March 31, 2011

No unfettered discretion

Courts have completely rejected the notion of unfettered or absolute discretion in public law. Statutory powers conferred by the Parliament for achieving the public good, should be exercised reasonably without any abuse or misuse, so that the very trust reposed may not be defeated.  The executives are expected to carry out the intention expressed in the Statute.  No Government can defy the real intention of the underlying policy of the Statute. the discretionary powers donated shall be exercised in a proper way and on correct principle. There is nothing like “unfettered” or “absolute discretion” in public law, although the draftsmen may have used  “unrestricted permissive language.” The term absolute discretion, as we all come across, should not be accepted to do anything and everything. The authority is not free to exercise unfettered discretion according to its whim or caprice.  What the Courts have answered to this chronic problem or construed is that the authority is granted somewhat wider powers to achieve the object, and to secure better public good under the scheme of the Statute. Arguments are often advanced by some section of the lawyers so as to be “law unto themselves”. They mean absolute in its literal sense. Thereby a reason is put forward to exclude the administrative action beyond the pale of judicial review.  But that notion is completely wrong.  The Courts have never approved such arguments.  Both on principle and on authority it is proved that Courts have never given literal verbal interpretation of such absolute or unfettered discretion. 

There is wide difference between Private law and Public law.The provisions under private law governing the individual interest may be termed in its absolute discretion. For instance, the group of persons or individual may release the debtor from debt in absolute discretion or that individual may dispense with his property according to his wishes in his absolute discretion. He may set his property at fire and no body would ask him or draw any restrictions or that he may will out according to his whim or caprice. But all these things are not permissible under Public law.  There is great restraint when the public authority exercises its discretion under Statute. Authority cannot act alike individual is acting.  There are certain stringent tests adapted by the Courts.  They cannot cross these limits, but they shall exercise the discretion within the scope of the empowering Act. The notion of unreviewability is therefore ruled out.  The Courts will readily interfere if the claim of the executives about their unfettered discretion is too high. Two strong decisions in the year 1968 came out from England. The House of Lords disapproved such unfettered discretion in public law. They are both important landmarks in administrative law that cannot escape any attention. In Famous Padfield’s case the House of Lords asserted complete legal control over such absolute discretion of the Minister who refused to investigate the grievance of the Complainant. It was a case where under the provisions of the Agricultural Marketing Act, 1958 the Minister had the power to appoint a Committee to go into certain questions under Section 19 of that Act, but when requested to appoint a committee he refused to do so.  In refusing to appoint the committee he had given elaborate reasons for his refusal.  They were on the files.  It was admitted that the question of referring the complaints to a committee was a matter within the Minister’s discretion. It was also argued that he was not bound to give any reasons for refusing to refer a complaint to a committee and that if he gives no reason his giving reasons could not put him in a worse position. It was held that the Parliament conferred a discretion on the Minister to consider the complaint according to law so that the discretion could be used to promote the policy and objects of the Act which was to be determined by the construction of the Act and that was a matter of law for the Court. It was further held that  the Minister’s discretion was never unlimited and if it appeared that the effect of his refusal to appoint a committee for investigation was to frustrate the policy of the Act, the Court was entitled to interfere. The minority view of Lord Denning is accepted as correct legal principle which is approved by the House of Lords in the said Judgment.  Lord Reid speaking for the Court observed that :

“It is implicit in the argument for the minister that there are only two possible interpretations of this provision-either he must refer every complaint or he has an unfettered discretion to refuse to refer in any case.”

Lord Reid finally said in this connection that “I do not think that is right”.  Thus the Court refused to accept such arbitrary and unlimited discretionary powers at the instance of the Minister.  Lord Reid did not accept the unreasonable proposition that “it must be all or nothing-either no discretion at all or an unfettered discretion”.  He further observed that :

“Parliament must have conferred the discretion with the intention that it should be used to promote the policy and objects of the Act; the policy and objects of the Act must be determined by construing the Act as a whole and construction is always a matter of law for the Court.  In a matter of this kind it is not possible to draw a hard and fast line, but if the Minister, by reason, so uses of his having misconstrued the Act or for any other reason, so uses his discretion as to thwart or run counter to the policy and objects of the Act, then our law would be very defective if persons aggrieved were not entitled to the protection of the Court.”

Lord Pearce said:

“I do not regard a Minister’s failure or refusal to give any reasons as a sufficient exclusion to the Court’s surveillance.”

In another case of Breen V/s Amalgamated Engineering his fellow members and workers elected Mr. Breen as a shop steward. The Rule frame by the District Committee provided that such elected shop steward is subject to approval by the District Committee and he shall not function until approval is granted to him. Mr. Breen was charged with an offense of misappropriation, but that was baseless.  The rule gave a wider discretion to the District Committee. They claimed unfettered discretion with the authority. 

This is how Lord Denning said:

“The discretion of a statutory body is never unfettered.  It is a discretion which is to be exercised according to law. That means at least this: the statutory body must be guided by relevant considerations and not by irrelevant.  If its decision is influenced by extraneous consideration which it ought not to have taken into account then the decision cannot stand. No matter that the statutory body may have acted in good faith.  Nevertheless the decision will be set aside.  That is established by Padfield V/s Minister for Agriculture, Fisheries and Food which is landmark in modern administrative law. “

In a case, the High Court of Allahbad observed:

“The language used in Article 470(b) of the CSR would reveal that wide discretion is conferred on the authority in the matter of reduction of pension. If the authority thinks it proper it can reduce the pension by saying that the services of the pensioner have not been thoroughly satisfactory, exercise this type of discretion, needs an objective assessment of facts before arriving at a conclusion about service not being satisfactory of an employee. The assessment which an authority to make with regard to the service of a pensioner not having remained thoroughly satisfactory must be based on some evidence and material. Before such evidence or material is relied upon by the authority for the purpose of ordering reduction of pension, it is necessary to be shown to the person who is likely to be affected by any order of reduction of pension. Such as expressions “if thinks proper” or “if authority is satisfied” or “if it appears to the authority”, are the common features in all statutory Rules whereby discretion is conferred on an authority. These expression have a close and important bearing on the question of jurisdiction of discretionary powers. Such expressions tend to make an authority  sole judge of the existence of conditions on which the discretionary powers of the said authority is to be exercised. The discretionary power conferred on an authority would not permit that authority to exercise the discretion arbitrarily or at his whim. In Article 470(b), the discretion of reduction of pension can be exercised only if it is proved that the service of the pensioner has not been thoroughly satisfactory during his tenure as employee under the State. The finding with regard to question of service not being satisfactory of any employee is not left to the whim of the authority. If an authority without any basis or foundation thinks it proper that the services of an employee during his tenure have not been thoroughly satisfactory, he cannot, by giving such a finding without any material being there, order the reduction of pension under the said Article. Exercise of discretionary power is required to have legal limits. the discretionary power conferred on an authority to reduce pension has to strike suitable balance between executive efficiency and protection of the rights of citizen. Use of arbitrary power or use of unfettered discretion are not countenanced by any Court. Discretionary power is to be exercised reasonably and in accordance with the spirit and letters of the Statute conferring such powers. Therefore, any order which is to be passed under this Article must have direct relation with the object it seeks to achieve. It is necessary for the authority to be convinced on objective consideration, that the services of an employee have not been thoroughly satisfactory during his tenure of service. The objective assessment and condition precedent is not to be based on subjective consideration or no evidence. Irrelevant consideration which have been taken into account, would make an order under Article 470(b) legally untenable.

Baldev Raj Chada is yet an another illustration of arbitrary refusal to exercise the statutory powers granted to the Licensing authority under the Act for “no objection certificate”. Rule 3 of the rules provided for making an application to the Licensing authority for the grant of no objection certificate and thereafter, the Government may consider the grant of no objection on the basis of the report of the authority.  It was urged on behalf of the State Government that under rule 5(2), the Government has “absolute discretion” to grant permission for the issue of a no objection certificate to the applicant.  Under the scheme of the relevant Act, the District Magistrate is the Licensing authority, and the State Government is never a licensing authority. The State Government, it was held, cannot relying upon the rules, assume to itself the jurisdiction of the Licensing authority to issue the license. Power to control the Licensing authority under rule 5 is not the power to supplant the Licensing authority.  Again the power to grant a license under the Act is a quasi judicial, and by the use of expression ”absolute discretion”, it is not intended to invest the licensing authority with arbitrary power so as to destroy the limitations to which it is subject by its inherent nature. The expression, “absolute discretion” cannot supersede the intention of the Legislature. Absolute discretion as used in the Act should mean wider power, and never unlimited or unfettered or arbitrary power. Such power should be exercised according to law, so that object can be achieved. 

the Fundamental rule 56 governing the cases of Civil servants regarding compulsory retirement came to be interpreted by the Supreme Court.  The rule provided for the discretion in the authority to retire the employees in civil services. The rule provided that “notwithstanding anything contained in this rule the appropriate authority shall, if it is of the opinion that it is in the public interest to do so have the absolute right to retire any Government servant by giving him notice.”

Justice Krishna Iyer said that the order to retire must be passed by only appropriate authority. That authority must form the requisite opinion, not subjective satisfaction but objective and bonafide, and based on relevant material.  The requisite opinion is that the retirement of the victim is ”in public interest” not personal, political or other interest but solely governed by the interest of public service. The right to retire is not absolute, though so worded.  “absolute” merely means wider, not more. When an order is challenged and its validity depends on its being supported by public interest, the State must disclose the material, so that the Court may be satisfied that the order is not bad for want of any material whatever which, to a reasonable man reasonably instructed in law is sufficient to sustain the grounds of ”Public interest” justifying forced retirement of the public servant.

The Court made the following observation while basing its decision on judicial review of administrative action :-

“Judges cannot substitute their own judgment for that of the administrator but they are not absolved from the minimal review well-settled in administrative law and founded on constitutional obligations. The court is confined to an examination of the material merely to see whether a rational mind may conceivably be satisfied that the compulsory retirement of the officer concerned is necessary in the public interest. The appropriate authority, not the Court makes the decision, but even so, a caveat is necessary to avoid misuse.”

After long years of services rendered and particularly when the employee was allowed to cross efficiency bar such short cut may often be a wrong cut and thus any order or action which irrationally digs up obsolete circumstances and obsessively reaches a decision is bad in law.

In case of Bhikhubhai Vithalbhai Patel vs. State of Gujarat, Civil Appeal 2000 of 2008 decided by Honourable the Supreme Court of India on 14.03.2008, the Court quashed the decision of the State Government as no formation of opinion reached by the Government. At the same time, no condition precedent before exercising the power was followed. In that case, the impugned preliminary notification itself does not reflect formation of any opinion by the State Government that it had become necessary to make substantial modifications in the draft development plan and, for that reason, instead of returning in the plan, decided to publish the modifications so considered necessary in the Official Gazette along with the notice inviting suggestions or objections with respect to the proposed modifications. It is very well settled, public orders publicly made, in exercise of a statutory authority, cannot be construed in the light of explanations subsequently given by the decision making authority. Public orders made by authorities are meant to have public effect and must be construed objectively with reference to the language used in the order itself. Neither the preliminary notification itself nor the records disclose the formation of any opinion by the State Government much less any consideration that any necessity as such had arisen to make substantial modifications in the draft development plan.

On consideration of the facts and the material available on record, it is established that State Government took the action proposing to make substantial modifications to the plan without forming of any opinion, which is a condition precedent for the use of power under proviso to Section 17(1) (a) (ii). The power, to restrict the use of land by the owners thereof, is a drastic power. The designation or reservation of the land and its use results in severe abridgment of the right to property. Statutory provisions enabling the State or its authorities to impose restrictions on the right to use one’s own land are required to be construed strictly. The legislature has prescribed certain conditions to prevent the abuse of power and to ensure just exercise of power. Section 17 and more particularly the proviso to Section 17 (1) (a) (ii) prescribes some of the conditions precedent for the exercise of power. The order proposing to make substantial modifications, in breach of any one of those conditions, will undoubtedly be void. On a successful showing the order proposing substantial modifications and designating the land of the appellants for educational use under Section 12 (2) (o) of the Act has been made without the Statement. The Government applying its mind to the aspect of necessity or without forming an honest opinion on that aspect will be void.

The appellants are deprived of their right to use the land for residential purposes for over a period of more than a quarter century. The Authority included the land in the residential zone but the State Government reserved the land for the purposes of South Gujarat University but the authority for whose benefit it was required failed to acquire the land leading to re-reservation of the land for the very same purpose which was ultimately struck down by this Court in Bhavnagar University.

The discretion, if any, conferred upon the State Government to make substantial modifications in the draft development plan is not unfettered. There is nothing like absolute or unfettered discretion and at any rate in the case of statutory powers. The basic principles in this regard are clearly expressed and explained by Prof. Sir William Wade in Administrative law (Ninth Edn.) in the chapter entitled abuse of discretion and under the general heading the principle of reasonableness, which read as under:

The common theme of all the authorities so far mentioned is that the notion of absolute or unfettered discretion is rejected. Statutory power conferred for public purposes is conferred as it were upon trust, not absolutely  that is to say, it can validly be used only in the right and proper way which Parliament when conferring it is presumed to have intended. Although the Crown s lawyers have argued in numerous cases that unrestricted permissive language confers unfettered discretion, the truth is that, in a system based on the rule of law, unfettered governmental discretion is a contradiction in terms. The real question is whether the discretion is wide or narrow, and where the legal line is to be drawn. For this purpose everything depends upon the true intent and meaning of the empowering Act.

The powers of public authorities are therefore essentially different from those of private persons. A man making his will may, subject to any rights of his dependents, dispose of his property just as he may wish. He may act out of malice or a spirit of revenge, but in law this does not affect his exercise of his power. In the same way a private person has an absolute power to allow whom he likes to use his land, to release a debtor, or, where the law permits, to evict a tenant, regardless of his motives. This is unfettered discretion. But a public authority may do none of these things it acts reasonably and in good faith and upon lawful and relevant grounds of public interest. The whole conception of unfettered discretion is inappropriate to a public authority, which possesses powers solely in order that it may use them for the public good. There is nothing paradoxical in the imposition of such legal limits. It would indeed be paradoxical if they were not imposed.

The Court is entitled to examine whether there has been any material available with the State Government and the reasons recorded, if any, in the formation of opinion and whether they have any rational connection with or relevant bearing on the formation of the opinion. The Court is entitled particularly, in the event, when the formation of the opinion is challenged to determine whether the formation of opinion is arbitrary, capricious or whimsical. It is always open to the court to examine the question whether reasons for formation of opinion have rational connection or relevant bearing to the formation of such opinion and are not extraneous to the purposes of the statute.

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