Judgment Case ID: 6334

Judgment:
ivil Appeal No. 1102 of 1990. From the Judgment and Order dated 7.10.1988 of the Patna High Court in C.W.J.C. No. 2075 of 1988. A.K. Sen	 K.D. prasad	 J. Krishna and Mrs. Naresh Bakshi for the Appellant. S.K. Sinha and U.S. Prasad for the Respondents. The Judgment of the Court was delivered by: K. JAGANNATHA SHETTY	 J. Special Leave is granted. This appeal from an order of the Patna High Court raises an important question as to the scope of section 33 B of the ( 'The Act '). The facts can be quite shortly stated: The appellant company is mainly engaged in construction of coal washeries on contract basis in different collieries and also doing allied and incidental work. Shivaji Prasad Sinha respondent No. 4 was a Senior Supervisor in the company 's establishment at Dhanbad. It is said that he was caught red handed when carrying 55 pieces of electromagnetic clutch plates kept concealed in the tool box of his scooter. The management held domestic enquiry into the incident and found him guilty of committing theft. He was accordingly dismissed from service. The dispute arising therefrom was referred under Section 10(1)(c) of the Act to Labour Court Dhanbad for adjudication. The Labour Court registered the case as refer ence case No. 4 of 1988 and issued notice to the parties. The parties entered appearance and filed their respective pleadings. When the matter was thus pending consideration the respondent seems to have written to the Government stating that it would be difficult for him to attend the Labour Court Dhanbad since he has been residing at Hajipur and it would be convenient for him if the case is trans ferred to Labour Court Patna. That application was made without intimation to the management. The Government howev er	 has acceded to the request of the respondent and without opportunity to 294 the management transferred the case to Labour Court Patna. The Notification issued in that regard reads as follows: "NOTIFICATION Patna dated 8th August 1988 S.O. In exercise of powers conferred by sub section (1) of Section 33 B of the (14 of 1947) the Governor of Bihar after careful consideration of the application of the petitioner Shri Shivajee Prasad Sinha wherein he has prayed for the transfer of adjudication proceedings to Patna keeping in view to the difficulties expressed by him to attend the labour court	 Dhanbad	 regu larly due to his residence at Hajipur is pleased to withdraw the proceeding shown in Annexure 'A ' pending before Labour Court	 Dhanbad and transfer the said proceeding to the Labour Court	 Patna for speedy disposal from the stage at which the case is transferred. " The management moved the High Court by way of writ petition under Article 226 of the Constitution to have the Notification quashed. The High Court did not agree and summarily dismissed the writ petition with an observation: "Since no prejudice is being caused to the petitioner and no allegation of mala fide has been made against the presiding officer	 Patna	 we are not inclined to interfere with the order under challenge. This application is dismissed" The management in the appeal challenges the Government notification withdrawing and transferring the pending case from the Labour Court Dhanbad to Labour Court Patna. Since the impugned notification has been issued under Section 33 B of the Act	 we may for immediate reference set out that Section. Omitting immaterial words	 it is in these terms: "33.B. Power to transfer certain proceedings: (1) The appropriate Government may	 by order in writing and for reasons to be stated therein	 withdraw any proceeding under this Act pending before a Labour Court	 295 Tribunal	 or National Tribunal and transfer the same to another Labour Court	 Tribunal or National Tribunal	 as the case may be	 for the disposal of the proceeding and the Labour Court	 Tribunal or National Tribunal to which the proceeding is so transferred may	 subject to special direc tions in the order of transfer	 proceed either de novo or from the stage at which it was so transferred." The Section 33 B provides power to the appropriate Government to withdraw any proceedings pending before a labour court or Tribunal and transfer it for disposal to another labour court or Tribunal. It could be exercised suo motu or on representations of the parties. The expression 'may ' in sub section (1) of Section 33 B only makes it discretionary in so far as the appropriate Government taking a decision as to whether the power conferred thereunder has to be exercised or not. But when once a decision is taken to transfer a pending case then the requirement of giving reasons becomes mandatory. The authority is under legal obligation to record reasons in support of its decision. Reasons would be life of the decision. Failure to give reasons or giving reasons not germane would be fatal to the decision. In Associated Electrical Industries (P) Ltd. vs Its Workmen	 [1961] II LLJ 122	 130 the Government withdrew and transferred a reference from one tribunal to another tribu nal merely stating that expediency required the withdrawal and transfer. The validity of the order of withdrawal and transfer was challenged inter alia on the ground that no reasons were stated for passing the order. Gajendragadkar	 J.	 (as he then was) speaking for this Court observed that the requirement about the statement of reasons to be record ed must be complied with both in substance and in letter. To say that it is expedient to withdraw a case from one tribu nal and transfer it to another does not amount to giving reasons as required by the Section. In the instant case	 the key question for consideration is whether the Government before accepting the representa tion of the workman and transferring the case from the labour court	 Dhanbad to labour court	 Patna should have given an opportunity to the management? The validity of the reasons given by the Government for transferring the case is another question to be considered. We will presently consider the question but before doing so a brief survey of some of the High Courts decisions bearing on this aspect may be usefully made. The Punjab High Court in Workman of Punjab 296 Worsted Spinning Mills Chheharta vs State of Punjab & Ors.	 [1965] II LLJ 2 18 has expressed the view that the power to transfer pending case under section 33 B is not a mere administrative but quasi judicial power and the appropriate Government cannot transfer a case on the basis of allega tions of one party without giving reasonable opportunity to other party to represent its point of view. This was also the view recognised by the Madras High Court in Management of Sri Rani Lakshmi Ginning and Weaving Mills Ltd. vs State of Madras	 at 167. It was explained by the Madras High Court that the reasons given by a party who moved for transfer may not be valid or relevant or may not be true at all. Whether such reasons in fact exist and whether those reasons have any relevance for a transfer could be tested only if the other party has notice of the same. The High Courts of Calcutta	 Andhra Pradesh and Allaha bad have however	 taken contrary view. In Jay Engineering Works Ltd. vs Fourth Industrial Tribunal	 Calcutta	 [1977] (Lab) 1C 1739 at 1750 the Calcutta High Court has observed that it would be difficult to appreciate how under such circumstances	 the Government could be called upon to give a notice to the parties before making an order under section 33 B. There could be no principle involved in giving such a notice. Nobody 's rights could possibly have been effected in taking such action and there is no question of observing the principles natural justice. The Andhra Pradesh High Court in Muthe Steels (India) Ltd. vs Labour Court	 Hyderabad	 [1979] (Lab) IC 325 at 329 has adopted a similar line of reasoning. It was emphasized that Section 33 B in terms does not con template any notice being given before a transfer is made of any proceeding from one Labour Court to another. There is no right to any party to have any question decided by a partic ular court. An arbitrary exercise of power of transfer is adequately safeguarded by the statutory requirement to record reasons for such transfer. The Allahabad High Court in Pioneer Ltd. vs Labour Court	 Gorakhpur	 [1983] (Lab) IC 335	338 has also expressed similar views. After the leading English case of Ridge vs Baldwin	I ; and an equally important case of this Court in A.K. Kraipak & Ors. vs Union of India	 there was a turning point in the development of doctrine of natural justice as applicable to administrative bodies. Both the authorities laid down that for application of rules of natural justice the classification of functions as 'judi cial ' or 'administrative ' is not necessary. Lord Reid in Ridge case explained	 'that the duty to act judicially may arise from the very nature of the 297 function intended to be performed and it need not be shown to be super added '. Hegde	 J.	 in Kraipak case said that under our Constitution the rule of law pervades over the entire field of administration. Every organ of the State under our Constitution is regulated and controlled by the rule of law. The concept of rule of law would lose its vitality if the instrumentalities of the State are not charged with the duty of discharging their functions in a fair and just manner. The requirement of acting judicially in essence is nothing but a requirement to act justly and fairly and not arbitrarily or capriciously. The procedures which are considered inherent in the exercise of a judicial power are merely those which facilitate if not ensure a just and fair decision. What is thus important in the modern administration is the fairness of procedure with elimination of element of arbitrariness. The State functionaries must act fairly and reasonably. That is	 however	 not the same thing to state that they must act judicially or quasijudicially. In Keshav Mills Co. Ltd. vs Union of India	 ; Mukherjea	 J.	 said (at 30): "The administrative authority concerned should act fairly	 impartially and reasonably. Where administrative officers are concerned	 the duty is not so much to act judicially as to act fairly." The procedural standards which are implied by the duty to act fairly has been explained by Lord Pearson in Pearl berg vs Varty	 	547: "A tribunal to whom judicial or quasi judicial functions are entrusted is held to be required to apply those principles (i.e. the rules of natural justice) in performing those functions unless there is a provision to the contrary. But where some person or body is entrusted by Parliament with administrative or executive functions there is no presump tion that compliance with the principles of natural justice is required although	 as 'Parliament is not to be presumed to act unfairly '	 the courts may be able in suitable cases (perhaps always) to imply an obligation to act with fair ness. " In Mohinder Singh Gill vs Chief Election Commissioner	 ; at 434 Krishna Iyer	 J. commented that natural justice though 298 varying is the soul of the rule as fair play in action. It extends to both the fields of judicial and administrative. The administrative power in a democratic set up is not allergic to fairness in action and discretionary executive justice cannot degenerate into unilateral injustice. Good administration demands fair play in action and this simple desideratum is the fount of natural justice. Fairness is flexible and it is intended for improving the quality of government by injecting fairplay into its wheels. In Maneka Gandhi vs Union of India	 [1978] 2 SCR 621 Bhagwati	 J.	 expressed similar thought that audio alteram partem is a highly effective rule devised by the Courts to ensure that a statutory authority arrives at a just decision and it is calculated to act as a healthy check on the abuse or misuse of power. In Swadeshi Cotton Mills vs Union of India	 Sarkaria	 J.	 speaking for himself and Desai	 J.	 said that irrespective of whether the power conferred on a statu tory body or tribunal is administrative or quasi judicial	 a duty to act fairly	 that is	 in consonance with the funda mental principles of substantive justice is generally im plied. The presumption is that in a democratic polity wedded to the rule of law	 the State or the Legislature does not intend that in the exercise of their statutory powers its functionaries should act unfairly or unjustly. In the same case	 Chinnappa Reddy	 J.	 added (at 2 12) that the princi ples of natural justice are now considered so fundamental as to be 'implicit in the concept of ordered liberty '. They are	 therefore	 implicit in every decision making function	 call it judicial	 quasi judicial or administrative. The learned Judge went on to state that where the statute is silent about the observance of the principles of natural justice	 such statutory silence is taken to imply compliance with the principles of natural justice. The implication of natural justice being presumptive	 it should be followed by the authorities unless it is excluded by express words of statute or by necessary implication. Citations could be multiplied since there is fairly abundant case law has come into existence: See	 for example	 Royappa vs State of Tamil Nadu	 ; and Union of India vs Tulsi Ram	 [1985] (Supp.) 2 SCR 13 1. More recently in a significant judgment in Charan Lal Sahu & Ors. vs Union of India	 JT learned Chief Justice Sabyasachi Mukharji has referred to almost all the authori ties of this Court on this aspect and emphasized that the principles of natural justice are fundamental in the consti tutional set up of this country. No man or no man 's right should be affected without an 299 opportunity to ventilate his views. The justice is a psycho logical yearning	 in which men seek acceptance of their view point by having an opportunity before the forum or the authority enjoined or obliged to take a decision affecting their right. It may be noted that the terms 'fairness of procedure '	 'fair play in action '	 'duty to act fairly ' are perhaps used as alternatives to "natural justice" without drawing any distinction. But Prof. Paul Jackson points out that "Such phrases may sometimes be used to refer not to the obligation to observe the principles of natural justice but	 on the. contrary	 to refer to a standard of behaviour which	 in creasingly	 the courts require to be followed even in cir cumstances where the duty to observe natural justice is inapplicable" (Natural Justice by Paul Jackson 2nd ed. p. 11). We share the view expressed by Professor Jackson. Fair ness	 in our opinion	 is a fundamental principle of good administration. It is a rule to ensure the vast power in the modern state is not abused but properly exercised. The State power is used for proper and not 'for improper purposes. The authority is not misguided by extraneous or irrelevant consideration. Fairness is also a principle to ensure that statutory authority arrives at a just decision either in promoting the interest or affecting the rights of persons. To use the time hallowed phrase "that justice should not only be done but be seen to be done" is the essence of fairness equally applicable to administrative authorities. Fairness is thus a prime test for proper and good adminis tration. It has no set form or procedure. It depends upon the facts of each case. As Lord Pearson said in Pearlberg vs Varty	 (at 547)	 fairness does not necessarily require a plurality of hearings or representations and counter repre sentations. Indeed	 it cannot have too much elaboration of procedure since wheels of administration must move quickly. A case with a not dissimilar problem was in Pannalal Binjraj and Anr. vs Union of India	 There the Commissioner of Income Tax by the power vested under section 5(7A) of Income Tax Act	 1922	 transferred an asses see 's case from one Income Tax Officer to another without hearing the assessee. Section 5(7A) of the Income Tax Act	 1922 provided: "The Commissioner of Income Tax may transfer any case from one Income Tax Officer subordinate to him to another	 and the Central Board of Revenue may transfer any case from any one Income Tax Officer to another. Such 300 transfer may be made at any stage of the proceedings	 and shall not render necessary the re issue of any notice al ready issued by the Income tax Officer from whom the case is transferred. " This Section did not provide for affording an opportuni ty to the assessee before transferring his case from one Income Tax Officer to another. The assessee challenged the constitutional validity of the Section. This Court upheld its validity on the ground that it is a provision for admin istrative convenience. N.H. Bhagwati	 J.	 speaking for this Court	 however remarked (at 589): " . . it would be prudent if the principles of natural justice are followed	 where circumstances permit	 before any order of transfer under section 5(7A) of the Act is made by the Commissioner of Income Tax or the Central Board of Revenue	 as the case may be	 and notice is given to the party affected and he is afforded a reasonable opportunity of representing his views on the question and the reasons of the order are reduced however briefly to writing . There is no presumption against the bona fide or the honesty of an assessee and normally the income tax authorities would not be justified in refusing to an assessee a reasonable oppor tunity of representing his views when any order to the prejudice of the normal procedure laid down in section 64(1) and (2) of the Act is sought to be made against him	 be it a transfer from one Income Tax Officer within the State to an Income Tax Officer without it	 except of course where the very object of the transfer would be frustrated if notice was given to the party affected. " Section 5(7A) was replaced by Section 127 of the Income Tax Act	 1961	 which now makes it obligatory to record reasons in making the order of transfer after affording a reasonable opportunity of being heard to the assessee in the matter. In Ajantha Industries vs Central Board of Taxes	 ; this Court considered the validity of a transfer order passed under Section 127 and it was held that merely recording of reasons on the file was not sufficient. It was essential to give reasons to the affected party. The order of transfer in that case was quashed for not communi cating reasons to the assessee. In the present case	 the State has withdrawn the pending refe 301 rence from the Labour Court	 Dhanbad and transferred it to another Labour Court at the distant District of Patna	 on the representation of the workman	 without getting it veri fied from the management. The State in fairness ought to have got it verified by giving an opportunity to the manage ment which is a party to the pending reference. Denial of that opportunity is a fatal flaw to the decision of the Government. The management need not establish particular prejudice for want of such opportunity. In S.L. Kapoor vs Jagrnohan	 ; at 765 Chinnappa Reddy	 J.	 after referring to the observation of Donaldson	 J.	 in Altco Ltd. vs Suth erland	 said that the concept that justice must not only be done but be seen to be done is basic to our system and it is concerned not with a case of actual injustice but with the appearance of injustice or possible injustice. It was emphasized that the principles of natural justice know of no exclusionary rule dependent on whether it would have made any difference if natural justice had been observed. The non observance of natural justice is itself prejudice to any man and proof of prejudice independ ently of proof of denial of natural justice is unnecessary. This takes us to the reasons given by the Government in support 'of the order of transfer. The Government has stated that the workman is having his residence at Hajipur and it would be therefore	 inconvenient for him to attend the labour court regularly at Dhanbad. However	 most of the factors do not point that way. The workman and his family members seem to be still residing in colony quarter at Dhanbad (Annexure C). His two sons are studying in De Nobili School at Mugma which is a nearby village. Reference may be made to a letter dated September 8	 1988 (Annexure D) of the Headmaster of the School in which the children of the work man are studying. Reference may also be made to a letter (Annexure E) from the Assistant Electrical Engineer in proof of the electricity supplied to the quarter occupied by the workman at Dhanbad. As against these material	 the workman has not produced any proof in support of his allegation that he has been residing in a village home near Patna. In fact	 in the counteraffidavit	 he has not denied the documents annexed to the Special Leave Petition	 and not seriously disputed the factum of his residence in the colony quarter at Dhanbad. Even the alleged recommendation of the Ward Commissioner referred in his counter affidavit has not been produced. We have	 therefore	 no hesitation in holding that the Government was misled by the representation of the workman. 302 In the result	 we allow the appeal and quash the notifi cation dated August 8	 1988 by which the Government of Bihar transferred the case from the Labour Court	 Dhanbad to the Labour Court	 Patna. The Labour Court	 Dhanbad shall now proceed to dispose of the matter as expeditiously as possi ble. In the 'circumstances of the case	 we make no order as to costs. P.S. S Appeal allowed.

Summary:
Sub section (1) of section 33 B of the provides that the appropriate Government may	 by order in writing and for reasons to be stated therein	 withdraw any proceedings pending before a Labour Court or Tribunal and transfer it for disposal to another Labour Court or Tribunal. Respondent No. 4	 a workman of the appellant company at Dhanbad	 was caught red handed while stealing certain goods. The domestic enquiry found him guilty of committing theft. Consequently	. he was dismissed from service. The dispute arising therefrom was referred to the Labour Court	 Dhanbad under section 10(1)(c) of the Act for adjudication. When the matter was pending consideration the respondent sought transfer of the case to the Labour Court at Patna on the plea that since he was residing at his village near Patna it would be difficult for him to attend the proceedings at Dhanbad. That application was made without intimation to the management. The Government	 however	 without giving opportu nity to the management transferred the case to Patna by a notification dated August 8	 1988 issued under section 33B of the Act. The writ petition filed by the management seeking to quash the notification was dismissed by the High Court on the view that no prejudice was being caused to the manage ment and no allegation of mala fide had been made against the presiding officer. Allowing the appeal by special leave	 the Court. HELD: 1.1 The power to transfer a pending case under section 33B of the is not a mere administra tive but quasijudicial power and the appropriate Government cannot transfer a case on the basis of allegations of one party without giving a reasonable opportunity to the other party to represent its point of view. Such 291 allegations may not be valid or relevant or may not be true at all. That could be tested only if the other party has notice of the same. [296A C] Punjab Worsted Spinning Mills	 Chheharta vs State of punjab & Ors.	 [1965] II LLJ 218 and Management of Sri Rani Lakshmi Ginning & Weaving Mills Ltd. vs State of Madras	 	 referred to. Jay Engineering Works Ltd. vs Fourth Industrial Tribu nal	 Calcutta	 [1977] (Lab) I.C. 1739; Muthe Steels (India) Ltd. vs Labour Court	 Hyderabad	 [1979] (Lab) I.C. 325 and Pioneer Ltd. vs Labour Court	 Gorakhpur	 [1983] (Lab) I.C. 335	 overruled. 1.2 What is important in the modern administration is the fairness of procedure with elimination of element of arbitrariness	 for fairness is a fundamental principle of good administration. It is a rule to ensure that vast power in the modern State is not abused but properly exercised. The State power is used for proper and not for improper purposes. The authority is not misguided by extraneous or irrelevant consideration. Fairness is also a principle to ensure that statutory authority arrives at a just decision either in promoting the interest or affecting the rights of persons. The concept that 'justice should not only be done but be seen to be done ' is the essence of fairness and is equally applicable to administrative authorities. Fairness is thus a prime test for proper and good administration. It has no set form or procedure. It does not necessarily re quire a plurality of hearings or representations and counter representations. It depends upon the facts of each case. [297C	 299C E] Ridge vs Baldwin	 ; ; A.K. Kraipak & Ors. vs Union of India	 ; Keshav Mills Co. Ltd. vs Union of India; 	 ; Pearlberg vs Varty	 	 547; Mohinder Singh Gill vs Chief Election Com missioner; 	 ; Maneka Gandhi vs Union Of India	 [1978] 2 SCR 621; Swadeshi Cotton Mills vs Union of India	 ; Royappa vs State of Tamil Nadu	 ; ; Union of India vs Tulsi Ram	 [1985] (Supp.) 2 SCR 131; Charan Lal Sahu & Ors. vs Union of India	 JT ; Natural Justice by Paul Jackson	 2nd ed. p. 11 and Pannalal Binjraj & Anr. vs Union of India	 	 referred to. 1.3 In the instant case	 the State had withdrawn the pending reference from the Labour Court	 Dhanbad and trans ferred it to another Labour Court at the distant District of Patna	 on the represen 292 tation of the workman without getting it verified from the management. The State in fairness ought to have got it verified by giving an opportunity to the management which was a party to the pending reference. The management was not required to establish particular prejudice for want of such opportunity. The non observance of natural justice was itself prejudice to the management and proof of prejudice independently of proof of denial of natural justice was unnecessary. Denial of the opportunity to the management was thus a fatal flaw to the decision of the Government. [300H 30 IA	 B D] S.L. Kapoor vs Jagmohan	 ; and Altco Ltd. vs Sutherland	 	 referred to. The expression 'may ' in Sub section (1) of section 33B of the Act only makes it discretionary in so far as the appropriate Government taking a decision as to whether the power con ferred thereunder has to be exercised or not. But when once a decision has been taken to transfer a pending case then the requirement of giving reasons becomes mandatory. The authority would be under legal obligation to record reasons in support of its decision. Failure to give reasons or giving reasons not germane would thus be fatal to the deci sion. [295C D] Associated Electrical Industries (P) Ltd. vs Its Work men	 [1961] II LLJ 122 and Ajanta Industries vs Central Board of Taxes	 ; 	 referred to. 2.2 In the instant case	 the Government has stated that the workman was having his residence at his village near Patna and it would be	 therefore	 inconvenient for him to attend the Labour Court regularly at Dhanbad. Most of the factors	 however	 do not point that way. The workman and his family members seem to be still residing in the colony quarter at Dhanbad. His two sons are studying in a school at a nearby village. The letter dated September 8	 1988 of the Headmaster of the said school speaks of that fact. The letter from the Assistant Electrical Engineer in proof of the electricity supplied to the quarter occupied by the workman at Dhanbad is also relevant. As against these mate rials	 the workman has not produced any proof in support of his allegation that he has been residing in a village home near Patna. He has not denied the documents annexed to the special leave petition and not seriously disputed the factum of his residence in the colony quarter at Dhanbad. The Government was	 therefore	 misled by the representation of the workman. [301E H] 293 3. The notification dated August 8	 1988 is quashed. The Labour Court	 Dhanbad shall proceed to dispose of the matter as expeditiously as possible. [302A]