ANALYSIS OF DUTY TO ACT FAIRLY

‘DUTY TO ACT FAIRLY’

Natural justice, according to Lord Parker C.J. in Re R.N, is the obligation to behave honestly.
While the terms "duty to behave fairly" and "natural justice" are synonymous, there is a
significant distinction between them. People have the right to natural justice to defend them
against bigotry and arbitrary acts.

The obligation to behave reasonably, on the other hand, is a requirement placed on regulatory
and quasi-judicial entities in order to prohibit them from behaving in an unfair or discriminatory
manner.
This paper would deal with the notion of Duty to Act Fairly and through different principles of
natural justice elaborate on as to how in the contemporary times this notion is most important in
materialising the concrete working of the state through its three different pillars. In the end,
emphasis would be given on the case of Keshav Mills Vs. Union of India1 as it stands a landmark
judgment in the history of determining duty to act fairly.

Keywords: Accountability, Transparency, Governance, Arbitrariness, bigotry and Regulatory

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MANU/SC/0447/1972

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S. No Chapter Page
Number
1. INTRODUCTION 4

2. RESEARCH METHODOLOGY 7

3. EVOLUTION OF PRINCIPLE OF NATURAL 9

JUSTICE

4. 11
KESHAV MILLS VS UNION OF INDIA

5. DECISION OF HC 12

6. ISSUES 12

7. RELEVANT LEGAL PROVISIONS 13

8. DECISION OF SC 15

9. CONCLUSION 16

10. RECCOMENDATION 17

11. REFERENCES 19

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 INTRODUCTION

Why should officials behave in a reasonable manner?

No one is above the rules, as the rule of law correctly says. This principle is in place to
ensure that citizens are treated equally and that they are protected equally. To maintain
an inclusive democracy, authorities must behave equally. Citizens' constitutional rights
can only be adequately protected by equal conduct.

Since the government is unable to make rules with any unique situation that might
occur, judicial and regulatory authorities must behave fairly when issuing judgments or
orders in order to fill any gaps in the legislation. Another explanation why policymakers
must behave reasonably is to safeguard citizens' legitimate expectations. The
cooperation of the three government organs is essential for a country's growth. Fairness
not only prevents people against unlawful intervention, but it also ensures the
adjudicating authorities are transparent.

Principles of Natural Justice

Nemo judex in causa sua

The first premise is that no one can be a judge in his or her own accord or cause. Every
situation should be judged by an unbiased individual. The justification for prohibiting
an individual from deciding his or her own case is to avoid biases such as:

Financial bias: If the adjudicating authority had some financial involvement in the
subject matter, no matter how minor, the regulatory authority would be biased.
Personal bias: Every judicial authority having a technical or personal relationship with
a group would be biased towards the party.

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Departmental bias: This type of bias is very prevalent in administrative affairs, and it is
important for a fair administrative measure to be taken.

Subject matter bias: A correct judgement cannot be made if the adjudicating bodies are
personally or indirectly connected to the subject matter.

Audi Alteram Partem

This Latin term expresses the idea that a citizen cannot be punished without being given
the right to defend himself in court. This is made up of four main elements:

• Issuing notification:
Parties to the case must be given fair notice about the case for a fair trial and if the rules
regulating the case do not require the participants to be served with notification, the
notice must be served. The allegations against the convicted should be included in the
notice. Just such allegations will lead to his conviction.

• Right to submit evidence and present lawsuit:

Once the notice is served, the parties must be granted a reasonable amount of time to
plan and justify themselves in the case. Unreasonable denial of this privilege is regarded
as arbitrary.

• Right to cross-examine:
The right to cross-examine the parties is another feature of a reasonable trial. Tribunals
and courts can provide the parties with the relevant documentation and guarantee that
the officers who performed the inquiry are present.

• Right to appoint a legal representative:

In matters under investigation, the guilty person has the right to appoint a legal
representative. No court may deny a person's right to select a legal representative.

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 • A well-informed and reasoned decision
Three values underpin this:
During an appeal or revision, the aggrieved party has the right to present the justification
for the lower authority's denial.
It is sufficient justification for the group against which the judgment was made.
It forbids executive bodies with judicial authority from exercising control arbitrarily.

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 Research Methodology

Doctrinal analysis was included in this project. Primary references are used in doctrinal studies,
and documents are obtained from museums, directories, and other sources. This project was
created using books, magazines, and posts. Furthermore, since the project subject was not fresh
and unheard of, and since different principles required to be clarified, informative analysis was
used in this case.

Research Questions
1. What is the principle of duty to act fairly?
2. In the case of Keshav Mills Co. Ltd. v. Union, how were the various principles of natural
justice determined and decided?

Aim

The aim of this research paper is to investigate the ‘duty to act fairly as determined in the case
of Keshav Mills Co. Ltd. v. Union of India.

Research Objectives

1. The aim of this project is to look at the origins and evolution of Natural Law concepts.
2. Interpreting the 'duty to act fairly in the case of Keshav Mills Co. Ltd. v. Union of India

Limitations

The focus of this research paper is on interpreting the ‘duty to act fairly’ in the case of Keshav
Mills Co. Ltd. v. Union of India.

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Literature Review

Natural Justice: Principles and Practical Application, by Geoffrey A Flick, Butterworths, 1984:
This is an excellent resource for learning about natural justice values and how to put them into
practice. It discusses the elements of natural law theory, as well as how it evolved and what it
means. When it comes to the consequences of violating natural justice values, as well as their
exceptions, this book is must-read. To further expand on these points, the book includes agreed
case law.

Due Process and Fair Procedures: A Study of Administrative Procedures, Clarendon Press,
1996. Denis James Galligan, Due Process and Fair Procedures: A Study of Administrative
Procedures.
The book discusses the procedural practices and processes using natural justice and equitable
procedures as guiding concepts. The case of Keshav Mills Co. Ltd. V. UOI is well explained
in the novel, as is the concept of the "duty to behave reasonably" and "duty to act judicially."
Overall, the book is a great resource for learning how to apply natural justice concepts in
disciplinary proceedings.

Justice Thomas in review of justice in administrative machinery:

To avoid a miscarriage of justice, the law of impartial hearing must be upheld. The object of
the statute is defeated if an offender is convicted without being heard. The adjudicating body
had no way of knowing whether or not the complainant is guilty. What if the perpetrator is
sentenced without a trial and then proves to be innocent?

Independent an unbiased investigation, Ravi Mehta (Scholar at JlU):

constitutional question that can be asked in such a situation can also be: “Whether any final
action which is taken by the authority on the basis of the report of the inquiry without first
supplying a copy of it to the delinquent would be arbitrary and, hence violative of Article 14
of the Constitution, which enshrines the great harmonizing principle?

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EVOLUTION OF PRINCIPLE OF NATURAL JUSTICE

There are two forms of justice: legal justice and natural justice. Natural justice relates to
universal justice which is regulated by the Laws of Equity. Legal justice refers to justice
governed by state statute. To one individual, justice does not seem to be injustice to another.
As a result, the goodness of a statute is measured by how much it maximizes the happiness of
the recipients thus minimizing the suffering of others.2This definition comes from English law
which represents the near relationship that exists between common law and moral values. The
terms "natural justice" and "judicial justice" do not have a clear classification. It is the substance
of justice that all must protect, and where civil justice struggles to do so, natural justice is
summoned to assist legal justice. Natural justice rules have evolved with the advancement of
society, and their substance is often used to assess the extent of civilisation and rule of law in
a given culture. According to Aristotle, natural law is law motivated by necessity, and if the
general preposition of legal law causes suffering in a specific situation, equity must be enforced
to alleviate and rectify the harshness. The term "natural justice" has come to mean a variety of
rules of fairness and fair play, and it is often known as "substantial justice," "universal justice,"
and "fair play in motion." To shield himself from the excesses of organized power, man has
always turned to those outside of himself. 2 Only God and His rules, spiritual law or natural
law, may be such a being, to which all temporal laws and acts must adhere.
Our sense of fairness, to which the whole scheme of government shall adhere, demands that
certain values be followed. To many books, judges, and legal processes, natural justice has
meant many things. It is interchangeably used with religious rule, such as the English common
law, the United States' "Due Process," India's "Dharma," and the civil law system's
"Proportionality."3
They are not immutable and may be adapted, adjusted, and omitted by law or Constitutional
laws, unless that exclusion is charged with the vice of unreasonableness and therefore invalid.
Natural justice values have enriched legislation and constitutions all around the globe. Despite
the fact that the Indian Constitution does not use the term "natural justice," the principle of
natural justice, stripped of its philosophical and religious baggage, pervades the whole

2
Denis James Galligan, Due Process and Fair Procedures: A Study of Administrative Procedures,
Clarendon Press, 1996
3
Geoffrey A Flick, Natural Justice: Principles and Practical Application, Butterworths Publication, 1984

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structure. In the preamble of the constitution, the principle of social and economic justice is
described as "fairness in social and economic practices of community," which is the foundation
of natural justice. Without utilizing the term "natural justice," Article 311 of the Constitution
incorporates many of the concepts of natural justice. Equal practice, as specified by Art.14 and
Art.21, includes the requirement to behave equally. Any action taken by a public official or by
others who have a public responsibility or responsibility must be motivated by necessity and
the public interest. Natural justice values are enshrined in Articles 14 and 21 of the
Constitution.

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 THE CASE OF KESHAV MILLS IS SUMMARIZED BELOW.

FACTUAL MATRIX:

• In Petlad, Gujarat, Keshav Mills was a well-known textile factory. From its
founding in 1935 to 1965, the firm prospered in its activities. The bulk of the
company's securities is held by a single family. The organization began to lose
money in 1965 due to a variety of factors, and it was in the red. This mill, like
many others in the state, was experiencing extraordinary losses.

• Following that, the government, using the authority granted to it under Section
15 of the Industries (Development and Regulation) Act, 1951, issued an order
establishing an Investigating Committee to investigate the company's operations.
• The investigative committee was tasked with determining the causes for the
company's current situation, its shortcomings, the company's immediate and
long-term needs, and its financial forecasts. They gave the corporation and its
executives the opportunity to provide facts and provide statements until the
inquiry was completed.
• The committee finished its investigation and sent its findings to the government.
The government issued an order under Section 18A of the Act ordering the
Gujarat State Textile Corporation (Authorised Controller) to take over
management of the whole business for a period of five years from the date of the
order.
• The godowns, buildings, and other departments of Keshav mills were taken over
by the approved controller's assistant secretary. The firm then lodged a writ
petition with the Delhi High Court under Article 226.
• The petitioners' biggest complaint was that the government did not submit a copy
of the committee's report to the corporation and did not offer the petitioners a
chance to be heard.

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 THE DECISION OF THE HIGH COURT

The high court had to decide if taking over an industry under Section 18A without first
allowing it a chance to be heard voids the proceedings.
After hearing both sides, the Delhi High Court's full bench rejected the appeal.
The petitioners then sought exclusive leave to appeal to the Supreme Court.

ISSUES
The parties are at odds about the standards of natural justice as in which particular
principles would apply in an industrial undertaking under Section 18A of the Act.

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As a result, the Supreme Court established the following issues:

• Within Section 18A of the Act, are all natural justice standards related to an
industrial undertaking?

• What theory applies in this situation?

o Do the laws have to be followed both during the inquiry under Section 15
and the execution of the study under Section 18A in this case?
o Is it essential to serve the committee's report to the company before
issuing a takeover order?

RELEVANT LEGAL PROVISIONS

The Industrial (Development and Regulation) Act of 1951 is a union law that governs
the development and regulation of industry.

Section 15: The government has the authority to prosecute industrial undertakings and
scheduled enterprises if it believes that:

Whether there has been, or would certainly be, a decrease in the amount of the good
provided by the industry without any basis in any manufacturing undertaking or
scheduled industries.
The products manufactured have deteriorated or may deteriorate in the future, which
can be prevented.
There has been, and there would most certainly be, a surge in the price of commodities
that is unjustified.
Any national infrastructure that the industry uses for its output must be protected or
preserved.

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Section 18A: The Central Government's Power Over Commercial Enterprises

Whether the Central Government believes that:

The business or undertaking has refused to follow the Central Government's
instructions. The investigative committee believes that the industry is behaving in a way
that is harmful to the industry and national security as a result of the Section 15 inquiry.
The government has the right to nominate someone to manage the undertaking's affairs,
and the order given under Section 18A is effective for five years from the date of the
order.
THE DECISION OF THE COURT

The decision was reached after considering the three issues listed above:

ISSUE 1

The court determined that the Central Government's order to take over the mill was an
executive action that included an administrative judgment, and thus the concept of
natural justice was not violated. The court cited the Regina v. Gaming Board4 case,
which ruled that it is not appropriate to report an informant's identification where a just
conclusion is reached based on facts presented by an uncharged informant.

ISSUE 2

Concerning the second question, the court determined that establishing a clear
collection of natural justice laws that judicial and quasi-judicial entities would obey in
any situation is impractical. Depending on the facts and conditions of the situation,

4
[1970] 2 WLR 1009

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courts must enforce the spirit of the concept of natural justice. The only requirement is
that the individual in question be given a proper opportunity to present his or herself,
and that the regulatory body behave equally. In a given situation, equal practices are
what a rational individual might deem fair.

ISSUE 3
The Act was enacted to control and improve the country's industries. The government
has some authority to oversee the operation and development of enterprises in order to
accomplish the Act's expected goal. Under certain situations, if the government believes
it is in the public interest to take over the operation of such industries, it has the authority
to do so.

In this situation, the court determined that the appellants were treated fairly and were
granted a proper opportunity to make their case to the Investigation Committee. The
corporation was not prejudiced by the investigation committee's non-disclosure of the
report, because it cannot be considered a violation of natural justice standards.

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CONCLUSION

The addition of the phrase "duty to behave reasonably" has the essential advantage of
providing immunity against procedures that cannot be classified as judicial or quasi-
judicial. The difference between procedural and substantive law is evident in England,
and the courts also ruled that the requirement to behave honestly only extends to
procedural laws in different decisions. In India, "unfair practice" is synonymous with
"irrational and "arbitrary" control exercise. In the cases of E.R Royappa v State of
Tamil Nadu5, Maneka Gandhi v Union of India6, and many others, these unequal acts
would result in violations of Articles 14, 19, and 21 of the Constitution.

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 RECOMMENDATION

The only approach to guarantee a fair trial is to make sure that each party has complete
knowledge of both the charges levelled against him and the facts used to justify such
allegations. He should be able to see the papers whether the documentation is historical.
When the proof comprises only of oral statements, he should be able to cross-examine
the witnesses, their names should be made public. Any civilized legal structure is built
on the foundation of natural justice. It isn't included in the laws. However, it is a part of
nature. Natural justice lacks a standardized description due to a lack of codification. It
does, however, provide the minimum level that an administrative entity must adhere to
in its operations. When legal justice stalls, moral justice plays a crucial part in stopping
a miscarriage of justice. And God never refused human beings the right to natural
justice. As a result, human laws must therefore adhere to natural justice principles. To
avoid a miscarriage of justice, the law of impartial hearing must be upheld. The object
of the statute is defeated if an offender is convicted without being heard. The
adjudicating body had no way of knowing whether or not the complainant is guilty.
What if the perpetrator is sentenced without a trial and then proves to be innocent?
Before taking further decision, the adjudicatory authority must weigh a number of
factors. On many occasions, like the Keshav Mills case, the courts have stressed the need
to behave equally.

5
1974 AIR 555
6
1978 AIR 59

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This experiment was an effort to investigate the obligation to conduct reasonably in
response to equal trial principles. The researcher sought answers to many of the study
questions when working on this project.

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 REFERENCES
List of Books

Denis James Galligan, Due Process and Fair Procedures: A Study of Administrative
Procedures, Clarendon Press, 1996

Geoffrey A Flick, Natural Justice: Principles and Practical Application, Butterworths

Publication, 1984

List of Articles

Bernard Schwartz, Administrative Procedure and Natural Law, Notre Dame Law Review,
1953

SBM Marume, CW Namusi, The Principles of natural justice in public administration and
Administrative law, International Journal of Business and Management Invention, 2016

Websites

1. http://india.lawi.asia/the-keshav-mills-company-ltd-and-anr-v-union-of-india-and-ors/
2. https://www.lawteacher.net/free-law-essays/constitutional-law/refinement-of-
doctrine-of-natural- justice-constitutional-law-essay.php
3. https://www.legalindia.com/pnj-principles-of-natural-justice/
4. http://www.lawyersclubindia.com/articles/Quasi-Judicial-Proceedings-And-The-
Duty-To-Act- Fairly-8032.asp
5. http://www.supremecourtcases.com/index2.php?option=com_content&itemid=1&do_
pdf=1&id=809

List of Cases

1. 94 (2001) DLT 301, 2001 (60) DRJ 651, 2001 (78) ECC 677, 2002 (144) ELT 288 Del,
2003 262 ITR 269
2. https://indiankanoon.org/doc/800551/
3. https://indiankanoon.org/doc/1550190/

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