Judicial Review: Only Palpably Arbitrary Decisions Of Executive In Economic Matters Can Be Interfered With: SC [Read Judgment]

The Supreme Court, on Monday, observed that while adjudging the validity of an executive decision in economic matters by exercising power of judicial review, it is not errors, but only palpably arbitrary decisions alone can be interfered with by the High Courts.

In this case, the fee structure fixed by Telangana Admission and Fee Regulatory Committee [TAFRC], which was later approved by the State Government, was set aside by the High Court which itself fixed a fee structure.

While considering the appeal, the bench comprising Justice Arun Mishra and Justice Navin Sinha noted that the High Court had itself held that the procedural fairness and bonafides of the TAFRC could not be doubted. The bench also said that, to prune the jurisdiction of the TAFRC by restraining it from examining and scrutinizing the statement of accounts to decide the justification of the proposed fee structure, and confining its role to mere perusal and comments, will amount to taking away its regulatory jurisdiction completely.

The bench then reiterated the principles to be followed during judicial review. It said:

"Judicial review, as is well known, lies against the decision-making process and not the merits of the decision itself. If the decision-making process is flawed inter alia by violation of the basic principles of natural justice, is ultravires the powers of the decision maker, takes into consideration irrelevant materials or excludes relevant materials, admits materials behind the back of the person to be affected or is such that no reasonable person would have taken such a decision in the circumstances, the court may step in to correct the error by setting aside such decision and requiring the decision maker to take a fresh decision in accordance with the law. The court, in the garb of judicial review, cannot usurp the jurisdiction of the decision maker and make the decision itself. Neither can it act as an appellate authority of the TFARC.

The court added that validity of complex executive decisions in economic cannot be tested on any rigid principles or the application of any straitjacket formula. Setting aside the High Court judgment, the bench added:

"The court while adjudging the validity of an executive decision in economic matters must grant a certain measure of freedom or play in the joints to the executive. Not mere errors, but only palpably arbitrary decisions alone can be interfered with in judicial review. The recommendation made by a statutory body consisting of domain experts not being to the satisfaction of the State Government is an entirely different matter with which we were not concerned in the present discussion. The court should therefore be loath to interfere with such recommendation of an expert body, and accepted by the government, unless it suffers from the vice of arbitrariness, irrationality, perversity or violates any provisions of the law under which it is constituted. The court cannot sit as an appellate authority, entering the arena of disputed facts and figures to opine with regard to manner in which the TAFRC ought to have proceeded without any finding of any violation of rules or procedure. If a statutory body has not exercised jurisdiction properly the only option is to remand the matter for fresh consideration and not to usurp the powers of the authority." 

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