1965 (3) TMI 72 - SC - Indian Laws

Supreme Court Upholds High Court Decision on Invalid State Order, Stresses Natural Justice

The Supreme Court affirmed the Allahabad High Court's decision, ruling that the revisional order passed by the State Government under Section 7-F without ... - ISSUES PRESENTED AND CONSIDERED 1. Whether an order passed by the State Government under s. 7-F of the Uttar Pradesh (Temporary) Control of Rent and Eviction Act, 1947, is invalid if the State Government did not afford an opportunity of hearing to persons affected by that order. 2. Whether proceedings and orders under s. 3(2) and s. 3(3) of the Act (granting permission to sue a tenant and revision by the Commissioner) are administrative or quasi-judicial in character and whether principles of natural justice are applicable. 3. Whether the nature and scheme of the Act, including ss. 3, 7-F, 14 and 15, require a judicial approach by authorities exercising powers under those provisions. 4. Whether earlier High Court decisions holding the State Government's revisional power under s. 7-F to be purely administrative should be followed or re-examined in the light of Supreme Court authorities. 5. (Obiter) Whether a single Judge should re-examine and depart from earlier Division Bench decisions of the same High Court without reference to a larger Bench. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of State Government order under s. 7-F absent hearing Legal framework: s. 7-F empowers the State Government to call for the record of cases granting or refusing permission under s. 3 and 'may make such order as appears to it necessary for the ends of justice.' ss. 3(2)-(4) provide for District Magistrate's permission to sue, revision by Commissioner (to 'hear' and be satisfied as to correctness, legality or propriety) and that Commissioner's order is final subject to s. 7-F. Precedent treatment: Earlier Division Bench decisions of the relevant High Court treated s. 7-F exercise by the State Government as administrative (no mandatory hearing). A later Supreme Court decision (Laxman Purshottam Pimputkar) had held State revisional power under a different statute to be quasi-judicial requiring natural justice. Interpretation and reasoning: The Court examined the statutory scheme and concluded that the State Government's power under s. 7-F cannot be divorced from the quasi-judicial character of the prior stages (District Magistrate and Commissioner). Since s. 3(2) removes statutory tenant protections when permission is granted, the permission affects substantive statutory rights of tenants. The Commissioner is required to 'hear' applications under s. 3(3) and to be satisfied about correctness, legality or propriety, which denotes a quasi-judicial function. Because the State Government's power under s. 7-F enables it to alter or reverse the Commissioner's order 'for the ends of justice,' the State must be able to decide the matter justly; doing so without affording affected parties opportunity to be heard would not permit a reasoned just decision. The Court applied the test (as in Ridge v. Baldwin adopted by the Court) that the obligation to observe natural justice depends on the nature of the power and the rights affected. Ratio vs. Obiter: Ratio - where statutory power affects substantive rights conferred by the Act and is combined with a statutory scheme requiring hearing at subordinate stages, the State Government exercising s. 7-F revisional jurisdiction must apply the principles of natural justice and afford hearing to affected parties. Conclusions: The revisional order by the State Government under s. 7-F passed without giving affected persons an opportunity to be heard was invalid. Issue 2: Character of proceedings under ss. 3(2) and 3(3) - administrative or quasi-judicial? Legal framework: s. 3(1) limits eviction suits except on enumerated grounds; s. 3(2) requires District Magistrate's permission to sue when the enumerated grounds are not shown; s. 3(3) entitles aggrieved party to revision to the Commissioner who 'shall hear' the application and may alter, reverse or make such order as may be just and proper. Precedent treatment: Some High Court decisions held these powers administrative and not subject to natural justice obligations. Supreme Court precedent discussed (including Laxman Purshottam Pimputkar) supports quasi-judicial character in comparable revisional provisions. Interpretation and reasoning: The Court reasoned that (a) the District Magistrate's permission has the effect of removing statutory protections from tenants - a change in substantive statutory rights - which imports judicial standards; (b) the existence of a right of revision to a hearing authority (Commissioner) implies that the District Magistrate must give reasons and hear parties so the Commissioner can exercise effective review; (c) s. 3(3)'s positive requirement that the Commissioner 'shall hear' and be satisfied as to correctness/legal propriety indicates quasi-judicial proceedings. Administrative bodies may act fairly, but when function alters statutory rights and the statute prescribes hearing/revision, a judicial/quasi-judicial approach and adherence to natural justice are mandated. Ratio vs. Obiter: Ratio - proceedings under ss. 3(2) and 3(3) are quasi-judicial in character and require observance of principles of natural justice (i.e., opportunity to be heard by those whose rights are affected). Conclusions: Authorities exercising powers under ss. 3(2) and 3(3) must act in accordance with natural justice; they cannot lawfully exclude hearing of parties whose statutory rights are at stake. Issue 3: Statutory scheme (ss. 3, 7-F, 14, 15) and requirement of judicial approach Legal framework: The Act's preamble and substantive provisions (ss. 3, 14, 15) manifest a legislative policy to protect tenants and restrict evictions except on specified grounds; s. 7-F permits State to call records and make orders for 'ends of justice.' Precedent treatment: The Court referenced authorities endorsing the test that natural justice obligations flow from the nature of the jurisdiction and the rights affected (adopting guidance from Ridge v. Baldwin and earlier Supreme Court exposition). Interpretation and reasoning: Given the scheme protecting tenants (ss. 14 and 15 bar execution or decree for eviction except on grounds in s. 3), the statutory right of tenant not to be evicted except on specified grounds is significant. Because permission under s. 3 can displace that protection, the whole chain of decision-making (DM ? Commissioner ? State Government) must be treated as discharging quasi-judicial functions to secure 'ends of justice.' The State Government's use of s. 7-F to reverse or direct revisional orders cannot be regarded as a mere policy/administrative act when it determines rights of parties under the Act. Ratio vs. Obiter: Ratio - the Act's object and provisions require a judicial approach by authorities at each stage affecting eviction rights; s. 7-F exercises must conform to that approach. Conclusions: The statutory scheme imports obligations of fair hearing and judicial appraisal at each stage where eviction rights may be affected; s. 7-F cannot be exercised in disregard of natural justice. Issue 4: Treatment of earlier High Court decisions and application of Supreme Court precedent Legal framework: Doctrine of stare decisis and hierarchical respect for earlier Division Bench rulings; Supreme Court guidance on tests for natural justice applicability. Precedent Treatment: The Court noted prior Division Bench authority to the contrary in the High Court, but found itself unable to agree with those decisions. The Court relied on its own earlier decision in Laxman Purshottam Pimputkar (which held comparable State revisional power to be quasi-judicial) as supportive, though acknowledging statutory schemes were not identical. Interpretation and reasoning: The Court distinguished the High Court rulings by re-examining statutory scheme and the nature of rights affected; it held that prior High Court conclusions that s. 7-F was purely administrative were erroneous because they failed to give effect to the quasi-judicial character implicit in ss. 3(2)-(3) and the tenant-protective scheme. The Supreme Court decision in the Watan Act context (Laxman Pimputkar) reinforced the principle that State revisional powers affecting substantive rights demand natural justice. Ratio vs. Obiter: Ratio - earlier High Court decisions treating s. 7-F as purely administrative are not followed; Supreme Court principles governing when natural justice applies control. Conclusions: High Court decisions to the contrary are rejected as incorrect on this point; the State Government must observe natural justice when exercising s. 7-F revisional power. Issue 5 (Obiter): Judicial propriety regarding single Judge re-examination of Division Bench decisions Legal framework: Principles of judicial decorum and practice - a single Judge should not lightly depart from or re-examine binding Division Bench decisions of the same High Court without convening a larger Bench. Interpretation and reasoning: The Court observed it would have been preferable for the single Judge, if inclined to revisit Division Bench precedent, to refer the matter to a Division Bench or place papers before the Chief Justice for constitution of a larger Bench. The single Judge's undertaking of such re-examination was inappropriate though it did not alter the substantive legal conclusion reached by the Supreme Court. Ratio vs. Obiter: Obiter - this is a remark on judicial propriety and does not form part of the decision's operative ratio concerning s. 7-F. Conclusions: Single Judges should follow established practice and not re-examine Division Bench precedents sitting alone; matters of that nature should be referred to a larger Bench for proper adjudication.