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Judgment
G.S. Singhvi, J.—These petitions are being decided by a common order because the issues raised therein are inter related.
The facts which are common to both the cases are that land measuring 23,480 square yards purchased by the petitioner-Society in 1970 in village Taraf Burrah, Tehsil and District Ludhiana was included in "Model Town Part II Extension Scheme" framed by Improvement Trust, Ludhiana, (hereinafter described as the Trust). However, vide resolution No. 24, dated 28.11.1972, the land belonging to the petitioners and 14 other co-operative societies were exempted from acquisition. Lateron, the scheme was abandoned by the Trust. In the year 1974, a new scheme was framed which was duly sanctioned by the State Government. The land of the petitioner and other cooperative societies were again included in the newly framed scheme. They approached the government for grant of exemption. Vide resolution dated 31.10.1974, the Trust recommended for grant of exemption to the land of the co-operative societies. These recommendations were partially accepted by the government and order dated 16.7.1976 was issued granting exemption to five co-operative societies. Since, the petitioner was not one among them, it filed C.W.P. No. 3228 of 1991 and challenged the government''s decision on the ground of discrimination. The High Court accepted the contention of the petitioner but declined to nullify the scheme as a whole because of long lapse of time. Instead, it directed the trust and the State Government to give plots to the eligible members of the society who were desirous of having houses in the area. The Court also observed that if the number of plots available was less than the eligible person, then the allotment be made by draw of lots. Letters Patent Appeal No. 1328 of 1991 filed by the Trust was dismissed by the Division Bench on 28.10.1991.
With a view to implement the directions given by the High Court, the Chairman of the Trust wrote letters Annexures P-1 to P-3 requiring the Society to furnish the authenticated list of eligible persons along with their affidavits. Thereafter, draw of lots for allotment of available plots was held on 27.2.1992 and 40 members of the petitioner-society who were successful in the draw were allotted plots. Two members of the Society, namely, Shri Sharad Kumar and Shri P.C. Mahajan, challenged the draw of lots held on 27.2.1992 by filing C.W.P. Nos. 9725 and 13653 of 1993 which were disposed of by the High Court on 9.5.1994 in view of the statement made by the counsel for the Trust that their cases for allotment of plots by draw of lots will be considered at the next draw. The High Court also took notice of the statement made by the counsel for the society that the list of its remaining members will be supplied to the Trust within one month. Thereafter, the President of the society forwarded a list of its remaining members to the Chairman of the Trust along with its letter dated 22.6.1994. Fresh draw of lots was held on 15.7.1995 and 43 members of the Society were declared eligible for allotment of plots. To this effect, communication dated 21.7.1995 was sent by the chairman of the Trust to the President of the petitioner-society. In compliance of the conditions incorporated in that letter, the petitioner deposited the required amount with the Trust. However, as the Trust did not give possession of the plots to the 43 members of the society. The petitioner served legal notices upon the Trust and the government requiring them to hand over possession of the plots to the members of the society but failed to get any response. Ultimately, it instituted C.W.P. No. 156943 of 1996 for issuance of a mandamus directing the respondents to hand over the possession of 43 plots to its members.
In response to the notice of motion, issued by the Court on 14.10.1996, the respondent-Trust filed written statement dated 8.4.1997 and prayed for dismissal of the writ petition as infructuous on the ground that the resolution passed by it for allotment of plots to 43 members of the petitioner-society has been annulled by the State Government vide order dated 27.2.1997 on the basis of enquiry report submitted by the Director, Local Government, Punjab. This order has been challenged by the petitioner in C.W.P. No. 8536 of 1997 primarily on the ground of violation of the rule of audi alteram partem. Other points raised in this petition are similar to those contained in C.W.P. No. 15693 of 1996.
In the amended written statement filed by respondents No. 1 and 3 through the Under Secretary to Government of Punjab, Local Government to contest C.W.P. No. 84536 of 1997, it has been averred that the allotment of plots by the respondent Trust is per se illegal and contrary to the directions given by the court on 12.4.1991. These respondents have further averred that 40 members of the Society were allotted plots measuring a total area of 8300 square yards against the total acquisition of 20,146 square yards land belonging to the society and therefore, the allotment of 43 plots measuring a total area of 9600 square yards was unwarranted. The respondents have relied on the provisions of Sections 72-B and 72-E of the Punjab Town Improvement Act, 1922 and the judgments of this Court in Baldev Raj Sharma v. State of Punjab (1972)74 P.L.R. 144 and Karan Singh v. State of Punjab (1979)81 P.L.R. 426 in support of their plea that no notice or opportunity of hearing was required to be given to the petitioner before the order cancelling the resolution of the Trust was passed by the Government. The respondent-Trust has also raised similar plea in the separate written statement filed by it. It has averred that the government has taken the impugned decision after going through the entire record relating to allotment of plots to 43 members of the petitioner-society and after fully satisfying itself that the disputed allotments are totally illegal, arbitrary and unjustified.
We have heard Shri B.S. Gupta, learned counsel for the petitioner, Shri H.S. Mattewal, learned counsel for the Trust and Shri Rupinder Khosla, Deputy Advocate General, Punjab. In our opinion, the order passed by the Government to annul the resolution of the Trust approving the allotment of 43 plots to the members of the petitioner-Society is liable to be quashed only on the ground of violation of the principles of natural justice.
The applicability of the rule of audi alteram partem in quasi judicial and ad-, ministrative matters is now well settled. The rule that a party to whose prejudice an order is intended to be passed is entitled to a hearing applies alike to judicial tribunals and bodies of persons invested with authority to adjudicate upon matters involving civil consequences. It is one of the fundamental rules of our constitutional set up that every citizen is protected against exercise of arbitrary authority by the State or its offices. Duty to act judicially would, therefore, arise from the very nature of the function intended to be performed, it need not be shown to be super-added. If there is power to decide and determine to the prejudice of a person, duty to act judicially is implicit in the exercise of such power. If the essentials of justice be ignored and an order to the prejudice of a person is made, the order is a nullity. That is a basic concept of the rule of law and importance thereof transcends the significance of a decision in any particular case.
In State of Orissa Vs. Dr. (Miss) Binapani Dei and Others, , their Lordships of the Supreme Court upheld the judgment of the High Court by which the retirement of the respondent was quashed. One of the contentions urged on behalf of the State was that the principles of natural justice are not attracted in administrative matters and in any case the decision to retire the respondent cannot be faulted because it was preceded by a preliminary enquiry. While rejecting this argument, the Apex Court held :
"It is true that some preliminary enquiry was made by Dr. S. Mitra. But the report of that Enquiry Officer was never disclosed to the first respondent. Thereafter, the first respondent was required to show cause why April 16, 1907, should not be accepted as the date of birth and without recording any evidence the order was passed. We think that such an enquiry and decision were contrary to the basic concept of justice and cannot have any value. It is true that the order is administrative in character, but even an administrative order which involves civil consequences, as already stated, must be made consistently with the rules of natural justice after informing the first respondent of the case of the State, the evidence in support thereof and after giving an opportunity to the first respondent of being heard and meeting or explaining of evidence. No such steps were admittedly taken, the High Court was, in our judgment, right in setting aside the order of the State."
In Sayeedur Rehman Vs. The State of Bihar and Others, , a three-judges bench of the Supreme Court expounded the proposition on the applicability of the principles of natural justice in the following words :
"This unwritten right of hearing is fundamental to a just decision by any authority which decides a controversial issue effecting the rights of the rival contestants. This right has its roots in the notion of fair procedure. It draws the attention of the party concerned to the imperative necessity of not overlooking the other side of the case before coming to its decision, for nothing is more likely to conduce to just and right decision than the practice of giving hearing to the affected parties. The omission of express requirement of fair hearing in the rules or other source of power claimed for reconsidering an order is supplied by the rule of justice which is considered as an integral part of our judicial process which also governs quasi-judicial authorities when deciding controversial points affecting rights of parties."
In Mrs. Maneka Gandhi Vs. Union of India (UOI) and Another, , a new dimension was given to the principles of natural justice by a seven-judges Bench of the Supreme Court while interpreting the provisions of the Passports Act, 1967. Some of the observations made in that decision are:
"Although there are no positive, words in the statute requiring that the party shall be heard, yet the justice of the common law will supply the omission of the legislature. The principle of audi alteram partem, which mandates that no one shall be condemned unheard, is part of the rule of natural justice.
Natural justice is a great humanising principle intended to invest law with fairness and to secure justice and over the years it has grown into a widely pervasive rule affecting large areas of administrative action. The inquiry must, always be: does fairness in action demand that an opportunity to be heard should be given to the person affected?
The law must now be taken to be well settled that even in an administrative proceedings, which involves civil consequences, the doctrine of natural justice must be held to be applicable".
S.L. Kapoor v. Jagmohan and Ors. AIR 1981 S.C. 137, (supersession of Municipal Committee), Swadeshi Cotton Mills Vs. Union of India (UOI), (taking over of undertaking without investigating), Olga Tellis and Others Vs. Bombay Municipal Corporation and Others, (removal of squatters and hawkers from footpath), Central Inland Water Transport Corporation Limited and Another Vs. Brojo Nath Ganguly and Another, and Delhi Transport Corporation Vs. D.T.C. Mazdoor Congress and Others, (termination of the services of permanent employees without enquiry) are illustrative cases of applicability of the principles of natural justice.
Some of the recent illustrations of the application of the rule of audi alteram partem are found in State of Gujarat and another Vs. Anand Municipality and others, (objections to the Town Planning Scheme), Lal Babu Hussein and Others Vs. Electoral Registration Officer and Others, (deletion of the name from electoral rolls) and Municipal Corporation v. Chela Ram and sons and Anr. (1996)1 S.C.C. 127 (Town Planning Scheme).
In view of the pronouncements of the Apex Court including the one of seven-judges Bench in Menaka Gandhi''s case, it must be treated as a settled proposition of law that even in the absence of a positive requirement of the statute requiring that the party shall be heard, the principle of audi alteram partem, which mandates that no one shall be condemned unheard, has to be complied with in all quasi-judicial and administrative proceeding which involve civil consequences and only in exceptional cases and for compelling reasons, the applicability of this humanising and fundamental doctrine which forms part of the concept of rule of law can be excluded.
If we examine the impugned order in the backdrop of the facts of this case and the proposition of law culled out from various judicial precedents, there is little difficulty in holding that the same is vitiated due to patent violation of the rule of audi alteram partem. Admittedly, the government ordered an enquiry into the alleged irregularities in allotment of plots to co-operative societies by Improvement Trust, Ludhiana. The Director, Local Government to whom the inquiry was entrusted made a detailed investigation in the matter. He examined the record of the Trust, recorded the statement of its officials and then concluded that allotment of 43 plots to the members of the petitioner-society is an act of favouritism and breach of trust by those who were supposed to protect the interest of the statutory body and this has caused great financial loss to the Trust. He recommended the cancellation of allotment of plots by annulling the resolution of the Trust. The Principal Secretary to the Government relied on the report of the Director, Local Government and cancelled the resolution of the Trust by holding that the allotment of 43 plots was not justified and not covered under the allotment rules. The relevant extracts of the order dated 27.2.1997 the legality of which has been challenged in C.W.P. No. 8536 of 1997 reads as under :-
"Government of Punjab
Department of Local Government,
(I.G. II Branch)
ORDER
xx xx xx Whereas it was brought to the notice of the Govt. that number of plots allotted to the said society was in excess of the allotment of plots allowed by Hon''ble Court in C.W.P. No. 3328 of 1981 passed on 12.4.1991 as also certain irregularities in allotment of plots. The Trust was directed to supply full facts of the case along with relevant record and a copy of the judgment of the Hon''ble Court.
Whereas the Improvement Trust Ludhiana supplied some information/document vide its letter No. II/DB/3234, dated 21.7.1994 and No LII/DB/3519, dated 30.11.1995. Trust was asked vide letter No. 8/80/95.3LGII/20632, dated 30.11.1995 to supply some documents with observations that till final decision is taken the status quo should prevail. Reply of the Trust along with documents, judgment of the court has been perused to examine the validity of allotment resolved to be made by the Trust vide resolution No. 91, dated 30.9.1995. The matter has also been required by the Addl. Secy. cum-Director, Local Govt.
xx xx xx And whereas the Hon''ble Court had ordered allotment of plots only in the area of the scheme (i.e. Model Town Extension Part-II Ludhiana) but the Trust decided to allot plots in various schemes of the Trust contrary to the allotment rules. The Trust did not examine and process the documents to find only the eligible members to be considered for allotment as far the Court orders dated 12.4.1991 requiring allotment of plots only to the eligible members. Moreover, 40 members of the society had already been allotted plots measuring total area of 8370 sq yds. Against acquisition of land of the society measuring 20146 Sq. yds. In view of this further allotment of 43 plots measuring 9650 sq. yds. to the remaining members of the society was not justified and not covered under the allotment rules. It is mentioned that with allotment of 43 plots in addition to 40 plots, allotted earlier in 1992, the total area under plots allotted to the society comes to 18,000/- sq. yds. which is nearly 90% of the total land of the society acquired by the \\ Trust, whereas even if the exemption would have been granted it would had been allowed to do plotting over area spanning to 45% to 55% of the total exempted land leaving remaining area for other essential development words viz. roads, parks etc. as per requirements of established principle of Town Planning.
Taking the above facts into consideration, I Rajan Kashap, Principal Secy, to Govt. Punjab, Department of Local Govt. in exercise of powers vested in me u/s 72-E of the Punjab Town Improvement Act, 1922 hereby annul Resolution No. 91, dated 31.5.1995 and direct the Trust to comply with these orders immediately."
It is an admitted that before passing the impugned order, the Principal Secretary to Government did not give an action oriented notice and opportunity of hearing to the petitioner-Society or its members even though they had acquired substantial interest in the land in view of the resolution passed by the Trust approving the allotment of plots to them. It must, therefore, be held that the petitioner and its members have been condemned unheard and the impugned order is liable to be quashed on the ground of violation of the principles of natural justice.
The argument of Shri Mattewal that while exercising the power u/s 72-E of the Punjab Town Improvement Act, 1922, the government is not bound to give notice and opportunity of hearing to the persons likely to be affected by its order has some support in the decision of the learned Single Judge in Baldev Raj Sharma v. State of Punjab (1912)74 P.L.R. 144 and the judgment of the Division Bench in Karam Singh v. State of Punjab (1979)81 P.L.R. 427, but, in our opinion, these decisions cannot be made basis for denying relief to the petitioner in view of the law declared by the Supreme Court in the judgments referred to herein above. In Baldev Raj Sharma''s case, the learned Single Judge interpreted Section 236(2) of the Punjab Municipal Act, 1914 and held that the statute does not expressly require giving of notice of the Municipal Committee concerned or any person who is affected by the resolution or annulment order and only the Municipal Committee, whose resolution, is annulled can have a grievance. The learned Single Judge further held that the person to whom that resolution relates has no right to urge that he has not been giving any notice or hearing before the order annulling the resolution was passed. The same line of reasoning has been adopted by the Division Bench in Karam Singh''s case. With great respect to the learned Single Judge and the Division Bench, the proposition laid down by them that in the absence of specific express requirement of statute, the rules of natural justice are not required to be followed can no longer be regarded as correct in view of the later decisions of the Apex Court including Maneka Gandhi v. Union of India (supra) and the judgment of the Constitution Bench in S.N. Mukherjee Vs. Union of India, .
For the reasons mentioned above, the writ petitions are allowed. The order dated 27.2.1997 passed by the Principal Secretary to Govt. Punjab Department of Local Government, is quashed with liberty to the government to pass fresh order after hearing the petitioner and/or its representatives, the beneficiaries and the Trust.
In order to facilitate early decision of the dispute, we direct that:
(1) The petitioner shall appear before the Principal Secretary to Govt. Punjab, Department of Local Government on 7.10.1998.
(2) Within 7 days thereafter the learned Secretary should disclose the reasons on which he proposes to cancel/annul the resolution/order passed by the Trust to allot plots to the members of the petitioner.
(3) In the meantime, the concerned authority shall get a notice published in the newspaper Punjab Kesari, which according to the learned counsel for the parties has got sufficient circulation in the District Ludhiana.
(4) Any person who wishes to make representation against the proposal for cancellation of the resolution of the Trust may file his representation/objection within 10 days of the publication of the notice. In any case, such objection shall be filed on or before 14.10.1998.
(5) Within 3 months calculated from 14.10.1998, the learned Secretary shall hear the parties and pass a fresh order on the issue of cancellation of the resolution of the Trust by passing a reasoned order.
(6) In case the revised decision is against the annulment of the resolution of the Trust, then the allotment made in favour of the members of the petitioner shall stand revived subject to the fulfilment of other conditions enumerated in the Town Improvement Act, 1922 and the Rules framed thereunder.
(7) It is also made clear that if there is any other litigation between the Trust, the Society and its members inter se or otherwise then the same shall not be adversely affected by this order.
The Bench Secretary should make available attested copies of the judgment to the learned counsel for the parties.