1971 Supreme(Mad) 699

Madras High Court
RAMAPRASADA RAO
K.Chelliah - Appellant
Versus
Chairman Industrial Finance Corporation of India - Respondent
Decided On : 10/29/1971

The participation of a person who has passed the original order in the appellate proceedings creates a reasonable apprehension of bias and vitiates the entire proceedings.

Headnote:

NATURAL JUSTICE - BIAS - INDUSTRIAL FINANCE CORPORATION OF INDIA - BOARD OF DIRECTORS - CHAIRMAN - APPEAL - BIASED ORDER - WRIT OF CERTIORARI - MAINTAINABILITY - PUBLIC AUTHORITY - INDUSTRIAL CONCERN - STATUTORY BODY - ADMINISTRATIVE BODY - QUASI-JUDICIAL FUNCTIONS - PRINCIPLES OF NATURAL JUSTICE - VIOLATION - JUDICIAL REVIEW - ARTICLE 226 OF THE CONSTITUTION - SCOPE - CONTRACT OF SERVICE - TERMINATION OF EMPLOYMENT - WRONGFUL DISMISSAL - DAMAGES - REMEDIES - ADMINISTRATIVE POWER - QUASI-JUDICIAL POWER - DISTINCTION - RULES OF NATURAL JUSTICE - APPLICABILITY - JUDICIAL INTERFERENCE - REASONABLE APPREHENSION OF BIAS - TEST - INTEREST OF THE PERSON ADJUDICATING - LIKELIHOOD OF BIAS - INDEPENDENT MEMBERS OF THE BOARD - PARTICIPATION OF THE CHAIRMAN IN THE APPELLATE PROCEEDINGS - EFFECT - FRESH DISPOSAL OF THE APPEAL.

Fact of the Case:

The petitioner was dismissed from service by the Industrial Finance Corporation of India (IFCI) for alleged acts of misconduct. He appealed to the Board of Directors of the IFCI, but the appeal was dismissed. The petitioner filed a writ petition in the High Court challenging the order of dismissal and the order of the Board of Directors.

Finding of the Court:

The High Court held that the IFCI is a public authority and its order is a decision which is susceptible to judicial review. The Court further held that the Board of Directors is a quasi-judicial body and is bound to act judicially and cannot violate the principles of natural justice. The Court found that the participation of the Chairman, who had passed the original order of dismissal, in the appellate proceedings created a reasonable apprehension of bias and vitiated the entire proceedings. The Court also held that the order of dismissal was not valid and directed the Board of Directors to dispose of the appeal afresh without the Chairman being associated in the proceedings.

Issues: 1. Whether the IFCI is a public authority and its order is a decision which is susceptible to judicial review? 2. Whether the Board of Directors of the IFCI is a quasi-judicial body and is bound to act judicially? 3. Whether the participation of the Chairman, who had passed the original order of dismissal, in the appellate proceedings created a reasonable apprehension of bias and vitiated the entire proceedings? 4. Whether the order of dismissal was valid?

Ratio Decidendi: 1. The IFCI is a public authority and its order is a decision which is susceptible to judicial review because it is an instrumentality of the State and is functioning under a statute of Parliament. It is in complete control of the affairs of the Corporation including the right to take disciplinary action against its employees. It is an industrial concern for all purposes unless there is any provision in the Act or in the rules which takes it out of it. No such provision has been shown to the Court. 2. The Board of Directors of the IFCI is a quasi-judicial body and is bound to act judicially because it is enjoined with certain quasi-Governmental functions and has the power to affect the rights of citizens. The Board has set its own regulations dealing with the conditions of service of its officers and employees, but if it happens that the principles of natural justice are in any way violated, then the arm of law can extend to reach such conclusions and decisions arrived at by an administrative body if a right thinking person reasonably comes to the conclusion that there has been a flagrant violation of the principles of natural justice. 3. The participation of the Chairman, who had passed the original order of dismissal, in the appellate proceedings created a reasonable apprehension of bias and vitiated the entire proceedings because the Chairman was the original punishing authority and had expressed himself strongly against the petitioner. He also made comments on the memorandum of appeal preferred by the petitioner. The order appealed against together with the remarks made on the appeal memorandum was before the Board and the Board ultimately rested its decision on the above material. This created a reasonable apprehension in the petitioner's mind that the order was vitiated by bias. 4. The order of dismissal was not valid because it was passed in violation of the principles of natural justice.

Final Decision: The writ petition was allowed and the order of dismissal and the order of the Board of Directors were quashed. The Board of Directors was directed to dispose of the appeal afresh without the Chairman being associated in the proceedings.