals) and interim order of pre-deposit passed by the 
Commissioner (Appeals) on March 31, 2004 as also the 
nature of challenge which was laid by the appellant against 
the said order of pre-deposit in the writ petitions filed in the C 
High Court, which were dismissed by the learned !'>:;igle 
Judge on May 18, 2004. 
11. By virtue of Notification dated July 08, 1999, the 
appellant was granted refund of the duty deposited in cash D 
up to February 2001. After the enactment of Section 154 of 
the Act of 2003, recovery order dated June 03, 2003 was 
passed for recovery of the aforesaid amount which had been 
refunded to the appellant. Simultaneously, another order 
dated June 06, 2003 was issued asking the appellant to pay E 
duty on the ground that such goods were no more exempted 
from payment of duty. In the appeals which were filed by 
the appellants before the Commissioner (Appeals) 
challenging the aforesaid orders, the Commissioner passed 
interim orders dated March 31, 2004 directing the appellants F 
to pay the amount demanded by the aforesaid orders. This 
order dated March 31, 2004 of
the Commissioner (Appeals) 
reflects that the Commissioner went into various issues 
raised by the appellant on the basis of which it was pleaded 
by the appellant that it had a good case on merits and, G 
therefore, condition of pre-deposit be waived. Apart from 
the contention that no show-cause notice was given before 
passing those orders, it was even argued that by making the 
retrospective amendment in the form of Section 154 of the H 
Act of 2003, the only effect was to validate the earlier actions
450 
SUPREME COURT REPORTS 
[2015] 6 S.C.R. 
A but no demand of refund of any amount could be made and 
no refund of the amount already paid could be claimed. It 
was also argued that the matter of recovery of amounts was 
pending consideration of Central Board of Excise and 
Customs (CBEC) as well as in the Gauhati High Court. All 
B these issues were considered by the Commissioner 
(Appeals), who gave his prima facie view thereupon 
observing that the appellants did not have strong prima facie 
case on merits resulting into the direction to deposit the entire 
amount within thirty days. 
c 
12. The appellant had filed writ petitions against the 
aforesaid order of the Commissioner (Appeals) with the 
prayer that the direction of the Commissioner (Appeals) to 
deposit the entire amount within thirty days be set aside and 
D the prayer of pre-deposit of the appellant be accepted. No 
doubt, while arguing for this relief, the appellant had raised 
various contentions on the merits of the case in its endeavour 
to demonstrate that it had a good case on merits. It is also 
borne from the record that the learned Single Judge, while 
E dismissing the writ petition, dealt with these issues, which 
touched upon the merits of the main issue. That is the reason 
that the order dated May 18, 2004 of the learned Single 
Judge dismissing the writ petition of the appellant runs into 
F 37 pages. Nevertheless, we find that the observations which 
were made by the learned Single Judge on
the issues raised 
were only prima facie in nature and the prime focus of the 
judgment rested on the core issue, namely, whether the 
direction of the Commissioner (Appeals) directing the 
G appellant to make deposit of the amount as a pre-condition 
for hearing of the appeal was sustainable or not. The writ 
petition was dismissed affirming the said order. Therefore, 
any observations made by the learned Single Judge, which 
were tentative in nature, could not be taken into consideration 
H by the Division Bench in the impugned judgment, thereby
DHARAMPAL SATYAPAL LTD. v. DY COMMNR. OF 
451 
CENTRAL EXCISE, GAUHATI [AK. SIKRI, J.] 
dismissing the Reference, invoking the principle of res A 
judicata. The order of the learned Single Judge dismissing 
the writ petition was challenged before the Division Bench 
and the Division Bench passed interim orders in the writ 
appeals not to dismiss the appeals preferred by the appellant 
for non-deposit of the duty. In this backdrop, appeals were B 
heard and appellant even partly succeeded. After the order 
of the Commissioner (Appeals) dated June 15, 2005 deciding 
the appeals partly in favour of the appellant, the writ appeals 
which were pending before the Division Bench had become 
infructuous and disposed of as such without going into the C 
merit of the order passed by the learned Single Judge '!"his 
is yet another reason to hold that the order of the learned 
Single Judge could not be treated as res judicata. 
13. Having regard to the aforesaid position, we heard D 
the instant appeal on merits, namely, on the issue as to 
whether it was mandatory to issue show-cause notice making 
an order of recovery. The Commissioner (Appeals} has held 
it to be mandatory and this order of the Commissioner 
(Appeals) has been set aside by the CESTAT The Reference E 
petition against the order of CESTAT, though wrongly is 
dismissed on the ground of resjudicata, the impugned order 
shows that it has mentioned that such show-cause notice 
was not mandatory as held by the learned
Single Judge by 
F 
order dated May 18, 2004. 
14. Learned senior counsel appearing for the 
appellant as well as learned Attorney General agreed that in 
this situation this Court may decide the aforesaid issue finally. 
It is for this reason that we have heard counsel for the parties G 
at length on this aspect of the matter. 
15. The neat submission made by Mr. Soli Sorabjee 
on behalf of the appellant was that the impugned demand 
of the Assistant Commissioner was in the nature of H
452 
SUPREME COURT REPORTS 
(2015] 6 S.C.R. 
A adjudication whereby the amount demanded in the order 
dated June 06, 2003 was crystallized and, therefore, there 
could not have been demand for recovery of the stipulated 
amount without issuing notice to the appellant and giving 
the appellant herein right of hearing. He also submitted that 
B merely because vires of Section 154 of the Act of 2003 were 
upheld by this Court in R.C. Tobacco (supra) could not be a 
ground to dispense with the aforesaid mandatory 
requirements of principles of natural justice. His further 
submission was that 'no prejudice' principle adopted by the 
C CESTAT amounted to erroneous approach. He sought to 
draw a fine distinction in this behalf by contending that the 
Authority passing the order could not presume that prejudice 
would not be caused to a person against whom the action is 
0 
contemplated and on that presumption dispense with the 
mandatory requirement of issuance of the notice. According 
to him, such a doctrine could be applied only by the courts 
while dealing with such issues where it is found that the action 
of the Authority was violative of principles of natural justice, 
E the Court could still choose not to remit the case back to the 
concerned Authority if it finds that it will be a futile exercise. 
16. As a pure principle of law, we find substance and 
force in the aforesaid submission of l\llr. Sorabjee. No doubt, 
F the Department was seeking to recover the amount paid
by 
virtue of Section 154 of the Act of 2003 which was enacted 
retrospectively and the constitutional validity of the said 
Section had already been upheld by this Court in R.C. 
Tobacco (supra) at the time of issuance of notice for 
G recovery. Further, no doubt, the effect of the said amendment 
retrospectively was to take away the benefit which was 
granted earlier. However, the question is whether before 
passing such an order of recovery, whether it was necessary 
to comply with the requirement of show-cause notice? The 
H appellant wanted to contend that Section 11A of the Excise
DHARAMPAL SATYAPAL LTD. v. DY. COMMNR. OF 
453 
CENTRAL EXCISE, GAUHATI [A.K. SIKRI, J.] 
Act was applicable, which requires this procedure to be A 
followed. 
Even if that provision is not applicable, it is 
fundamental that before taking any adverse action against 
a person, requirement of principles of natural justice is to be 
fulfilled. This Court in Collector of Central Excise, Patna 
& Ors. v. /. T.C. Limited & Anr.3 has held that show-cause B 
and personal hearing is necessary before saddling an 
assessee with additional demand. It is also trite that when a 
statute is silent, with no positive words in the Act or Rules 
spelling out need to hear the party whose rights or interests c 
are likely to be affected, requirement to follow fair procedure 
before taking a decision must be read into statute, unless 
the statute provides otherwise. 
17. What is the genesis behind this requirement? 
Why it is necessary that before an adverse action is taken D 
against a person he is to be given notice about the proposed 
action and be heard in the matter? Why is it treated as 
inseparable and inextricable part of the doctrine of principles 
of natural justice? 
E 
18. Natural justice is an expression of English 
Common Law. Natural justice is not a single theory - it is a 
family of views. In one sense administering justice itself is 
treated as natural virtue and, therefore, a part of natural 
justice. It is also called 'naturalist' approach to the phrase F 
'natural justice'
and is related to 'moral naturalism'. Moral 
naturalism captures the essence of commonsense morality 
- that good and evil, right and wrong, are the real features 
of the natural world that human reason can comprehend. In 
this sense, it may comprehend virtue ethics and virtue G 
jurisprudence in relation to justice as all these are attributes 
of natural justice. We are not addressing ourselves with this 
connotation of natural justice here. 
' (1995) 2 sec 38 
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A 
19. In Common Law, the concept and doctrine of 
natural justice, particularly which is made applicable in the 
decision making by judicial and quasi-judicial bodies, has 
assumed different connotation. It is developed with this 
fundamental in mind that those whose duty is to decide, must 
B act judicially. They must deal with the question referred both 
without bias and they must given to each of the parties to 
adequately present the case made. It is perceived that the 
practice of aforesaid attributes in mind only would lead to 
doing justice. Since these attributes are treated as natural 
C or fundamental, it is known as 'natural justice'. The principles 
of natural justice developed over a period of time and which 
is still in vogue and valid even today were: (i) rule against 
bias, i.e. nemo iudex in causa sua; and (ii) opportunity of 
0 
being heard to the concerned party, i.e. audi alteram parlem. 
These are known as principles of natural justice. To these 
principles a third principle is added, which is of recent origin. 
It is duty to give reasons in support of decision, namely, 
passing of a 'reasoned order'. 
E 
20. Though the aforesaid principles of natural justice 
are known to have their origin in Common Law, even in India 
the principle is prevalent from ancient times, which was even 
invoked in Kautilya's 'Arlhashastra'. This Court in the case 
F of Mohinder Singh Gill & Anr. v. The Chief Election
Commissioner, New Delhi & Ors.4 explained the Indian 
origin of these principles in the following words: 
G 
H 
"Indeed, natural justice is a pervasive facet of Sf''::Ji?.~ 
law where a spiritual touch enlivens legislation, 
administration and adjudication, to make fairness a 
creed of life. It has many colours and shades, many 
forms and shapes and, save where valid law excludes, 
it applies when people are affected by acts of authority. 
It is the bone of healthy government, recognised from 
4 (1978) 1 sec 405. AIR 1978 SC 851
DHARAMPAL SATYAPAL LTD. v. DY. COMMNR. OF 
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earliest times and not a mystic testament of judge-made 
law. Indeed from the legendary days of Adam - and of 
Kautilya's Arthashastra - the rule of law has had this 
stamp of natural justice, which makes it social justice. 
We need not go into these deeps for the present except 
to indicate that the roots of natural justice and its foliage 
are noble and not new-fangled. Today its application 
must be sustained by current legislation, case law or 
other extant principle, not the hoary chords of legend 
and history. Our jurisprudence has sanctioned its 
prevalence even like the Anglo-American system". 
21. Aristotle, before the era of Christ, spoke of such 
principles calling it as universal law. Justinian in the fifth 
and sixth Centuries A.O. called it Jura natura/ia', i.e. natural 
law. 
22. The principles have sound jurisprudential basis. 
Since the function of the judicial and quasi-judicial authorities 
455 
A 
B 
c 
is to secure justice with fairness, these principles provide 
great humanising factor intended to invest law with fairness E 
to secure justice and to prevent miscarriage of justice. The 
principles are extended even to those who have to take . 
administrative decision and who are not necessarily 
discharging judicial or quasi-judicial functions. They are a 
kind of code of fair administrative procedure. In this context, 
F 
procedure is not a matter of secondary
importance as it is 
only by procedural fairness shown in the decision making 
that decision becomes acceptable. In its proper sense, thus, 
natural justice would mean the natural sense of what is right 
and wrong. 
G 
23. This aspect of procedural fairness, namely, right 
to a fair hearing, wotild mandate what is literally known as 
'hearing the other side'. Prof. D.J. Galligan5 attempts to 
5 On 'Procedural Fairness' in Birks (ed). the Frontiers of Liability (Volume One) (Oxford H 
1994)
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A provide what he calls 'a general theory of fair treatment' by 
exploring what it is that legal rules requiring procedural 
fairness might seek to achieve. He underlines the importance 
of arriving at correct decisions, which is not possible without 
adopting the aforesaid procedural fairness, by emphasizing 
B that taking of correct decisions would demonstrate that the 
system is working well. On the other hand, if mistakes are 
committed leading to incorrect decisions, it would mean that 
the system is not working well and the social good is to that 
extent diminished. The rule of procedure is to see that the 
C law is applied accurately and, as a consequence, that the 
social good is realised. For taking this view, Galligan took 
support from Bentham6 , who wrote at length about the need 
to follow such principles of natural justice in civil and criminal 
0 
trials and insisted that the said theory developed by Bentham 
can be transposed to other forms of decision making as well. 
This jurisprudence of advancing social good by adhering to 
the principles of natural justice and arriving at correct 
decisions is explained by Galligan in the following words: 
E 
F 
G 
"On this approach, the value of legal procedures is 
judged according to their contribution to general social 
goals. The object is to advance certain social goals, 
whether through administrative processes, or through 
the civil or criminal trial. The law and its
processes are 
simply instruments for achieving some social good as 
determined from time to time by the l'.lw makers of the 
society. Each case is an instance in achieving the 
general goal, and a mistaken decision, whether to me 
benefit or the detriment of a particular person, is simply 
a failure to achieve the general good in that case. At 
this level of understanding, judgments of fairness have 
no place, for all that matters is wh~erthe social good, 
as expressed through laws, is effectively achieved." 
H 
6 A Treatise of Judicial Evidence (London 1825)
DHARAMPAL SATYAPAL LTD. v. DY. COMMNR. OF 
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CENTRAL EXCISE, GAUHATI [A.K. SIKRI, J.] 
Galligan also takes the idea of fair treatment to a A 
second level of understanding, namely, pursuit of common 
good involves the distribution of benefits and burdens, 
advantages and disadvantages to individuals (or groups). 
According to him, principles ofjustice are the subject matter 
of fair treatment. However, that aspect need not be dilated. 
B 
24. Allan7 , on the other hand, justifies the procedural 
fairness by following the aforesaid principles of natural justice 
as rooted in rule of law leading to good governance. He 
supports Galligan in this respect and goes to the extent by C 
saying that it is same as ensuring dignity of individuals, in 
respect of whom or against whom the decision is taken, in 
the following words: 
"The instrumental value of procedures should not be 
underestimated; the accurate application of 
authoritative standards is, as Galligan clearly explains, 
an important aspect of treating someone with respect. 
But procedures also have intrinsic value in 
acknowledging a person's right to understand his 
treatment, and thereby to determine his response as a 
conscientious citizen, willing to make reasonable 
sacrifices for the public good. If obedience to law ideally 
entails a recognition of its morally obligatory character, 
there must be suitable opportunities to test its moral 
credentials. Procedures may also be though to have 
intrinsic value in so
far as they constitute a fair balance 
between the demands of accuracy and other social 
needs: where the moral harm entailed by erroneous 
decisions is reasonably assessed and fairly distributed, 
procedures express society's commitment to equal 
concern and respect for all." 
It, thus, cannot be denied that principles of natural 
7 'Procedural Fairness and /he Duty of Respect', (198) 18 OJLS 497 
D 
E 
F 
G 
H
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A justice are grounded in procedural fairness which ensures 
taking of correct decision and procedural fairness is 
fundamentally an instrumental good, in the sense that 
procedure should be designed to ensure accurate or 
appropriate outcomes. In fact, procedural fairness is valuable 
B in both instrumental and non-instrumental terms. 
25. It is on the aforesaid jurisprudential premise that 
the fundamental principles of natural justice, including audi 
alteram partem, have developed. It is for this reason that 
C the courts have consistently insisted that such procedural 
fairness has to be adhered to before a decision is made and 
infraction thereof has led to the quashing of decisions taken. 
In many statutes, provisions are made ensuring that a notice 
is given to a person against whom an order is likely to be 
D passed before a decision is made, but there may be instances 
where though an authority is vested with the powers to pass 
such orders, which affect the liberty or property of an 
individual but the statute may not contain a provision for 
prior hearing. But what is important to be noted is that the 
E applicability of principles of natural jsutice is not dependent 
upon any statutory provision. The principle has to be 
mandatorily applied irrespective of the fact as to whether 
there is any such statutory provision or not. 
F 
De Smith8 captures the essence thus - "Where a 
G 
statute authorises interference with
properties or other rights 
and is silent on the question of hearing, the courts would 
apply rule of universal application and founded on plainest 
principles of natural justice". 
Wade9 also emphasizes that principles of natural 
justice operate as implied mandatory requirements, non-
observance of which invalidates the exercise of power. In 
H 
8 Judia/ Review of Administrative Action (1980), at page 161 
9 Administrative Law (1977), at page 395
DHARAMPAL SATYAPAL LTD. v. DY. COMMNR. OF 
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CENTRAL EXCISE, GAUHATI [A.K. SIKRI, J.] 
Cooperv. Sandworth Board ofWorks10 the Court laid down A 
that: ' ... although there is no positive word in the statute 
requiring that the party shall be heard, yet justice of common 
Jaw would supply the omission of Legislature". Exhaustive 
commentary explaining the varied contours of this principle 
can be traced to the judgment of this Court in Managing B 
Director, ECJL, Hyderabad & Ors. v. 8. Karunakar & Ors. 11 , 
wherein the Court discussed plenty of previous case law in 
restating the aforesaid principle, a glimpse whereof can be 
found in the following passages: 
"20. The origins of the law can also be traced to the 
principles of natural justice, as developed in the 
following cases: In A. K. Kraipak v. Union of India, (1969) 
2 SCC 262 : (1970) 1 SCR 457, it was held that the 
rules of natural justice operate in areas not covered by 
any law. They do not supplant the law of the land but 
supplement it. They are not embodied rules and their 
aim is to secure justice or to prevent miscarriage of 
justice. If that is their purpose, there is no reason why 
they should not be made applicable to administrative 
proceedings also especially when it is not easy to draw 
the line that demarcates administrative enquiries from 
quasi- judicial one.s. An unjust decision in an 
administrative inquiry may have a more far reaching 
effect than a decision in a quasi-judicial inquiry. It was
further observed that the concept of natural justice has 
undergone a great deal of change in recent years. What 
particular rule of natural justice should apply to a given 
case must depend to a great extent on the facts and 
circumstances of that case, the framework of the law 
under which the inquiry is held and the constitution of 
the tribunal or the body of persons appointed for that 
purpose. Whenever a complaint is made before a Court 
10 (1863) 14 GB (NS) 
11 (1993) 4 sec 727 
c 
D 
E 
F 
G 
H
460 
A 
B 
c 
D 
E 
F 
G 
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that some principle of natural justice has been 
contravened, the Court has to decide whether the 
observance of that rule was necessary for a just 
decision on the facts of that case. The rule that inquiry 
must be held in good faith and without bias and not 
arbitrarily or unreasonably is now included among the 
principles of natural justice. 
21. 
In Chairman, Board of Mining Examination v. 
Ramjee. (1977) 2 SCC 256, the Court has observed 
that natural justice is not an unruly horse, no lurking 
landmine, nor a judicial cure-all. If fairness is shown by 
the decision-maker to the man proceeded against, the 
form, features and the fundamentals of such essential 
processual propriety being conditioned by the facts and 
circumstances of each situation, no breach of natural 
justice can be complained of. Unnatural expansion of 
natural justice, without reference to the administrative 
realities and other factors of a given case, can be 
exasperating. The Courts cannot look at law in the 
abstract or natural justice as mere artifact. Nor can they 
fit into a rigid mould the concept of reasonable 
opportunity. If the totality of circumstances satisfies the 
Court that the party visited with adverse order has not 
suffered from denial of reasonable opportunity, the 
Court will decline to be punctilious or fanatical as if the 
rules of natural justice were sacred scriptures. 
22. In Institute of Chartered
Accountants of India v. L. 
K. Ratna, (1986) 4 SCC 537, Charan Lal Sahu v. Union 
oflndia, (1990) 1 SCC 613 (Bhopal Gas Leak Disaster 
Case) and C. B. Gautam v. Union of India. (1993) 1 
sec 78, the doctrine that the principles of natural justice 
must be applied in the unoccupied interstices of the 
statute unless there is a clear mandate to the contrary, 
is reiterated."
DHARAMPAL SATYAPAL LTD. v. DY. COMMNR. OF 
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CENTRAL EXCISE, GAUHATI [A.K. SIKRI, J.] 
In his separate opinion, concurring on this A 
fundamental issue, Justice K. Ramaswamy echoed the 
aforesaid sentiments in the following words: 
"61. It is now settled law that the proceedings must be 
just, fair and reasonable and negation thereof offends 
B 
Articles 14 and 21. It is well settled law that principles 
of natural justice are integral part of Article 14. No 
decision prejudicial to a party should be taken without 
affording an opportunity or supplying the material which 
. is the basis for the decision. The enquiry report 
C 
constitutes fresh material which has great persuasive 
force or effect on the mind of the disciplinary authority. 
The supply of the report along with the final order is 
like a post mortem certificate with putrefying odour. The 
failure to supply .copy thereof to the delinquent would 
D 
be unfair procedure offending not only Arts. 14, 21 and 
311 (2) of the Constitution, but also, the principles of 
natural justice." 
26. Likewise, in C.B. Gautam v. Union of India & E 
Ors.12, this Court once again held that principle of natural 
justice was applicable even though it was not statutorily 
required. The Court took the view that even in the absence 
of statutory provision to this effect, the authority was liable 
to give notice to the affected parties while purchasing their F 
properties under Section 269-UD of the Income Tax Act, 
1961. It was
further observed that the very fact that an 
imputation of tax evasion arises where an order for 
compulsory purchase is made and such an imputation casts 
a slur on the parties to the agreement to sell leads to the G 
conclusion that before such an imputation can be made 
against the parties concerned they must be given an 
opportunity to show-cause that the under valuation in the 
agreement for sale was not with a view to evade tax. It is, 
H 
12 (1993) 1 sec 78
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[2015) 6 S.C.R. 
A therefore, all the more necessary that an opportunity of 
hearing is provided. 
27. From the aforesaid discussion, it becomes clear 
that the opportunity to provide hearing before making any 
B decision was considered to be a basic requirement in the 
Court proceeding. Later on, this principle was applied to other 
quasi-judicial authorities and other tribunals and ultimately 
it is now clearly laid down that even in the administrative 
actions, where the decision of the authority may result in 
C civil consequences, a hearing before taking a decision is 
necessary. It was, thus, observed in A.K. Kraipak's case 
(supra) that if the purpose of rules of natural justice is to 
prevent miscarriage of justice, one fails to see how these 
rules should not be made available to administrative inquiries. 
D In the case of Maneka Gandhi v. Union of India & Anr. 13 
also the application of principle of natural justice was 
extended to the administrative action of the State and its 
authorities. It is, thus, clear that before taking an action, 
service of notice and giving of hearing to the noticee is 
E required. In Maharashtra State Financial Corporation v. 
F 
G 
Mis. Suvarna Board Mills & Anr. 14 , this aspect was 
explained in the following manner: 
"3. It has been contended before us by the learned 
counsel for the appellant that principles of natural justice 
were satisfied before taking action under Section 29, 
assuming that it was
necessary to do so. Let it be 
seen whether it was so. It is well settled that natural 
justice cannot be placed in a straight-jacket; its rules 
are not embodied and they do vary from case to case 
and from one fact-situation to another. All that has to 
be seen is that no adverse civil consequences are 
allowed to ensue before one is put on notice that the 
H 
13 (1978) 1 sec 248 
"(1994) s sec 566
DHARAMPAL SATYAPAL LTD. v. DY. COMMNR. OF 
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CENTRAL EXCISE, GAUHATI [AK. SIKRI, J.] 
consequence would follow if he would not take care of 
A 
the lapse, because of which the action as made known 
is contemplated. No particular form of notice is the 
demand of law: All will depend on facts and 
circumstances of the case." 
28. In the case of East India Commercial Company 
Ltd., Calcutta & Anr. v. The Collector of Customs, 
Calcutta15 , this Court held that whether the statute provides 
B 
for notice or not, it is incumbent upon the quasi-judicial 
authority to issue a notice to the concerned persons C 
disclosing the circumstances under which proceedings are 
sought to be initiated against them, failing which the 
conclusion would be that principle of natural justice are 
violated. To the same effect are the following judgments: 
a) U.0.1. & Ors. v. Madhumilan Syntex Pvt. Ltd,. &Am: 16 
b) Morarji Goculdas B&W Co. Ltd. & Anr. v. U.0.1. & 
Ors. 11 
c) Metal Forgings & Anr. v. U.0.1. & Ors.18 
d) U.0.1. & Ors. v. Tata Yodogawa Ltd. & Anr. 19 
29. Therefore, we are inclined to hold that there was 
D 
E 
a requirement of issuance of show-cause notice by the F 
Deputy Commissioner before passing the order of recovery, 
irrespective of the fact whether Section 11A of the Act is 
attracted in the instant case or not. 
30. But that is not the end of the matter. While the G 
law on the principle of audi alteram partem has progressed 
15 AIR 1962 SC 1893 
16 (1988) 3 sec 348 
11
(1995) supp 3 sec 588 
16 (2003) 2 sec 36 
19 1988 (38) ELT 739 (SC):: 1988 (19) ECR 569 (SC) 
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A in the manner mentioned above, at the same time, the Courts 
have also repeatedly remarked that the principles of natural 
justice are very flexibl1e principles. They cannot be applied 
in any straight-jacket formula. It all depends upon the kind 
of functions performed and to the extent to which a person 
B is likely to be affected. For this reason, certain exceptions 
to the aforesaid principles have been invoked under certain 
circumstances. For example, the Courts have held that it 
would be sufficient to allow a person to make a representation 
and oral hearing may not be necessary in all cases, though 
C in some matters, depending upon the nature of the case, 
not only full-fledged oral hearing but even cross-examination 
of witnesses is treated as necessary concomitant of the 
principles of natural justice. Likewise, in service matters 
0 
relating to major punishment by way of disciplinary action, 
the requirement is very strict and full-fledged opportunity is 
envisaged under the statutory rules as well. On the other 
hand, in those cases where there is an admission of charge, 
even when no such formal inquiry is held, the punishment 
E based on such admission is upheld. It is for this reason, in 
certain circumstances, even post-decisional hearing is held 
to be permissible. Further, the Courts have held that under 
certain circumstances principles of natural justice may even 
be excluded by reason of diverse factors
like time, place, 
F the apprehended danger and so on. 
31. We are not concerned with these aspects in the 
present case as the issue relates to giving of notice before 
taking action. While emphasizing that the principles of natural 
G justice cannot be applied in straight-jacket formula, the 
aforesaid instances are given. We have highlighted the 
jurisprudential basis of adhering to the principles of natural 
justice which are grounded on the doctrine of procedural 
fairness, accuracy of outcome leading to general social goals, 
H etc. Nevertheless, there may be situations wherein for some
DHARAMPAL SATYAPAL LTD. v. DY. COMMNR. OF 
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CENTRAL EXCISE, GAUHATI [A.K. SIKRI, J.] 
reason -
perhaps because thei evidence against the A 
individual is thought to be utterly compelling - it is felt that a 
fair hearing 'would make no difference' - meaning that a 
hearing would not change the ultimate conclusion reached 
by the decision-maker-then no legal duty to supply a hearing 
arises. Such an approach was endorsed by Lord Wilberforce B 
in Malloch v. Aberdeen Corporation20, who said that a 
'breach of procedure ... cannot give (rise to) a remedy in the 
courts, unless behind it there is something of substance 
w:1ich has been lost by the failure. The court dos not act in 
vain'. Relying on these comments, Brandon LJ opined in · C 
Cinnamondv. British Airports Authority21 that 'no one can 
complain of not being given an opportunity to make 
representations if such an opportunity would have availed 
him nothing'. In such situations, fair procedures appear to 0 
serve no purpose since 'right' result can be secured without 
according such treatment to the individual. In this behalf, 
we rieed to notice one other exception which has been carved 
out to the aforesaid principle by the Courts. Even if it is 
found by the Court that there is a violation of principles of E 
natural justice, the Courts have held that it may not be 
necessary to strike down the action and refer the matter 
back to the authorities to take fresh decision after complying 
with the procedural
requirement in those cases where non-
grant of hearing has not caused any prejudice to the person 
F 
against whom the action is taken. Therefore, every violation 
of a facet of natural justice may not lead to the conclusion 
that order passed is always null and void. The validity of 
the order has to be decided on the touchstone of 'prejudice'. 
The ultimate test is always the same, viz., the test of prejudice G 
or the test of fair hearing. 
32. In Managing Director, ECIL (supra), the majority 
opinion, penned down by Sawant, J., while summing up the 
20 (1971) 1WLR1578 at 1595 
21 (1980) 1 WLR 582 at 593 
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[2015) 6 S.C.R. 
A discussion and answering the various questions posed, had 
to say as under qua the prejudice principle: 
B 
c 
D 
E 
F 
G 
H 
"30. Hence the incidental questions raised above may 
be answered as follows: 
xx 
xx 
xx 
(v) The next question to be answered is what is the 
effect on the order of punishment when the report of 
the enquiry officer is not furnished to the employee and 
what relief should be granted to him in such cases. 
The answer to this question has to be relative to the 
punishment awarded. When the employee is 
dismissed or removed from service and the inquiry is 
set aside because the report is not furnished to him, in 
some cases the non-furnishing of the report may have 
prejudiced him gravely while in other cases it may have 
made no difference to the ultimate punishment awarded 
to him. Hence to direct reinstatement of the employee 
with back-wages in all cases is to reduce the rules of 
justice to a mechanical ritual. The theory of reasonable 
opportunity and the principles of natural justice have 
been evolved to uphold the rule of law and to assist 
the individual to vindicate his just rights. They are not 
incantations to be invoked nor rites to be performed on 
all and sundry occasions. Whether in fact, prejudice 
has been caused to the employee or not on account of 
the denial to him of the report, has to be considered on 
the facts and circumstances of each case. Where, 
therefore, even after the
furnishing of the report, no 
different consequence would have followed, it would 
be a perversion of justice to permit the employee to 
resume duty and to get all the consequential benefits. 
It amounts to rewarding the dishonest and the guilty 
and thus to stretching the concept of justice to illogical
DHARAMPAL SATYAPAL LTD. v. DY. COMMNR. OF 
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CE.NTRAL EXCISE, GAUHATI [A.K. SIKRI, J.] 
and exasperating limits. It amounts to an "unnatural 
A 
expansion of natural justice" which in itself is antithetical 
to justice." 
33. So far so good. However, an important question 
posed by Mr. Sorabjee is as to whether it is open to the B 
authority, which has to take a decision, to dispense with the 
requirement of the principles of natural justice on the grouna 
that affording such an opportunity will not make ia
1ny 
difference? To put it otherwise, can the administrative 
authority dispense with the requirement of issuing notice by C 
itself deciding that no.prejudice will be caused to the person 
against whom the action is contemplated? Answer has to 
be in the negative. It is not permissible for the authority to 
jump over the compliance of the principles of natural justice 
on the ground that even if hearing had been provided it would D 
have served no useful purpose. The opportunity of hearing 
will serve the purpose or not has to be considered at a later 
stage and such things cannot be presumed by the authority. 
This was so .held by the English Court way back in the year E 
1943 in the case of General Medical Council v. 
Spackman22• This Court !jlso spoke in the same language 
in the case of The Board of High School and Intermediate 
Education, U.P. & Ors. v. Kumari Chittra Srivastava & 
Ors.23• as is apparent from the following words: 
"8. The learned counsel for the
appellant, Mr. C.B. 
Aggarwal, contends that the facts are not in dispute 
and it is further clear that no useful purpose would have 
been served if the Board had served a show cause 
notice on the petitioner. He says that in view of these 
circumstances it was not necessary for the Board to 
have issued a show cause notice. We are unable to 
accept this contention. Whether a duty arises in a 
22 1943AC·627 
23 (1970) 1SCC 121 : AIR 1970 SC 1039 
F 
G 
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[2015] 6 S.C.R. 
A 
particular case to issue a show cause notice before 
inflicting a penalty does not depend on the authority's 
satisfaction that the person to be penalised has no 
defence but on the nature of the order proposed to be 
B 
passed." 
34. In view of the aforesaid enunciation of law, Mr. 
Sorabjee may also be right in his submission that it was not 
open for the authority to dispense with the requirement of 
principles of natural justice on the presumption that no 
C prejudice is going to be caused to the appellant since 
judgment in R.C. Tobacco (supra) had closed all the windows 
for the appellant. 
35. At the same time, it cannot be denied that as far 
D as Courts are concerned, they are empowered to consider 
as to whether any purpose would be served in remanding 
the case keeping in mind whether any prejudice is caused 
to the person against whom the action is taken. This was so 
clarified in the case of Managing Director, ECIL (supra) 
E itself in the following words: 
"31. Hence, in all cases where the enquiry officer's 
report is not furnished to the delinquent employee in 
the disciplinary proceedings, the Courts and Tribunals 
F 
should cause the copy of the report to be furnished to 
the aggrieved employee if he has not already secured 
it before coming to the CourU Tribunal and given the 
employee an opportunity to show how his or her case 
was prejudiced because of the non-supply of the report. 
G 
If after hearing the
parties, the CourUTribunal comes 
to the conclusion that the non-supply of the report would 
have made no difference to the ultimate findings and 
the punishment given, the CourUTribunal should not 
interfere with the order of punishment. The CourU 
H 
Tribunal should not mechanically set aside the order
DHARAMPAL SATYAPAL LTD. v. DY. COMMNR. OF 
CENTRAL EXCISE, GAUHATI [A.K. SIKRI, J.) 
of punishment on the ground that the report was not 
furnished as it regrettably being done at present. The 
courts should avoid resorting to short cuts. Since it is 
the Courts/Tribunals which will apply their judicial mind 
to the question and give their reasons for setting aside 
or not setting aside the order of punishment, (and not 
any internal appellate or revisional authority), there 
would be neither a breach of the principles of natural 
justice nor a denial of the reasonable opportunity. It is 
only if the Court/Tribunal finds that the furnishing of 
the report would have made a difference to the result 
in the case that it should set aside the order of 
punishment." 
469 
A 
B 
c 
36. Keeping in view the aforesaid principles in mind, 
even when we find that there is an infraction of principles of D 
natural justice, we have to address a further question as to 
whether any purpose would be served in remitting the case 
to the authority to make fresh demand of amount recoverable, 
only after issuing notice to show cause to the appellant. In 
the facts of the present case, we find that such an exercise E 
would be totally futile having regard to the law laid down by 
this Court in R.C. Tobacco (supra). 
37. To recapitulate the events, the appellant was 
accorded certain benefits under Notification dated July 08, 
F 
1999. This Notification stands nullified by Section 154 of 
the Act
of 2003, which has been given retrospective effect. 
The legal consequence of the aforesaid statutory provision 
is that the amount with which the appellant was benefitted 
under the aforesaid Notification becomes refundable. Even G 
after the notice is issued, the appellant cannot take any plea 
to retain the said amount on any ground whatsoever as it is 
bound by the dicta in R.C. Tobacco (supra). Likewise, even 
the officer who passed the order has no choice but to follow H 
the dicta in R.C. Tobacco (supra). It is important to note
470 
SUPREME COURT REPORTS 
[2015) 6 S.C.R. 
A 
that as far as quantification of the amount is concerned, it is 
not disputed at all. In such a situation, issuance of notice 
would be an empty formality and we are of the firm opinion 
that the case stands covered by 'useless formality theory'. 
B 
38. In Escorts Farms Ltd. (Previously known as 
Mis. Escorts Farms (Ramgarh) Ltd.) v. Commissioner, 
Kumaon Division, Nainital, U.P. & Ors.24 , this Court, while 
reiterating the position that rules of natural justice are to be 
followed for doing substantial justice, held that, at the same 
C time, it would be of no use if it amounts to completing a 
mere ritual of hearing without possibility of any change in 
the decision of the case on merits.. It was so explained in 
the following terms: 
D 
E 
F 
G 
"64. Right of hearing to a necessary party is a valuable 
right. Denial of such right is serious breach of statutory 
procedure prescribed and violation of rules of natural 
justice. 
In these appeals preferred by the holder of 
lands and some other transferees, we have found that 
the terms of government grant did not permit transfers 
of land without permission of the State as grantor. 
Remand of cases of a group of transferees who were 
not heard, would, therefore, be of no legal 
consequence, more so, when on this legal question all 
affected parties have got full opportunity of hearing 
before the High Court and in this appeal before this 
Court. Rules of natural justice are
to be followed for 
doing substantial justice and not for completing a mere 
ritual of hearing without possibility of any change in 
the decision of the case on merits. In view of the legal 
position explained by us above, we, therefore, refrain 
from remanding these cases in exercise of our 
discretionary powers under Article 136 of the 
Constitution of India." 
H 
24 (2004) 4 sec 2a1
DHARAMPAL SATYAPAL LTD. v. DY. COMMNR. OF 
471 
CENTRAL EXCISE, GAUHATI [A.K. SIKRI, J.] 
39. Therefore, on the facts of this case, we are of the A 
opinion that non-issuance of notice before sending 
communication dated June 23, 2003 has not resulted in any 
prejudice to the appellant and it may not be feasible to direct 
the respondents to take fresh action after issuing notice as 
that would be a mere formality. 
B 
40. With this we advert to the last submission of Mr. 
Sorabjee that the judgment in R.C. Tobacco (supra) (which 
is a two Judge Bench decision) is in conflict with the three 
Judge Bench judgment in J.K. Cotton (supra). This C 
argument is not even open to the appellant for the simple 
reason that the judgment in J.K. Cotton (supra) was 
specifically taken note of and discussed in R.C. Tobacco 
(supra). Paragraph 13 of the judgment in R.C. Tobacco 
(supra) would reflect that the appellant therein had specifically D 
relied upon the judgment in J.K. Cotton (supra) in support 
of the submission that retrospectivity was harsh and 
excessive since there is, in fact, a retrospective imposition 
of excise duty. It was also argued that justification of such 
retrospective imposition of tax must be overwhelming and E 
no such overriding consideration had been disclosed. The 
submission went to the extent of pleading that if the appellant 
is called upon to pay the excise duty now it will cripple its 
unit. More pertinent was another submission, which is F 
relevant
for our purpose, that the demand which was raised 
could not be sustained as it was made without issuing any 
show-cause notice and was in contravention of Section 11A 
of the Act. In support of this view, few judgments, including 
J.K. Cotton (supra), were relied upon. The Court, however, G 
did not find any merit in the aforesaid submissions and dealt 
with the issue as under, duly taking note of the judgment in 
J.K. Cotton (supra): 
"40. In J.K. Cotton Spg. & Wvg. Mills Ltd. v. Union of 
India, (1987) Supp. SCC 350, relied upon by the 
H
472 
A 
B 
c 
D 
E 
F 
G 
H 
SUPREME COURT REPORTS 
[2015] 6 S.C.R. 
petitioners, by virtue of the retrospective amendment 
of Rules 9 and 49 of the Central Excise Rules in 1982, 
commodities obtained at an intermediate stage of 
manufacture in a continuous process were deemed to 
have been 'removed' within the meaning of Rule 9(1) 
thereby making such intermediate products dutiable 
under the Act with effect from the commencement of 
the Act i.e. 1944. In this context the Court held that the 
amended Rules 9 and 49 would take effect subject to 
Section 11-A. The decision is distinguishable. The 
circumstances in which the Court held that the demands 
for duty could only be limited to six months prior to the 
amendment was unquestionably different from those 
present in the case before us. What we have to consider 
here is whether the benefit granted in 1999 could be 
withdrawn in 2003. Besides, the Court in J.K. Cotton 
Spg. & Wvg. Mills Ltd. case rejected the contention of 
the Union of India that Section 51 of the 1982 Finance· 
Act by which the amendments were made to Rules 9 
and 49 overrode the provisions of Section 11-A saying: 
(SCC p. 363, pzira 32) "if the intention of the legislature 
was to nullify the effect of Section 11-A, .. the legislature 
would have specifically provided for the same." Similarly 
our decision iin National Agricultural Coop. Marketing 
Federation of India Ltd. v. Union of India, (2003) 5 SCC 
23 which dealt with an amendment to Section 80-
P(2)(a)(iii) of the Income Tax Act, 1961 noted that: (SCC 
p.35, para 29) 
"The amendment does not seek to touch on the 
periods of limitation provided in the Act, and in 
the absence of such express provision or clear 
implication, the legislature clearly could not be 
taken to intend that the amending provisions 
authorizes the Income Tax Officer to commence

DHARAMPAL SATYAPAL LTD. v. DY. COMMNR. OF 
473 
CENTRAL EXCISE, GAUHATI [A.K. SIKRI, J.] 
proceedings which before the new Act came into 
A 
force, had, by the expiry of the period provided 
become barred". 
In the present case Section 154(4) specifically and 
expressly allows amounts to be recovered within a 
B 
period of thirty days from the day Finance Bill, 2003 
received the assent of the President. It cannot but be 
held therefore that the period of six months provided 
under Section 11-Awould not apply." 
40 A. In the aforesaid scenario, when the Court was 
conscious of the principle laid down in J.K. Cotton (supra) 
and explained the same in a particular manner while deciding 
c 
the appeal in R.C. Tobacco (supra), it cannot be argued 
that the judgment in R.C. Tobacco (supra) runs contrary to D 
J.K. Cotton (supra). 
41. For all these reasons, the appeals are dismissed. 
Nidhi Jain 
Appeals dismissed. 
E