Judicial Review of Administrative Discretion in India – Essay

The courts in India have always held the view that judge-proof discretion is a negation of the rule of law. Therefore, they have developed various formulations to control the exercise of administrative discretion. These formulations may be conveniently grouped into two broad generalizations

(i) That the authority is deemed not to have exercised its discretion at all.

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(ii) That the authority has not exercised its discretion properly.

(iii) That the authority is deemed not to have exercised its discretion at all : Under this categorization the courts exercise judicial control over administrative discretion if the authority has either abdicated it power or has put fetters on its exercise or the jurisdictional facts are either non- extent or have been wrongly determined.

Purtabpore Company Ltd. v. Cane Commissioner of Bihar (1969):

In this case the Cane Commissioner who had the power to reserve sugarcane areas for the sugar factories, at the dictation of the Chief Minister excluded 99 villages from the area reserved by him in favour of the appellant company.

The Court quashed the exercise of discretion by the Cane Commissioner on the ground that he abdicated his power by exercising it at the dictation of some other authority; therefore, it was deemed that the authority had not exercised its discretion at all.

However, this does not mean that the administrative authority cannot frame broad policies for the exercise of its discretion. In Sri Rama Sagar Industries Ltd. v. State of A.P. (1974), Section 21 of the A.P. Sugarcane (Regulation, Supply and Purchase) Act, 1961 gave power to the administrative authority to exempt from payment of tax any new factory which has substantially expanded.

The government framed a policy granting exemption only to factories in the cooperative sector. The Supreme Court, negotiating the contention that the adoption of this policy has fettered the exercise of discretion, held that a body endowed with a statutory discretion may legitimately adopt general rules or principles of guide itself in the exercise of its discretion provided such rules are not arbitrary and not opposed to the aims and objectives of the Act.

The court further remarked that by adopting such scales the agency must not disable itself from exercising genuine discretion in individual cases. Justice Mathew and Justice Bhagwati however, gave a dissenting opinion on the ground that the adoption of policy, as has been done in this case, predetermines the issue.

This is an all embracing formulation development by the courts in India to control the exercise of discretion by the administrative authority. In proper exercise of discretion includes everything which English courts include in ‘unreasonable’ exercise of discretion and American courts include in ‘arbitrary and capricious’ exercise of discretion.

Improper exercise of discretion includes such things as ‘taking irrelevant considerations into account’, acting for in bad faith, ‘neglecting to take into consideration relevant factors’ or ‘acting unreasonably’.

Barium Chemicals Ltd. v. Company Law Board 1967:

This case shows a definite orientation in the judicial behaviour for an effective control of administrative discretion, in India. In this case the Company Law Board exercising its powers under Section 237 of the Companies Act, 1956 ordered an investigation into the affairs of Barium Chemicals Ltd.

Under Section 237 the Board is authorised to order investigation if in its opinion the business of the company is being conducted with intent to defraud its creditors or members etc. or the management of the company is guilty of fraud, misfeasance or other misconduct or the members of the company have not been given all information about in the affairs of the company.

However, the basis of the exercise of discretion for ordering investigation was that due to faulty planning the company incurred a loss, as a result of which the value of the shares had fallen and many examined persons had resigned from the Board of Directors.

The court quashed the order of the Board on the ground that the basis of the factors mentioned in Section 237 for such exercise of discretion. This case also stands for the proposition that mere executive declaration that there was material for forming an opinion will not save the exercise of discretion from judicial scrutiny.

M. A. Rasheed v. State of Kerala (1974):

In this case the Kerala government issued a notification to prevent his consumption of coir in mechanised industry because the traditional sector was starving, causing unemployment. The main ground of challenge was that there was no reasonable basis for the exercise of this discretion. The court observed

(i) Whenever a public authority is invested with the power to make an order which prejudicially affects the rights of an individual, than whatever may be the nature of the power, whatever may be the procedure prescribed and whatever may be the nature of the authority the proceedings of the public authority must be regarded to questions?

(ii) Where powers are conferred on the executive authority based on subjective satisfaction, the courts will not readily defer to the conclusiveness of an executive authority opinion as to the existence of a matter of law and fact upon which the exercise of power is predicted.

(iii) Administrative decision in exercise of powers even if conferred in subjective terms is to be made in good faith based on relevant considerations. The Courts can enquire whether a reasonable man could have come to the decision without misdirecting himself on law and fact.

The standard of reasonableness may range from the court’s own opinion of what a reasonable man might have decided. The courts will find out whether conditions precedent to the forming of opinion has a factual base.

(iv) Where reasonable conduct is expected, the criterion of reasonableness is not subjective but objective.

Smt. S.R. Venkataraman v. Union of India (1979):

The appellant, a Central Government officer, was prematurely retired from service in ‘public interest’ under Rule 560) (i) on attaining the age of 50 years. Her contention was that the government did not apply its mind to her service record and that in the facts and circumstances of the case the discretion vested under Rule 5(j) (i) was not exercised for furtherance of public interest and that the order was based on extraneous circumstances. The government conceded that there was nothing on record to justify the order.

The Supreme Court, quashing the order of the Government held that if a discretionary power has been exercised for an unauthorised purpose it is generally immaterial whether its repository was acting in good faith or bad faith. An administrative order based on reason or facts that do not exist must be held to be infected with an abuse of power.

The court quoted with approval Lord Esher in The Queen on the Prosecution of Richard Westbroky. The Vestry of St. Pancras (1890). “If people who have to exercise a public duty by exercising their discretion take into account matters which the courts consider not to be proper for the guidance of their j discretion, then in the eye of the law they have not exercised their discretion”.

Rampur Distillery Co. v. Company Law Board (1969):

The Company Law Board| exercising wide discretionary power under Section 236 of the Companies Act, 1956 it matter of renewal of a managing agency refused approval of the renewal to the managing agents of the Rampur Distillery. The reason given by the Board for its action related to the past conduct of the managing agent.

The Vivian Bose, Inquiry Commission had found these managing agents guilty of gross misconduct during the year in relation to other companies. The Supreme Court, though it did not find any fault in taking into consideration the conduct he noncommercial Id the, order bad, because the Board did not take into consideration the present acts which were very relevant factors in judging suitability.

G. Sadanandan v. State of Kerala (1966):

The petition challenged his detention order by the government on the ground of malafide exercise of discretion. The facts were brought before the court to show that the Deputy Superintendent of Police (Civil Supplies Cell) made a false report against the petitioner who was a wholesale dealer of kerosene, in order to benefit his relative in the same trade by eliminating the petitioner from the trade. In the absence of counter-affidavit from the side of the government the court quashed the order.

R.D. Shetty v. International Airport Authority (1979):

It is heartening to see the law catching up with the vagaries of the State’s dealings in the exercise of its discretion. In this case the issue was the awarding of a contract for running a second class restaurant and two snack bars by the International Airport Authority, which is statutory corporation.

The tenders were invited from registered, second class hoteliers’ and it was clearly stipulated that the acceptance of the tender would rest with the Airport Director who would not bind himself to accept any tender and reserved to himself the right to reject all or any of the tenders received without assigning any reason. The highest tender was accepted.

The only snag was that the tender was not an hotelier at all. A writ petition was filed by a person who was himself neither a tender nor an hotelier. His grievance was that he was in the same position as the successful if an essential condition could be ignored in the tender’s case why not in the petitioner’s? The Supreme Court accepted the plea of locus stand in challenging the administrative action. Justice P.N. Bhagwati, who delivered the judgment of the court, held:

1. Exercise of discretion is an inseparable part of sound administration and therefore, the State which is itself a creature of the Constitution, cannot shed its limitation to any time in any sphere of State activity.

2. It is a well settled rule of administrative law that an executive authority must be rigorously held to the standards by which, it processes its actions to be judged.

3. It is indeed unthinkable that in a democracy governed by the rule of law the executive government or any of its officers should possess arbitrary powers over the interests of an individual. Every action of the executive government must be informed with reason and should be free from arbitrariness. That is the very essence of the rule of law and its bare minimal requirement.

4. The government cannot be permitted that it will give jobs or enter into contracts or issue quotas or licenses only in favour of those having grey hair or belonging to a particular political party or follower of a particular religious faith. The government when it acts in the matter of granting largesse it cannot act arbitrarily. It does not stand in the same position as a private individual.

This case is not an attempt in judicialising the administrative process but only reiterates that the exercise for discretion must not be arbitrary fanciful and influenced by extraneous consideration. In matters of discretion of choice must be dictated by public interest and must not be unprincipled or unreasonable.

It has been firmly established that the discretionary powers given to the government or quasi-governmental authorities must be hedged by policy standards procedural safeguards or guidelines, failing which the exercise of discretion and its delegation may be quashed by the courts.

This principle has, been reiterated in many cases. The courts have also insisted that before the exercise of discretion the administrative authority must also frame rules for the proper exercise of the discretion.

Courts have emphasised that even the power to the President or the Government to grant pardon and to suspend remit or commute sentences or power of the Chief Minister to allot government plots or houses from discretionary quota or to make nominations to medical or engineering colleges must conform to this: norm.

In a case, the Himachal Pradesh High Court struck down the nomination of three students to the State Medical College made by the Chief Minister out of his discretionary quote for 1982-83.

The main thrust of attack in a bunch of petitions challenging these nominations was that no guidelines have been prescribed for the exercise of discretion and hence the power is uncanalised and able to be abused and may be subject to political pulls and pressures.

Quashing these nominations, the court emphasised that while college prospectus leaves nominations to the discretion of the Chief Minister it has not provided any clear guidelines with reference to which the Chief Minister was to exercise his discretion. Thus within the area of administrative discretion the courts have tried to fly high the flog of Rule of Law which aims the progressive diminution of arbitrariness in the exercise of public power.

Nevertheless, the Supreme Court has reiterated that the judicial investigation of administrative decision would not extend far as reviewing the actions on merit. In P. Kasilingam v. P.S.G. College of Technology (1981), the court held that a High Court transgresses its jurisdiction under Article 226 if it enters upon the merits of the controversy by embarking upon an inquiry into the facts.

Furthermore, the court has developed a kind of caste-based hierarchic view of administrative responsibility when it presumes that high authority is unlikely to use its discretionary powers. This presumption is certainly conjectural and hence not tenable. This makes the judicial review of administrative discretion marginal and feeble.

In England, where Parliament is supreme and can confer any amount of discretion on the administration. The court has always held that the concept of unfettered discretion is a constitutional blasphemy.

Besides requiring that the discretion must be exercised in conformity with the odd policy of the Act and for a proper purpose, the court insists on its reasonable exercise. Thus, the judicial control of administrative discretion in England, U.S.A. and India converges on the same point despite divergent constitutional structurisation.

The decision of the House of Lords in Padfield v. Minister of Agriculture (1968) lays down the parameters of judicial control of administrative discretion in England. In this case under the statutory milk-marketing scheme, the prices paid to milk producers in different areas are fixed by the Milk Marketing Board which consists of representatives of the producers.

The producers of London complained that though they were in proximity of the London market, yet did not reflect the higher value of the price paid for their milk, and requested the minister to refer the matter to the statutory committee for complaints.

To direct or not to direct a complaint to the committee was the sole discretion of the minister. The minister in exercise of his unfettered discretion refused to direct the complaint. One of the reasons given by the ministry was that minister would be in a difficult political position.

Despite the committee’s acceptance of the complaint, the minister should take no action. The House of Lords held that the minister’s reasons were unsatisfactory and his decision was unreasonable. The purpose of the Act was the very genuine complaint must be forwarded, to the committee and anything contrary to this would frustrate that purpose.

R.B. Metropolitan Police Commissioner Expert Blackburn (1968) is another classical example of judicial control of administrative gambling had increased considerably in London but because of shortage of police personnel, the Police Commissioner issued confidential instructions that the observation of the gambling was to cease.

Therefore, a policy of not prosecuting these clubs was adopted Mr. Blackburn, a private individual, applied for a writ of mandamus to direct the police to do their duty and enforce the law.

Though the writ lapsed because the Police Commissioner reversed his policy, yet the court held that the discretion of the police was not absolute and uncontrollable in the sense that no means were available for enforcing this duty. Therefore, in England, the long arm of the court reaches out to administrative discretion to correct its abuse in the same manner as it does in India and the U.S.A.

In U.S.A. besides the judicial review of administrative discretion which is available in the due process clause and the general grant of constitutional judicial power the Administrative Procedure Code, 1946, in Section 10 provides that the reviewing court shall hold unlawful and set aside agency action, findings and conclusions found to be arbitrary, capricious, and abuse of discretion, or otherwise not in accordance with law. This entails that if administrate discretion is exercised arbitrarily or capriciously, the court would intervene.

Section 10 also provides for a dangerous exception to the rule of judicial review in cases where agency action is by law committed to agency discretion.

However, the court has interpreted this exception in a manner not to cover arbitrary or capricious exercises of discretion. In citizens to Preserve Overton Park Inc. v. Volpe (1970), the Secretary of Transportation had authorised the use of federal funds for the construction of a highway through the public park. The statute gave discretion to the Secretary to allow such a construction only if a feasible and prudent alternative route did not exist.

The Supreme Court did not accept the contention of the Secretary that the determination of feasible and prudent alternative route is committed, to his absolute discretion and hence is not subject to judicial review. The court did not allow the exception to Section 10, A.P.A. to reign supreme.

In the same manner, in Barlow v. Collins where the statute authorised the Secretary of Agriculture to prescribe such regulations as he may deem proper to carry out the provisions of this chapter the court did not accept the contention that the contents of the regulations were committed to the absolute discretion of the Secretary which was not subject to judicial review.

In U.S.A., judicial activism has entered the area of administrative discretion also and courts not only substitute their discretion to the discretion of administrative authority but sometimes exercise discretion which is vested in an administrative authority.

In Boreta Enterprises v. Department of Alcoholic Beverage Control (1970), the agency revoked the liquor license because the, licensee employed topless waitresses. The agency exercised its discretion on the ground that the licensee’s conduct was contrary to public morals and might lead to socially deleterious conduct.

The California Supreme Court held the exercise of discretion invalid on the ground that it is not a legal exercise of discretion covered within the requirement of the ‘good cause’ clause for revocation of licence.

In the same manner in United States v. Professional Air Traffic Controller’s Organisation, (1970) the court ordered the controllers of air traffic to end a strike and return to work. The order of the court also lay down that the Federal Aviation Authority will impose no penalty of suspension or dismissal, no matter that the question of discipline in case of strike was within the sole discretion of the F.A.A.

In France, the administrative courts exercise power of judicial review over administrative action if the administrative authority abuses its discretionary powers. The term ‘abuse of power’ includes everything which the term unreasonable exercise of power, includes in England and arbitrary and capricious exercise of power includes in U.S.A.

From the above analysis it becomes clear that though some direction is necessary to keep the giant wheels of administration moving in this age of an intensive form of government if the power is misused, the arms of the court are long enough to reach it.