Administrative Law - Decision Will Be Vitiated If Materials Are Not Disclosed To Affected Party : Supreme Court

Factual Background

The proceeding emanates from complaints seeking deletion of names of some members of the Shri Chhatrapati Rajaram Sahakari Sakhar Karkhana Limited, a cooperative society registered under the Maharashtra Co-operative Societies Act, 1960, primarily engaged in the production of sugar. In 2019, complaints were filed before the Registrar alleging that 2000 ‘producer members’ of the society do not fulfill the conditions of eligibility prescribed in the society’s bye-laws, which are as under -

1. have attained the age of 18 years;
2. be an occupier of land within the jurisdiction of the society/factory as owner or tenant; and
3. cultivate sugar in a minimum area of 10 gunthas of land.

On 03.01.2020, the Regional Joint Director (Sugar) issued show cause notice to the Co-operative society, informing it about the complaints. On 14.02.2020, the Regional Joint Director (Sugar) directed 1415 members to be deleted, while finding the other 484 members to have met the eligibility criteria. An appeal was filed, which was dismissed on 18.02.2021 by the Minister of Cooperation. Thereafter, writ petitions were instituted before the Bombay High Court. Eventually, the High Court dismissed the writ petitions.

Submissions

Senior Advocates, Mr. Maninder Singh and Mr. Neeraj Kishan Kaul, representing the members who were sought to be deleted by the Regional Joint Director (Sugar) (appellants) argued that there was no enquiry on whether they meet the eligibility conditions. The Senior Counsels argued that there were no specific allegation of ineligibility against individual members; the Regional Joint Director pursued the enquiry in haste. It was submitted that though a Committee was constituted to verify the allegations, the reports of the same have not been disclosed to the co-operative society or its affected members. Breach of principles of natural justice was alleged by the Senior Counsels.

Senior Advocate, Mr. A.M. Singhvi, appearing for the original complainants, averred that the plea of lack of enquiry into individual eligibility, which was not raised before the High Court ought not to be asserted before the Apex Court. He also resorted to the argument of concurrent findings by courts below.

Analysis by the Supreme Court

The Bench noted that it is trite that an adjudicatory body cannot base its decision on any material unless the person against whom it is sought to be utilised has been appraised of the same and given an opportunity to respond to it. It refers to M.P. Jain & S.N. Jain’s treatise on Principles of Administrative Law in this regard.

“ If without disclosing any evidence to the party, the authority takes it into its consideration, and decides the matter against the party, then the decision is vitiated for it amounts to denial of a real and effective opportunity to the party to meet the case against him. The principle can be seen operating in several judicial pronouncements where non-disclosure of materials to the affected party has been held fatal to the validity of the hearing proceedings.”

The Bench further culled out the relevant principles enumerated in T. Takano v. SEBI 2022 LiveLaw (SC) 180 -

1. A quasi-judicial authority has a duty to disclose the material that has been relied upon at the stage of adjudication; and
2. The actual test is whether the material that is required to be disclosed is relevant for the purpose of adjudication. If it is, then the principles of natural justice require its due disclosure.

In the case at hand, the Bench observed that the Report of the Committee constituted to verify the allegations, contained findings regarding the eligibility of individual members. But, the report was not supplied to the individual members or the society. Moreover, given that there were otherwise no specific allegations of ineligibility, the non-disclosure of the Committee’s report caused prejudice to the individuals who were sought to be disqualified.

It noted that neither the order of the adjudicating authority nor that of the appellant authority dealt with facts pertaining to the eligibility of each of the members. The affected members had also raised serious objections in the appeal and the writ petitions regarding the allegation of their ineligibility. Considering the consequence of disqualifying almost 1415 members, the Bench reckoned -

“The consequence of ousting such a large group of members from the membership of a cooperative society would result in a serious miscarriage of justice unless individual facts are considered in each case.”

Case details

Deepal Ananda Patil v. State of Maharashtra And Ors | CA 88-89 of 2023 | 4 Jan 2023 | Chief Justice of India, D.Y. Chandrachud and Justice P.S. Narasimha

For Petitioner(s) Mr. Neeraj Kishan Kaul, Sr. Adv. Mr. Abhikalp Pratap Singh, AOR Mr. Raghav Agrawal, Adv. Mr. Toshiv Goyal, Adv. Mr. Dhruv Sharma, Adv. Ms. Aadya Yadav, Adv. M/S. Lawyer S Knit & Co, AOR Mr. Maninder Singh, Sr. Adv. Mr. S. Udaya Kumar Sagar, Adv. Mr. Eeshan D. Khaire, Adv. Mr. Tushar Singh, Adv. Mr. Katubadi Ismail, Adv.

For Respondent(s) Mr. Kedar Pralhad LAD, Adv. Mr. Dhawesh Pahuja, Adv. Mr. Sandeep Singh, AOR Mr. Tushar Mehta, Solicitor General Mr. Siddharth Dhamadhikari, Adv. Mr. Aaditya Aniruddha Pande, AOR Mr. Bharat Bagla, Adv. Ms. Kirti Dadheech, Adv. Mr. Siddharth Bhatnagar, Adv. Ms. Pracheta Kar, Adv. Mr. Aditya Sidhra, Adv. Mr. Nadeem Aftoz, Adv.

Citation : 2023 LiveLaw (SC) 30

For Petitioner(s) Mr. Neeraj Kishan Kaul, Sr. Adv. Mr. Abhikalp Pratap Singh, AOR Mr. Raghav Agrawal, Adv. Mr. Toshiv Goyal, Adv. Mr. Dhruv Sharma, Adv. Ms. Aadya Yadav, Adv. M/S. Lawyer S Knit & Co, AOR Mr. Maninder Singh, Sr. Adv. Mr. S. Udaya Kumar Sagar, Adv. Mr. Eeshan D. Khaire, Adv. Mr. Tushar Singh, Adv. Mr. Katubadi Ismail, Adv.

For Respondent(s) Mr. Kedar Pralhad LAD, Adv. Mr. Dhawesh Pahuja, Adv. Mr. Sandeep Singh, AOR Mr. Tushar Mehta, Solicitor General Mr. Siddharth Dhamadhikari, Adv. Mr. Aaditya Aniruddha Pande, AOR Mr. Bharat Bagla, Adv. Ms. Kirti Dadheech, Adv. Mr. Siddharth Bhatnagar, Adv. Ms. Pracheta Kar, Adv. Mr. Aditya Sidhra, Adv. Mr. Nadeem Aftoz, Adv.

Headnotes: 

Well-established principle of administrative law - an adjudicatory body cannot base its decision on any material unless the person against whom it is sought to be utilised has been apprised of it and given an opportunity to respond to it [Paragraph 17]

MP Jain and SN Jain’s treatise on Principles of Administrative Law - if without disclosing any evidence to the party, the authority takes it into its consideration, and decides the matter against the party, then the decision is vitiated for it amounts to denial of a real and effective opportunity to the party to meet the case against him - the principle can be seen operating in several judicial pronouncements where non-disclosure of materials to the affected party has been held fatal to the validity of the hearing proceedings [Paragraph 17]

T. Takano v. Securities and Exchange Board of India - a quasi-judicial authority has a duty to disclose the material that has been relied upon at the stage of adjudication - the actual test is whether the material that is required to be disclosed is relevant for purpose of adjudication - if it is, then the principles of natural justice require its due disclosure [Paragraph 18]

MD, ECIL, Hyderabad v. B. Karunakar - in order to set aside the order of punishment, the aggrieved person must be able prove that prejudice has been caused to him due to non-disclosure- to prove prejudice, he must prove that had the material been disclosed to him the outcome or the punishment would have been different [Paragraph 19]

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