TaxTMI 
TaxTMI 
1983 (6) TMI 136
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....e ground that the workmen who had a right to be heard at the stage of issue of the citation and who had made two applications, C. A. No. 109 of 1980 and C. A. No. 774 of 1980, in that behalf specifically seeking an opportunity of being heard, were not afforded an opportunity of being heard. This appeal was posted along with O.S.A. No. 9 of 1983 preferred by the company itself against the order of the company judge directing advertisement of the petition. Both the appeals were heard together on the merits of the matter even at that stage as we thought that the two appeals should be heard and disposed of finally at that stage itself. Though the appeals were heard together, however, for the sake of convenience, the appeals are disposed of by separate judgments. The challenge to the order of the learned company judge has been on two grounds and these are the two questions that fall for determination in this appeal: (i)The first is that as laid down by the Supreme Court in National Textile Workers' Union v. P. R. Ramakrishnan [1983] 53 Comp. Cas. 184; AIR 1983 SC 75, the workmen of the company have a right to be heard even at the stage of issue of advertisement of a winding-up ....
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....o. 109 of 1980 and C. A. No. 774 of 1982, and that they were not actually heard before the order under appeal was passed, is not disputed or contested. The learned company judge had directed that all "connected matters to be posted" along with Company Petition No. 8 of 1980. But, the two applications filed by the appellant before the company court in C.A. Nos. 109 of 1980 and 774 of 1982 were not, unfortunately, posted by the office on December 14, 1982, when the learned company judge heard the arguments in the matter of issue of advertisement. We may now take up the first point for consideration. Sri Sampath-kumaran urged that the order for the advertisement was passed by the learned company judge on April 22, 1983, and even before an appeal could be preferred, the petitioning-creditor moved with unusual speed and caused the advertisement to be carried out in the newspapers all over the country on the very next and successive days and sought to confront the workmen with a fait accompli. Sri Sampathkumaran submitted that an advertisement of a winding-up petition in relation to a company does immense harm to the financial stability of the company and, in turn, to the interests of....
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.... and consistently with this principle they should have ensured their presence at the time of hearing of the company petition and not stand by after making an application and make the non-hearing a ground for a subsequent attack on the order. Secondly, contends Sri Sundaraswami, an order made in a judicial proceeding, where a party entitled to be heard is not heard, could not be said to be "void" in an absolute sense that it is non est. His proposition is that where in a fullfledged appellate jurisdiction, a party, who is aggrieved by a breach of the rules of natural justice in the original proceedings, is afforded an opportunity to place all the material and to present his case fully and the appellate court in exercise of its jurisdiction which is coextensive with that of the original jurisdiction decides a matter on merits, then the consequences of non-compliance of the rules of natural justice in the original proceedings may be held to have been cured. Sri Sundaraswami submitted that in this appeal the workmen have been afforded all opportunities of being heard on merits as to whether an order of advertisement should or should not issue, and that the appellant adopted the a....
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....tion which is liable to be quashed for error on the face of the record". (vide page 310) "Ridge v. Baldwin [1964] AC 40, brought with it a rash of conflicting opinions about whether failure to give a fair hearing rendered the dismissal of the chief constable void or voidable. In the long history of the cases on natural justice as applied to administrative action, this question had never before been agitated, for the simple reason that the logic of the situation excluded it. It had always previously been held that a breach of the rules of natural justice resulted in the determination being null and void, in the same way as any other act which was ultra vires. For, the duty to act fairly, just like the duty to act reasonably, was enforced as an implied statutory requirement, so that failure to observe it meant that the administra tive decision was outside the statutory power, unjustified by law, and, therefore, ultra vires and void". (vide page 468) (Underlining supplied) De Smith's Judicial Review of Administrative Action (IVth edn.) says: "Although breaches of natural justice used to be assignable as 'errors in fact,' a ground of challenge presupposing that the impugned or....
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.... may have some effect, or existence, in law. This condition might be better expressed by saying that the decision is invalid or vitiated" .(Underlining is ours) The observations of Megarry J. in Hounslow London Borough Council v. Twickenham Garden Developments Ltd., [1971] 1 Ch 233, at page 259: "A decision reached by a tribunal wholly outside its jurisdiction and in complete defiance of natural justice is about as void as anything can be; but if nobody who is entitled to challenge or question it chooses to do so, it remains in being. Yet to describe such a decision as being 'voidable' is to use that word in a sense that is not only very special but also liable to mislead".(Underlining* supplied) Indeed, one of the incidents of importing the concept of "void" expressed itself in the contention that against a "void" decision no appeal lies as there is "nothing" to appeal from. In Ferd Dawson Calvin v. John Henry Brownlow Carr [1980] AC 574, the Privy Council rejected this theory and said (p. 590): "Passing from this analogy to authorities directly relevant in the field of civil proceedings their Lordships consider that these support the proposition that a decision of an ....
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....Sampnthkumaran says that the only way in which the injury occasioned by the breach of the audi alterant partem rule is to set aside the decision and remit the matter back. Megarry J., in Leary v. National Union of Vehicle Builders [1971] 1 Ch 34, adverting to the effect of breach of rules of natural justice, at the stage of the trial, whether the effects of that breach could at all be made good by a fair and full hearing in an appeal, said (at p. 49): "If the rules and the law combine to give the member the right to a fair trial and the right of appeal, why should he told that he ought to be satisfied with an unjust trial and a fair appeal ?.......As a general rule, at all events, I hold that a failure of natural justice in the trial body cannot be cured by a sufficiency of natural justice in an appellate body" . (Underlining is ours) But Sri Sundaraswami contends that the above is not a generally accepted proposition of law and that amongst the recognised remedies for breach of rules of natural justice is the "solvent" of a full hearing to the aggrieved party in an appeal where the jurisdiction of the appellate body is co-extensive with that of the original authority and ....
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....) There are cases illustrative of the extreme positions the situation admits of the view of Megarry. J., in Leary's case [1971] 1 Ch 34, is at one extreme. The general proposition in Leary's case was referred to by Wade in a general sense of approval thus: "In principle there ought to be an observance of natural justice equally at both stages; and accordingly natural justice is violated if the true charge is put forward only at the appeal stage. If natural justice is violated at the first stage, the right of appeal is not so much a true right of appeal as a corrected initial hearing; instead of fair trial followed by appeal, the procedure is reduced to unfair trial followed by fair trial". (vide Administrative Law, 5th edn., p. 487) (Emphasis supplied) But, we think that what emerges from a conspectus of the case law is that the proposition in Leary's case [1971] 1 Ch 34 is too broadly stated. There are cases and cases and though no general principle of universal validity, valid for all situations, cannot be predicated, yet it is possible to say, even in cases of statutory or "domestic" appeals, that a fair appeallate procedure can cure the infirmity in the original procee....
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....s, therefore, void and that there could be no appeal from a "void" decision. Mr. Calvin's action failed. The Judicial Committee, in appeal, held on the second aspect that though a decision reached on breach of rules of natural justice might, for certain purposes, be void, it was nevertheless susceptible of an appeal. On the first aspect, the Privy Council held that though there was no general rule as to whether an appellate court could cure a defect due to a failure of natural justice in original proceedings, however, since the disputes and the discipline in that case were in a consensual category and since, on the facts, the committee had given the plaintiff's case overall a full and fair consideration, any failure of natural justice by the stewards at the inquiry stage became irrelevant. Referring to the observation of Megarry J., in Leary's case [1971] 1 Ch 34, that "a failure of natural justice in the trial body cannot be cured by a sufficiency of natural justice in an appellate body", the Privy Council observed (p. 593 of [2980] AC): "In their Lordships' opinion this is too broadly stated. It affirms a principle which may be found correct in a category of cases. . ....
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...., AIR 1958 SC 86, at p. 94: "On the authorities referred to above it appears to us that there may conceivably be cases-and the instant case is in point-where the error, irregularity or illegality touching jurisdiction or procedure committed by an inferior court or Tribunal of first instance is so patent and loudly obtrusive that it leaves on its decision an indelible stamp of infirmity or vice which cannot be obliterated or cured on appeal or revision... This would be so all the more if the Tribunals holding the original trial and the Tribunals hearing the appeal or revision were merely departmental Tribunals composed of persons belonging to the departmental hierachy without adequate legal training and background and whose glaring lapses occasionaly come to our notice". Again, Bernar Schwartz, in "The Test Book of Administrative Law", at page 209 says: "Where the requisite due process of hearing is not included in the. . . . . administrative process, it may be adequately supplied by a judicial proceeding in which new evidence may be supplied and full opportunity afforded for exploration of the bases of the disputed order. This does not mean that, as Justice Douglas once as....