# '-f' [2008) 14 S.C.R. 859 M/S NAGARJUNA CONSTRUCTION CO. LTD v. GOVT. OF ANDHRA PRADESH AND ORS

- **Citation:** [2008] 14 S.C.R. 859
- **Court:** Supreme Court of India
- **Decided:** 2008-10-20
- **Case number:** Civil Appeal No. 1438 of 2004
- **Bench:** Dr. Arijit Pasayat, P. Sathasivam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/f-2008-14-s-c-r-859-m-s-nagarjuna-construction-co-ltd-v-govt-of-andhra-pradesh-23835
- **Pages:** 24

## Headnote

Administrative law:
B
Principles of natural justice - Adherence to, by administrative authorities - Discussed.
C
Administrative action - Judicial review of - Held: Court
cannot substitute its judgment for decision of administrative
authorities - Court should intervene only when administrative
action is unfair or unreasonable.
Doctrines/Principles: Principle of natural justice - General rules - Discussed.
Maxims:
(i)
audi alteram partem - Meaning of.
(ii)
nemo judex in causa sua - Meaning of.
(iii) nemo debet esse judex in propria causa sua -
Meaning of.
(iv) aliquis non debet esse judex in propria causa
quia non potest esse judex at pars - Meanin'g of
(v)
nemo potest esse simul actor et judex- Meaning
of
(vi) qui aliquid statuerit parte inaudita alteram
actquam licet dixerit, haud acquum facerit -
Meaning of
859
D
E
F
G
H
860
SUPREME COURT REPORTS
[2008] 14 S.C.R.
A
The question which arose for consideration in the
instant appeals is whether State Government while exer-
~-
cising revisional jurisdiction, acted on certain materials
collected behind the back of appellants and the reports
submitted by certain authorities and thereby violated the
B principles of natural°justice.
Allowing the appeals and remitting the matter to State
Government, the Court
-l
;
HELD: 1. The basic principles of natural justice was
c disregarded by the State Government while revising the
order. It acted on materials which were not supplied to
the appellants. Additionally, the High Court,. for the first
time, made reference to the report/inspection notes which
,I
were not even referred to by the State Government while
D
exercising revisional power. The State Government has
to re-consider the matter after supplying to the appellants
copies of reports/inspection notes on which the Department case rests. It should also consider the effect of the
concession made by the Department in the earlier rounds
'7--
of proceedings before the High Court. [Paras 30, 42] [875E
F-G; 882-G]
2.1. Natural justice is another name for common
sense justice. Rules of natural justice are not codified
canons. But they are principles ingrained into the conF
science of man. Justice is based substantially on natural
ideals and human values. The administration of justice is
to be freed from the narrow and restricted considerations
which are usually associated with a formulated law involv-
~
ing linguistic technicalities and grammatical niceties. [Para
33] [877-C-D]
G
2.2. The expressions "natural justice" and "legal· justice" do not present a water-tight classification. It is the
-<
substance of justice which is to be secured by both, and
yvhenever legal justice fails to achieve this solemn purH
pose; natural justice is called in aid of legal justice. Natural justice relieves legal justice from unnecessary tech-
M/S NAGARJUNA CONSTRUCTION CO. LTD. v.
861
GOVT OF A. P. & ORS.
,._,,..ynicality, grammatical pedantry or logical prevarication. It A
supplies the omissions of a formulated law. [Para 34] [877E-F]
2.3. The obligation to act fairly on the part of the administrative authorities was evolved to ensure the rule of
law and to prevent failure of justice. This doctrine is B
complementary to the principles of natural justice which
)-
the quasi-judicial authorities are bound to observe. It is
true that the distinction between a quasi-judicial and the
administrative action has become thin. Even so, the extent of judicial scrutiny/judicial review in the case of ad- c
ministrative action cannot be larger than in the case of
quasi-judicial action. If the High Court cannot sit as an
Appellate Authority over the decisions and orders of
quasi-judicial authorities, it follows equally that it cannot
do so in the case of administrative authorities. In the matD
ter of administrative action, it is well known, more than
one choice is available to the administrative authorities;
~--r
they have a certain amount of discretion available to them.
They have "a right to choose between more than one
poss

## Text

_Characters 0–39,964 of 49,284. This is a partial read: ask again with offset=39964 for what follows._

'-f'
[2008) 14 S.C.R. 859
M/S NAGARJUNA CONSTRUCTION CO. LTD.
A
v.
GOVT. OF ANDHRA PRADESH AND ORS.
(Civil Appeal No. 1438 of 2004)
OCTOBER 20, 2008
[DR. ARIJIT PASAYAT AND P. SATHASIVAM, JJ.]
Administrative law:
B
Principles of natural justice - Adherence to, by administrative authorities - Discussed.
C
Administrative action - Judicial review of - Held: Court
cannot substitute its judgment for decision of administrative
authorities - Court should intervene only when administrative
action is unfair or unreasonable.
Doctrines/Principles: Principle of natural justice - General rules - Discussed.
Maxims:
(i)
audi alteram partem - Meaning of.
(ii)
nemo judex in causa sua - Meaning of.
(iii) nemo debet esse judex in propria causa sua -
Meaning of.
(iv) aliquis non debet esse judex in propria causa
quia non potest esse judex at pars - Meanin'g of
(v)
nemo potest esse simul actor et judex- Meaning
of
(vi) qui aliquid statuerit parte inaudita alteram
actquam licet dixerit, haud acquum facerit -
Meaning of
859
D
E
F
G
H
860
SUPREME COURT REPORTS
[2008] 14 S.C.R.
A
The question which arose for consideration in the
instant appeals is whether State Government while exer-
~-
cising revisional jurisdiction, acted on certain materials
collected behind the back of appellants and the reports
submitted by certain authorities and thereby violated the
B principles of natural°justice.
Allowing the appeals and remitting the matter to State
Government, the Court
-l
;
HELD: 1. The basic principles of natural justice was
c disregarded by the State Government while revising the
order. It acted on materials which were not supplied to
the appellants. Additionally, the High Court,. for the first
time, made reference to the report/inspection notes which
,I
were not even referred to by the State Government while
D
exercising revisional power. The State Government has
to re-consider the matter after supplying to the appellants
copies of reports/inspection notes on which the Department case rests. It should also consider the effect of the
concession made by the Department in the earlier rounds
'7--
of proceedings before the High Court. [Paras 30, 42] [875E
F-G; 882-G]
2.1. Natural justice is another name for common
sense justice. Rules of natural justice are not codified
canons. But they are principles ingrained into the conF
science of man. Justice is based substantially on natural
ideals and human values. The administration of justice is
to be freed from the narrow and restricted considerations
which are usually associated with a formulated law involv-
~
ing linguistic technicalities and grammatical niceties. [Para
33] [877-C-D]
G
2.2. The expressions "natural justice" and "legal· justice" do not present a water-tight classification. It is the
-<
substance of justice which is to be secured by both, and
yvhenever legal justice fails to achieve this solemn purH
pose; natural justice is called in aid of legal justice. Natural justice relieves legal justice from unnecessary tech-
M/S NAGARJUNA CONSTRUCTION CO. LTD. v.
861
GOVT OF A. P. & ORS.
,._,,..ynicality, grammatical pedantry or logical prevarication. It A
supplies the omissions of a formulated law. [Para 34] [877E-F]
2.3. The obligation to act fairly on the part of the administrative authorities was evolved to ensure the rule of
law and to prevent failure of justice. This doctrine is B
complementary to the principles of natural justice which
)-
the quasi-judicial authorities are bound to observe. It is
true that the distinction between a quasi-judicial and the
administrative action has become thin. Even so, the extent of judicial scrutiny/judicial review in the case of ad- c
ministrative action cannot be larger than in the case of
quasi-judicial action. If the High Court cannot sit as an
Appellate Authority over the decisions and orders of
quasi-judicial authorities, it follows equally that it cannot
do so in the case of administrative authorities. In the matD
ter of administrative action, it is well known, more than
one choice is available to the administrative authorities;
~--r
they have a certain amount of discretion available to them.
They have "a right to choose between more than one
possible course of action on which there is room for reaE
sonable people to hold differing opinions as to which is
to be preferred". The court cannot substitute its judgment
for the judgment of administrative authorities in such
cases. Only when the action of the administrative authority is so unfair or unreasonable that no reasonable person would have taken that action, can the court intervene.
c
I
")>-
[Para 31] (875-H; 876-A-E]
A.K. Kraipak v. Union of India (1969) 2 SCC 262 - relied
on.
Secy of State for Education and Science v. Metropolitan G
Borough Council of Tameside (1976) 3 All ER 665; Associ-
';---
ated Provincial Picture Houses Ltd. v. Wednesbury Corpn-
(1947) 2 all All ER 682 - referred to.
2.4. The adherence to principles of natural justice as
recognized by all civilized States is of supreme imporH
862
SUPREME COURT REPORTS
[2008] 14 S.C.R.
A
tance when a quasi-judicial body embarks on determining disputes between the parties, or any administrative
'+-·
action involving civil consequences is in issue. These
principles are well settled. The first and foremost principle
is what is commonly known as a1:1di alteram partem rule. It
B
says that no one should be condemned unheard. Notice
is the first limb of this principle. It must be precise and unambiguous. It should appraise the party determinatively the
case he has to meet. The time given for the purpose
J..._
should be adequate so as to enable him to make his representation. In the absence of a notice of the kind and
C such reasonable opportunity, the order passed becomes
· wholly vitiated. [Para 35 ] [877-G-H; 878-A]
D
Cooper v. Wandsworth Board of Works (1963) 143 ER
414 - referred to.
2.5. Principles of natural justice are tho~e rules which
have been laid down by the Courts as being the minimum
protection of the rights of the individual against the arbitrary procedure that may be adopted by a judicial, quasijudicial and administrative authority while making an orE der affecting those rights. These rules are intended to
prevent such authority from doing injustice. [Para 36]
[878-F]
F
Ray V. Local Government Board (1914) 1 KB 160 199:83
LJKB 86; General Council of Medical Education & Registration of U.K. v. Sanckman (1943) AC 627: (1948) 2 All ER 337;
Board of Education v. Rice (1911) AC 179:80 LJKB 796;
Spackman v. Plumstead District Board of Works (1985) 10
AC 229:54 LJMC 81 - referred to.
2.6. Concept of natural justice has undergone a great
G deal of change in recent years. Rules of natural justice
are not rules embodied always expressly in a statute or
in rules framed thereunder. They may be implied from the
--<
nature of the duty to be performed under a statute. What
particular rule of natural justice should be implied and
H what its contex~ should be in a given case must depend
MIS NAGARJUNA CONSTRUCTION CO. LTD. v.
863
GOVT. OF A. P. & ORS.
to a great extent on the fact and circumstances of that A
~ case, the frame-work of the statute under which the enquiry is held. The old distinction between a judicial act
and an administrative act has withered away. Even an administrative order which involves civil consequences
must be consistent with the rules of natural justice. ExB
pression 'civil consequences' encompasses infraction of
not merely property or personal rights but of civil liber-
. >-
ties, material deprivations, and non-pecuniary damages .
In its wide umbrella comes everything that affects a citizen in his civil life. [Para 39] [880-F-H; 881-A]
c
Drew v. Drew and Lebura (1855) 2 Macg. 1.8; James
Dunber Smith v. Her Majesty the Queen (1877-78) 3 App.
Case 614, 623 JC; Arthur John Specman v. Plumstead District Board of Works (1884-85) 10 App. Case 229, 240; Vionet v.
Barrett (1885) 55 LJRD 39, 41; Hookings v. Smethwick Local D
Board of Health (1890) 24 QBD 712; Ridge v. Baldwin (1963)
1 WB 569, 578; Maneka Gandhi v. Union of India (1978) 2
--r
SCR 621; In re: H.K. (An Infant) (1967) 2 Q.B. 617, 630;
fairmount Investments Ltd. v. Secretary to State for Environment (1976) WLR 1255; Regina v. Secretary of State for Home E
Affairs Ex Parle Hosenball (1977) 1 WLR 766 - referred to.
2.8. Over the years by a process of judicial interpre ..
tation two rules have been evolved as representing the
principles of natural justice in judicial process, including
F
therein quasi-judicial and administrative process. They
constitute the basic elements of a fair hearing, having their
}-
roots in the innate sense of man for fair-play and justice
which is not the preserve of any particular race or country but is shared in. common by all men. The first rule is
'nemo judex in causa sua' or 'nemo debet esse judex in proG
pria causa sua' that is, 'no man shall be a judge in his own
cause'. The form 'aliquis non deb et esse judex in propria
causa quia non potest esse judex at pars', that is, 'no man
ought to be ajudge in his own case, because he cannot
~,
act.as Judge and at the same time be a party'. The form H
864
SUPREME COURT REPORTS -
[2008) 14 S.C.R.
A
'nemo potest esse simul actor et judex', that is, 'no one can
't'-
be at once suitor and judge' is also at times used. The
second rule is 'audi alteram partem', that is, 'hear the other
side'. At times and particularly in continental countries,
the form 'audietur at altera pars' is used, meaning very
8
much the same thing. A corollary has been deduced from
the above two rules and particularly the audi alteram partem
rule, namely 'qui aliquid statuerit parte inaudita alte,ram
-l.
actquam licet dixerit, haud acquum facerit' that is, 'he who
shall decide anything without the other side having been
c heard, although he may have said what is right, will not
have been what is right'. In other words, as it is now ex- ,
pressed, 'justice should not only be done but should
manifestly be seen to be done'. [Para 41] [881-G-H; 882A-E]
D . to.
Bosewe//'s case (1605) 6 Co.Rep. 48-b, 52,;a ..:.. referred
CASE LAW REFERENCE
. ..__,.__
(1969) 2 sec 262
relied on
[Para 31]
E
(1976) 3 All ER 665
referred to
[Para 31]
(1947) 2 all All ER 682
referred to
[Para 31]
(1963) 143 ER 414
referred to
[Para 35]
(1914) 1 KB 160 199
referred to
[Para 37]
F
(1943) AC 627
referred to
[Para 37]
(1911) AC 179:80 LJKB 796 referred to
[Para 38]
-f·
(1985) 10 AC 229
referred to
[Para 38]
(1855) 2 Macg. 1.8
referred to
[Para 40]
G
(1877-78) 3 App. Case 614
referred to
[Para 40]
(1884-85) 10 App. Case 229 referred to
[Para 40]
-(
(1885) 55 LJRD 39, 41
referred to
[Para 40]
(1890) 24 QBD 712
referred to
[Para 40]
H
(1963) 1 WB 569, 578
referred to
[Para 40]
~
MIS NAGARJUNA CONSTRUCTION CO. LTD. v.
865
GOVT. OF A. P. & ORS.
(1978) 2 SCR 621
referred to
[Para 40]
A
(1967) 2 Q.8.617
referred to
[Para 40]
(1976) WLR 1255
referred to
[Para 40]
(1977) 1 WLR 766
referred to
[Para 40]
(1605) 6 Co. Rep. 48-b, 52-a referred to
[Para 41]
B
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 1438
of 2004
From the final Judgment and Order dated 9/1 /2003 of the
High Court Judicature, Andhra Pradesh at Hyderabad in Writ C
Petition No. 5683 of 2002
WITH
C.A. Nos. 1439, 1442, 1443 and 1444 of 2004
H.N. Salve, P.S. Patwalia, VA. Mohta, Arun Kathpalia, C.S. D
Vaidyanathan, Anoop G. Choudhary, Suyodhan Byrapaneni,
Siddharth Patnaik, G. Arun, G. Ramakrishna Prasad, Manoj
Swarup, Rohit Sohgaura, D. Bharat Kumar, Anand, Azim H,
Laskar, M. lndrani, Neelkanta Nayal, Abhijit Sengupta, D. Bharat E
Kumar, Anand, Azim H. Laskar, lndrani, Abhijit Sengupta, Ram
Babu, Amit Sharma, Anupam Lal Das, Manoj Saxena, Rajnish
Singh, Rahul Shukla and T.V. George for the Appearing Parties.
·
The Judgment of the Court was delivered by
DR. ARIJIT PASAYAT, J. 1. Since common points are
involved in these appeals, they are disposed of by this com-·
man judgment.
F
2. Writ Petitions were filed by the appellants before the G
Andhra Pradesh High Court praying for quashing the order
passed by the State Government in Memorandum No.8817/
M.11(1)/2001-6, dated 4.2.2002 and the consequent demand ·
notice issued by the Director of Mines and Geology and the
proceedings of the Deputy Director, Mines and Geology. The H
866
SUPREME COURT REPORTS
[2008] 14 S.C.R.
A
appellant in each case is engaged in the business of construction, engineering and civil works. In each case the appellant
had participated in the tenders invited by the Bharat Heavy
Electricals Ltd. (in short 'SHEL') for the purpose of executing
their part of the contract which is with NTPC for levelling and
B
grading. SHEL had awarded the contract to the appellant-company for ~xecution of the work. According to the appellant, the
material required for the purpose of execution of the contract in
terms of th,e specifications prescribed under the contract is earth,
morrum gravel and mixture of these or any other material ape proved by th~ BHEL. The appellant had obtained rights for excavation of good earth from the ryots of patta lands in the vicinity as well as from the quarry lease holders. Each appellant was
supplying the materials from the source in which they obtained
right of excavation of materials. Huge quantity of these materiD als was supplied under the contract. The Assistant Director of
Mines and Geology required BHEL to show cause as to why
action should not be initiated to realize a sum of money towards
seigniorage fee which includes five times penalty over and above
the normal seigniorage fee. The Assistant Director required
BHEL to produce documentary evidence, if any, with regard to
E
the source from where the materials had been procured
alongwith the permits issued by the Department. BHEL filed a
detailed reply disputing the liability in the matter. It was indicated that the requisite application for allotment of quarries and
other formalities were to be done directly by the sub contracF
tors concerned. The agencies have been paying the seigniorage fee directly to the Department of Mines and Geology. In
between meeting was held between the agencies and Department of Mines and Geology, SHEL and the contractors. Detailed minutes were drawn up according to which the Director
G of Mines and Geology expressed that type of filling materials
may have to be decided by the Department of Mines and not by
the contractors themselves.
3. Subsequently, demands were raised. Reference was
made to certain data supplied by BHEL to the Vigilance and
H
M/S NAGARJUNA CONSTRUCTION CO. LTD. v.
867
..... _,..,-
GOVT. OF A. P. & ORS.
Enforcement Department. It was observed that filling material A
was partly gravel and partly ordinary clay in respect of which
seigniorage fee is liable to be paid. The appellant in each case
requested the authority to withdraw the demands while agreeing to pay the seigniorage fee under protest.
4. The Assistant Director, Mines and Geology again sent 8
demand notice. The Deputy Director of Mines and Geology
raised demand notice directing the appellant to pay a higher
sum being the balance of seigniorage fee after giving credit to
the fees already paid. At this stage the appellant submitted detailed representation to the Secretary (Mines), Industries and C
Commerce Department, Government of Andhra Pradesh interalia highlighting various contradictory notices issued by the
Assistant Director and the Deputy Director. The Government,of
Andhra Pradesh in exercise of suo motu revisional jurisdiction
under Rule 35-A of the Andhra Pradesh Minor Mineral ConcesD
sion Rules, 1966 (in short the 'Andhra Pradesh Rules') set asi,de
the revised demand issued by the Deputy Director confirming
the original demand and the appellant was directed to pay the
balance amount. Writ Petition was filed before the High Court
challenging the revisional order. The High Court by its order E
dated 20.7.2001 allowed the writ petition at the admission stage
holding that the order of the State Government is misconceived
and unsustainable on account of having been issued without
any notice to the affected persons. However, leave was granted
to the Government to initiate fresh proceedings if so desired
F
and if so permitted by law after giving notice and opportunity to
the appropriate parties. Notices were issued to all the sub- contractors and after hearing the parties the order impugned before the High Court was passed. Again challenge was made
before the High Court.
5. The first stand was that the Government ought not to
have passed the impugned order clubbing the companies with
G
the other sub contractors inasmuch as demands raised by the
Deputy Director in respect of each party were totally different.
Quantity and the nature of materials supplied by each of them H
868
SUPREME COURT REPORTS
(2008] 14 S.C.R.
A
and the sources were different and merits of each case was to
T----
be gone into separately and it was also submitted that the order of the State Government was passed on surmises and assumptions and indicated non application of mind.
S
6. It was also submitted that seigniorage fee on the total
quantity of earth materials supplied by the company was levied
in utter disregard of the analyst report of the material and with-
-~
out any authority to do so. Finally, it was submitted that copy of
the report submitted by the Deputy Director of Mines and Geology who was purportedly instructed to inspect the area to asc certain the nomenclature of the materials supplied by the sub
contractors to the SH EL was not at point of time supplied to the
affected parties. It was submitted that the Government could
not have ignored the test and analyst report of the Department
of Civil Engineering and Soil Mechanics Division of Andhra
D
Pradesh University which was a relevant piece of evidence. A
detailed counter affidavit was filed on behalf of the Joint Director of Mines and Geology, Department of Mines and Geology,
~
Hyderabad. Allegations were disputed. The High Court observed that the Deputy Director of Mines and Geology had
E
played havoc in the matter. He had been placed under suspension. He was found guilty of the charges in the matter of short
levy and collection of seigniorage fee. Various charges were
framed against him and the enquiry officer appointed has submitted his report upholding him guilty of several charges.
F
7. The High Court came to hold that the plea of the Gov-
..,
ernment that said officer had acted in collusion with the appellant was not without any basis. The High Court also observed
that in reply to the show cause notice SHEL had furnished a list
of five sub-contractors who were entrusted with the levelling
G work. In reply it was stated that the agency had paid certain
amounts towards seigniorage fee for the quantities burrowed
from the foot of the hills. It was further submitted that in line with
the provisions of the contract the agencies are under obligation
'
to accept and deal with the mining department directly. It was
H therefore the st2.nd of SHEL that it had no mens rea-and had
M/S NAGARJUNA CONSTRUCTION CO. LTD. v.
869
GOVT. OF A. P. & ORS .
..--r
always made conscious effort to ensure payment of seigniorA
age fee by the agencies.
8. It was stated that BHEL was under the impression that
the matter would have been decided upon as the department
had inspected the sources presumably in the presence of agenB
cies as agreed in the meeting held on 4.9.1999.
-·' )-
9. In the counter-affidavit it was also submitted that the appellants had failed to produce documentary evidence. The
Deputy Director had acted on the basis of information furnished
by SHEL. The High Court referred to BHEL's letter dated c
8.3.2000 whereby the details of total quantities of filling materials supplied by sub contractors were furnished. According to
the data, various mines had been supplied as filling materials.
The High Court noticed that there was no evidence to show that
seigniorage fee had been paid in respect of filling material.
D
10. According to the High Court the main question that
~·
arose for consideration was the nature of the soil utilized by the
appellants in the levelling and grading work undertaken by them
under the agreement with SHEL.
11. Stand of the appellants was that the bulk of the materiE.
als used by the appellants-companies was earth and the same
was not subject to seigniorage fee. It was therefore contended
that the initiation of suo motu revisional power and the orders
passed are illegal as the order ignored the materials available
F
on record.
:;--
12. It was pointed out that what was supplied was gravel
from the quarry and the ordinary earth from the patta land and
therefore the argument that the total material received by SHEL
was partly gravel from sources of foot hills and partly ordinary G
clay from the tank beds and, therefore, the material is subject to
,,
seigniorage fee was vitiated for the reason that there was no
material supplied by one of the appellants i.e. Mis Nagarjuna
Construction Co. Ltd. from the foothills and the tank bed lands.
13. The State's stand as highlighted before the High Court H
870
SUPREME COURT REPORTS
[2008] 14 S.C.R.
~
A
was about the so-called collusion between the concerned Deputy
Director and the appellants and his giving No Objection for the
release of the amounts by BHEL. The High Court referred to
para 3.03.01 of the specifications of the contract. We will deal
with this aspect later.
B
14. The High Court primarily focused on the role allegedly
played by the concerned Deputy Director. It was observed that
~ ..... ,
no permission was taken by any of the appellants to quarry mining as required under law and they had also not made available
the details of purchase and lease of private lands for the purc pose of excavation of materials. It did not accept the stand that
what was utilized was only earth material for filling purpose and
the same was not subject to seigniorage fee. The High Court
observed that this version of the appellants cannot be accepted
as a gospel truth and the conduct of the appellants showed that
D
they were playing hide and seek with the statutory authorities.
15. The High Court noted objection of appellants that the
1--
inspection report was not made available either by the Department or the Government as to enable the appellant to file its
E
objections. It rejected the plea with the foll~wing observations:
"However, it is urged that the said inspection report is not
made available either by the Department or the
Government so as to enable the petitioner-company to
file its objections. The petitioner-company admittedly
F
supplied some quantity of gravel also. The source from
whom the gravel is purchased and the details of transit
"i'
waybills are not furnished by the petitioner-company at
any point of time. No efforts ever have been made by the
petitioner-company to identify and reveal the source of
G
supply of material consumed and utilized by it for the
purpose of filling in fulfillment of its contractual obligation.
-(
Everything is shrouded in mystery. Neither the petitionercompany nor the other sub contractors responded to the
repeated queries of the department. The record contains
H
the inspection notes of the sites from where the petitioner-
.1·.
MIS NAGARJUNA CONSTRUCTION CO. LTD. v.
871
GOVT. OF A. P. & ORS.
··T
company excavated the materiaL The memorandum of A
grounds, which has been treated as an explanation, does
not contain any objection as to the non supply of the
inspection report. There is no plea of any prejudice having
been caused on account of non supply of the said
inspection notes. It is not .as if the petitioner-company. 8
-
demanded for the Inspection notes during the hearing of
the revision and the Government failed to furnish the same.
).
In the absence of any such plea and demonstration of any
prejudice having been caused on account of non supply of
the inspection notes the impugned order cannot be set c
aside on that score."
16. The High Court also did not find any substance in the
plea relating to non consideration of the test and analysis report of the Civil Engineering Department of Andhra University. It
was held that it was a self service devise adopted by the appelD
lant. Therefore, it was held that since the Government had ar-
-t
rived at to its decision after hearing the parties no interference
. -'(
is called for .
17. So far as the question of penalty is concerned, it was E
held that though mens rea is an essential ingredient but the fatual
position left no manner of doubt that the appellant was not acting bona fide. The High Court did not also attach importance to
the stand taken by the Department in the earlier writ petitions.
Accordingly, all the writ petitions were dismissed.
F
18. The basic stand of the appellants in the appeals is that
,.
the basic principles of natural justice have not been followed in
the present case. The authorities have acted on certain materials which were collected behind the back of the appellants and
the reports submitted by certain authorities. The High Court's G
conclusion that no prejudice was caused by non supply is really
"').
a conclusion without any foundation. Finally, in view of the accepted stand of the State Government in the earlier writ petitions it would not be open for the State Government to take diametrically opposite stand to levy the seigniorage fee. It was also H
872
SUPREME COURT REPORTS
[2008] 14 S.C.R.
A
submitted that the report of the Department of Civil Engineer-
'T-··
ing of Andhra Pradesh University was obtained by Govern mental authorities. The High Court should not have accepted the
stand of the State Government as to why the report was not to
be considered. It was also pointed out that the portion of the
B contract as quoted by the High Court was incomplete. Therefore, it was submitted that view of the High Court is clearly unsustainable.
-\
19. Reference was also made to the judgment dated
3.3.1999 in Writ Petition Nos. 1990, 2271 and 2741 of 1999
c filed by the appellant where it was held as follows:
"the power to collect seigniorage fee at the rates mentioned
in Schedule I read with Rule 10 is subject to filling material
being declared as minor mineral under Section 3(c) as
D
the fact that earth is a "filling material" cannot be disputed.
As the State Government under Section 15 has the power
to levy fee in respect of the minor mineral as declared by
the Central Government under Section 3(c) by a notification
"r -
published in the official gazette, and since no proceeding
E
is placed before me declaring Earth as minor mineral by
the Central Government by a notification published in the
official gazette, and in the absence of a notification issued
by the Central Government declaring earth as mi_nor
mineral, the State Government i::, not competent to collect
F
seigniorage fee under Rule 10 read with Schedule 1".
20. The Central Government by Notification No.GSR
No.95(E) dated 3.2.2000 had notified the earth as a minor minera I and has enabled the State Government to levy seigniorage
fee under Rule 10 of the Rules on earth also. The schedule was
G amended and the entry was re-numbered in the following manner:
"Item 8: Morram/Gravel-Rs.13-(Rupees thirteen) per cubic
~
meter".
H
21. The High Court noted that since the amendment came
M/S NAGARJUNA CONSTRUCTION CO. LTD. v.
873
GOVT. OF A. P. & ORS.
~ r
after the contract period was over, it was really of no ~onseA
quence.
)
22. It, however, .accepted the stand of the State Government that only that ordinary earth which does not contain any
mineral content whatsoever alone was exempted from payment
of seigniorage fee and there is hardly any earth which do.es not 8
.contain fine particles or other minerals in respect of which
seigniorage fee is liable to be charged.
23. Learned counsel for the State, on the other hand, supported the judgment of the High Court and stated that the con- c
duct of the appellants disentitled them from getting inequitable
relief. Further more, there was no foundation in the plea that
what the State Government had stated earlier would act as an
estoppel.
24. We shall first deal with the plea relating to incorrect D
reflection of the conditions in the contract. The High Court has
referred to para 3.03.01 of the specifications of the contract. It
reads as follows:
"The material used for constructing the embankment by
earth filling shall be Morram, Gravel, a mixture of these or E
any other material approved by the Engineer."
25. This is not the correct quotation. In the instant case the
expression "earth" is missing. The actual clause reads as follows:
F
"The material used for constructing embankment by earth
filling shall be earth, morrum, gravel and mixture of these
or any other material approved by the engineers. The
materials shall be free from lumps, clouds, boulders or
rock pieces roots and vegetations, harmful salts and G
chemicals, organic material, silt, fine sand expansive clays
in order to provide stable embankment. Further, in the
said specification, it is clearly mentioned that the material
for embankment shall be as obtained from a particu·1ar
source with the preference given to material becoming H
874
SUPREME COURT REPORTS
[2008] 14 S.C.R.
A
available from nearby road excavation under the same
contract or any other excavation under the same contract."
26. Additionally, it is noticed the High Court has relied on
certain records which purportedly contain the inspection notes
of the sites from where the appellants had excavated the mate-,
B
rial. It is to be noted that for the first time before the High Court
these records were produced. Since there was no reference to
the so called inspection notes at any point of time the question
of the appellant pleading prejudice because of non-supply of
the same does not arise. The High Court observed that since
c the appellant had not demanded for the inspection notes during
, __ --,.:_,_ hearing of the revision there was no question of any prejudice.
The approach is clearly wrong. At no point of time, not even at
the time of hearing of revision petition or in the revisional order
there is any reference to the so called inspection notes. Added
D to that, the High Court did not consider the effect of the stand
taken by the Government earlier.
-\
27. In the earlier round of proceedings the respondents
'r
had categorically admitted that the appellants utilized earth only -
E
as filling material. In the additional counter-affidavit filed by the
Joint Secretary of Mines, in the present case it was explained
that in the counter affidavit filed on behalf of the respondents
dated -1 a.2.1999 in Writ Petition No.1990/99, the then Assistant Director made a statement that the excavated material is
earth which is also liable to levy seigniorage fee. This was a
F
mistake. By the time the counter-affidavit was filed,-the Depart-
-
ment had no precise knowledge of the locations where excava-
-+
tion was going on or the nature of the soil which was being excavated. It was much later i.e. in December, 1999 pursuant to a
meeting between the various contractors and the concerned
G officials during which it was decided that the locations should
be disclosed to the Department. Then the Deputy Director and
Assistant Director inspected the areas and opined that the excavated material was not simply earth but gravel and clay. The
High Court found the explanation to be convincing. What the
H High Court seems to have overlooked is t~at there was a spe- -
M/S NAGARJUNA CONSTRUCTION CO. LTD. v.
875
GOVT. OF A. P. & ORS.
~rcific admission in the earlier cases. It is also not borne out from A
the records as to when the so called inspection notes of the
Deputy Director and the Assistant Director were made and what
was the nature of their report. The High Court's observation that ,
the counter affidavit earlier was on account of inadvertence is
without any basis. The observations of the High Court that there B
was no question of sending the samples to the Department of
}
Civil Engineering are also unsustainable. As a matter of fact it
is not a case that the appellants _themselves had sent the
samples. lrJ fact, the samples were sent by the Department apart ,
from the samples being sent by the appellants. The High Court's c_
observations that they were rightly ignored by Government do
not stand to reason. Jhe report was available on record and
was not by an ordinary authority, and was by the Department of '
Aridhra Pradesh University.
28. ""(he High Court did not acGept the vi~w expressed by_ D
a learned Single Judge while disposing of writ petition No.4579
"
--f
of 2001 filed by one of the s1,1b contractors Mis Gayatri Projects
Ltd. Though that- order was not challenged by the Department,
the Division Bench thought that the decision was not proper. In
an_y event, that question is of no relevance in the present case.
~
-
The High Court rightly observed that since the ame11dments referred to, were introduced after:,the expiry of the contract period
they were really of non consequence. -
29. Looked at from any angle the judgment of the High
F
,
Court is unsustainable.
1
30. The basic principles of natural justice seem to have been
disregarded by the State-Government While revising the order. It
acted on materials which were not supplied to the appellants.
Additionally the High Court for the first time made reference to G
~
the report/inspecUon notes which was not even referred to by the
State Government while exercising revisional power.
31. The obligation to act fairly on the part of the adniihistrative authorities was evolved to ensure the rule of law and to
prevent failure of justice. This doctrine is complementary to the H
876
SUPREME COURT REPORTS
[2008] 14 S.C.R.
•,
•'
A
principles of natural justice which the quasi-judicial authorities
;~
are bound to observe. It is true that the distinction between a
quasi-judicial and the administrative action has become thin,
as pointed out by this Court as far back as 1970 in AK Kraipak
v. Union of India (1969 (2) SCC 262). Even so the extent of
B
judicial scrutiny/judicial review in the case of administrative action cannot be l'arger than'in the case of quasi-judicial action. If
the High Court cannot sit as·an Appell9te Authority over the decisions and orders of quasi-judicial authorities, it follows equally
that it cannot do so in the case of administrative authorities. In
~
c the matter of administrative action, it is well known, more than
j
one choice is available to the administrative authorities; they
have a certain amount of discretion available to them. They have
"a right to choose between more than one possible course of
action on which there is room for reasonable people to hold
D
differing opinions as to which is to be preferred" (as per Lord
Diplock)n Secy of State for Education and Science v. Metropolitan Borough Council of Tameside, 1976(3) All ER 665 at
pp.695f). The court cannot substitute its judgment for the judg-
~-
ment of administrative authorities in such cases. Only when the
E
action of the administrative authority is so unfair or unreasonable that no reasonable person would have taken that action,
can the court intervene. To quote the classic passage from the
-
judgment of Lord Greene, M.R. in Associated Provincial Pieture Houses Ltd. v. Wednesbury Corpn: (1947 (2) all All ER
pp.682H-683A)
F
"It is true the discretion must be exercised reasonably.
i
Now what does that mean? Lawyers familiar with the
phraseology commonly used in relation to exercise of
statutory discretions often use the word 'unreasonable' in
G
a rather comprehensive sense. It has frequently been used
and is frequently· used as a general description of the
things that must not be done. For instance, a person
""
~
entrusted with the discretion must, so to speak, direct
l
himself properly in law. He must call his own attention to
H
the matters which he is bound to consider. He must exclude
M/S NAGARJUNA CONSTRUCTION CO. LTD. v . . 877
GOVT. OF A. P. & OR
·t
from his consideration matters which are irrelevant to what A
he has to consider. If he does not obey those rules, he
may truly be said, and often is said, to be actin·g
'unreasonably'. Similarly, there may be something so
absurd that no sensible person could ever dream that it
lay within the powers of the authority."
B
32. The conclusions regarding absence of prejudice are,
therefore, not sustainable.
33. Natural justice is another name for commonsense justice. Rules of natural justice are not codified canons. But they are c
1
principles ingrained into the conscience of man. Natural justice is.
the administration of justice in a commonsense liberal way. Justice is based substantially on natural ideals and human values. The
administration of justice is to be freed from the narrow and restricted
considerations which are usually associated with a formulated law D
involving linguistic technicalities and grammatical niceties. It is the
-~
substance of justice which has to determine its form.
34. The expressions "natural justice" and "legal justice" do
not present a water-tight classification. It is the substance of
justice which is to be secured by both, and whenever legal jusE
A
tice fails to achieve this solemn purpose, natural justice is called
in aid of legal justice. Natural justice relieves legal justice from
unnecessary technicality, grammatical pedantry or logical prevarication. It supplies the omissions of a formulated law. As Lord
Buckmaster said, no form or procedure should ever be permitF
ted to exclude the presentation of a litigants' defence.
35. The adherence to principles of natural justice as recognized by all civilized States is of supreme importance when a
quasi-judicial body embarks on determining disputes between
the parties, or any administrative action involving civil conseG
~
quences is in issue. These principles are well settled. The first
--+
and foremost principle is what is commonly known as audi
alteram partem rule. It says that no one should be condemned
unheard. Notice is the first limb of this principle. It must be pre-
. cise and unambiguous. It should appraise the party H
'
~ ~
~
~ ,,
...
878
SUPREME COURT REPORTS
[2008] 14 S.C.R.
)>
--..
A
determinatively the case he has to ineet. Time given for the purT-·
pose should be adequate so as to enable him to make his representation. In the absence of a notice of the kind and such reasonable opportunity, the order passed becomes wholly vitiated.
Thus, it' is but essential that a ·party should be put on notice of
B
the case tfefore any adverse order is passed against him. This
. is one of the most important principles of natural justice. It is
·after a11 an approved rule of fair play. The concept has gained
-\
significance and shades with time. When the historic document
was made at Runnymede in 1215, the first statutory recognition
c of this principle found its way into the "Magna Carta". The classic exposition of Sir Edward Coke of natural justice requires to
"vocate interrogate and adjudicate". In the celebrated case of
...
~
Cooper v. Wandsworth Board of Works (1963 (143) ER 414),
the principle was thus stated:
D
"Even God did not pass· a sentence upon Adam, before
he was called upon to make his defence. "Adam" says
God, "where art thou has thou not eaten of the tree whereof ·
' "r .
I commanded thee that though should not eat" .
E
. Since then the principle has been chiselled, honed and
refined, enriching its content. Judicial treatment has added light
and luminosity to the concept; like polishing of a diamond.
....
·-
36. Principles of natural justice are those rules which have
..
been laid down by the Courts as being the minimum protection
F
of the rights of the individual against the arbitrary procedure that
may be adopted by a judicial, quasi-judicial and administrative
authority while making an order affecting those rights. These rules
are intended to preve·nt such authority from doing injustice.
37.