Holding

The dismissal order did not violate natural justice and the punishment was not disproportionate, so the High Court's decision was set aside.

Summary

Canara Bank dismissed employee V.K. Awasthy for multiple acts of misconduct. The employee challenged the dismissal, alleging violation of natural justice and that the punishment was disproportionate. The High Court held the dismissal violated natural justice and was excessive, directing a fresh hearing. On appeal, the Supreme Court observed that the employee never raised any prejudice claim in his memorandum of appeal or at the personal hearing, and that he was afforded a hearing before the appellate authority. The Court held that the dismissal did not breach the principles of natural justice and that the punishment was not disproportionate, applying the Wednesbury test. Consequently, the High Court's orders were set aside and the appeal was allowed.

Issues considered

Did the order of dismissal violate the principles of natural justice?
Was the employee entitled to claim prejudice despite not raising it in the appeal?
Is dismissal as a punishment disproportionate to the proved misconduct?
What is the scope of judicial review of disciplinary punishments under Article 14 and the Wednesbury test?

Subjects

natural justiceprocedural fairnessdisciplinary dismissalproportionalityWednesbury testadministrative lawservice lawjudicial reviewArticle 14bank employee misconduct

Judgment

CANARA BANK A
v.
V.K. AWASTHY

MARCH JI,. 2005

- [ARIJIT PASA YAT AND S.H. KAPADIA, JJ.] B

Service Law :

Dismissal for misconduct-Dismissed employee did not specifically plead
violation ofprinciples ofnatural justice, while passing ofthe order ofdismissal, C
in either the Memorandu~. ofApp~a/ or at the time ofpersonal hearing before
· Appellate authority-He also placed no material to show as to how he was
· prejudiced-In such circumstances, held, conclusion of the Division Bench of
High Court that there was violation of natural justice cannot be maintained-
•. Administrative Law-Natural Justice. D
Punishment-Limited scope of judicial review-Several acts of
misconduct committed by employee prejudicial to interest of emp/oyer-bank-
1n such case, held, punishment of dismissal cannot be held to be
disproportionate warranting interference by Court-Administrative Law--
Administrative action-Principle of "proportionality". E
Administrative Law :

Natural Justice-Rules of "nemo judex in causa sua" and "audi alteram
partem "- Administrative order involving "civil consequences" must be
consistent with the rules of natural justice. F
Respondent-employee in appellant-bank was served with a charge
sheet. The Inquiry Officer after considering the explanations of ·
respondent-employee held the charges to have been amply proved and
recommended his dismissal from service, which was accepted by the
Disciplinary Authority. Appeal filed before the prescribed Appellate G
Authority was dismissed. Respondent filed Writ Petition, on which Single
Judge of High Court held that the quantum of punishment i.e. dismissal
was disproportionate to the misconduct proved, but held that no prejudice
was caused to the respondent and that there was no violation of principles
81
H
82 SUPREME COURT REPORTS [2005) 3 S.C.R.

A of natural justice. Both respondent and the appellant-employer filed writ
appeals. Division Bench of High Court held that the order directing
respondent's dismissal from service was in violation of the principles of
natural justice, and that it was passed without proper application of mind.
It permitted the respondent to make a detailed representation to the
Disciplinary Authority in respect of the enquiry proceedings and findings,
B within a stipulated time and directed the Disciplinary Authority to consider
the same and pass a fresh order.

In appeal to this Court, it was submitted that in the Memorandum
of Appeal before the prescribed Appellate Authority, no stand was taken
by the respondent-employee that any prejudice was caused to him; that
C he was given personal hearing by the Appellate Authority but before him
also no plea regarding any prejudice was raised; that the Division Bench
missed these vital factors and hence its view regarding violation of
principles of natural justice cannot be maintained. It was further submitted
that in view of the proved misconduct, the punishment imposed cannot
D be held to be disproportionate, and that in any event, there was hardly
any scope within the limited scope of judicial review to interfere with the
quantum of punishment.

Allowing the appeal, the Court

E HELD : 1.1. Natural justice is another name for commonsense
justice. It relieves legal justice from unnecessary technicality, grammatical
pedantry or logical prevarication and supplies the omissions of a
formulated law. (88-A-C)

1.2. The expressions "natural justice" and "legal justice" do not
.F present a water-tight classification. It is the substance of justice whiCh is
to be secured by both, and whenever legal justice fails to achieve this
solemn purpose, natural justice is called in aid of legal justice. (88-CJ

1.3. Rules of natural justice are not rules embodied always expressly
in a statute or in rules framed thereunder. They may be implied from the
G nature of the duty to be performed under a statute. What particular rule
of natural justice should be implied and what its context should be in a
given case must depend to a great extent on the facts and circumstances
of that case, the frame-work of the statute under which the enquiry is held.
(90-H; 91-AI

H 1.4. The old distinction between a judicial act and an administrative
(
CANARA BANK v. V.K. AWASTHY 83
act has withered away. Even an administrative order which involves civil A
consequences must be consistent with the rules of natural justice.
1 Expression 'civil consequences' encompasses infraction of not merely

property or personal rights but of civil liberties, material deprivations,
and non-pecuniary damages. In its wide umbrella comes everything that
affects a citizen in his civil life. 191-A-BI
B
Maneka Gandhi v. Union of India, 11978) 2 SCR 621, referred to.

Cooper v. Wandsworth Board of Works, (1963) 143 ER 414; Ray v.
Local Government Board, (1914) 1 KB 160:83 WKB 86; General Council
of Medical Education & Registration of UK. v. Sanckman, (1943) AC 627: C
11948) 2 All ER 337; Board of Education v. Rice, (1911) AC 179:80 WKB
796; Spackman v. Plumstead District Board of Works, (1985) 10 AC 229:54
WMC 81; Drew v. Drew and Lebura, (1855) 2 Macg. 1.8; James Dunber
Smith v. Her Majesty the Queen, (1877-78) 3 App.Case 614 JC; Arthur John
Specman v. Plumstead District Board of Works, (1884-85) 10 App.Case 229;
Vionet v. Barrett, (1885) 55 LJRD 39; Hookings v. Smethwick Local Board D
of Health, (1890) 24 QBD 712; Ridge v. Baldwin, (1963) 1 WB 569; In re
R.N. (An Infaot) (1967) 2 8617; Fairmount Investments Ltd v. Secretary to
State/or Environment, (1976) WLR 1255 and Regina v. Secretary of State
for Home Affairs Ex Parte Hosenball, (1977) 1 WLR 766, referred to.

2.1. In the present case, respondent-employee did not raise any E
ground relating to violation of principles of natural justice in either the
Memorandum of Appeal or, at the time of personal hearing before the
Appellate authority. Additionally, there was no material placed by the
employee to show as to how he has been prejudiced. 186-C-D)
F
2.2. Though in all cases the post-decisional hearing cannot be a
substitute for pre-decisional hearing, in the case at hand the position is
different. In appeal before the Appellate Authority, findings of the Inquiry
Officer and Disciplinary Authority were challenged and, therefore, the
question of any prejudice does not arise. Since respondent-employee had
the opportunity to meet the stand of the appellant-employer, it was to his G
advantage; opportunity for personal hearing was also granted. There was
no question of violation of principles of natural justice.. (86-D; 87-F]

Managing Director, ECIL, Hyderabad and Ors. v. B. Karunakar and
Ors., (1993) 4 sec 727, relied on. H
84 SUPREME COURT REPORTS (2005] 3 S.C.R.

A 3. Unless failure of justice is occasioned or that it would not be in
public interest to do so in particular case, this Court may refuse to grant
relief to the concerned employee. [94-E]

Gadde Venkateswara Rao v. Govt. of A.P. and Ors., AIR (1966) SC
828; Charan Lal Sahu v. Union ofIndia etc., AIR (1990) SC 1480 and Canara
B Bank and Ors v. Debasis Das and Ors., [2003) 4 SCC 557, relied on.

MC. Mehta v. Union of India, [1999) 6 SCC 237, referred to.

4. The various allegations as laid in the departmental proceedings
I
C
reveal that several acts of misconduct unbecoming a bank official were
committed by the respondent. The proved charges clearly established that
the respondent-employee failed to discharge his duties with utmost
--
integrity, honesty, devotion and diligence and his acts were prejudicfal to
the interest of the bank. [94-H; 95-A-B)

D 5. Interference with quantum of punishment cannot be a routine
matter. The decision of the Single Judge on the quantum of punishment
and of the Division Bench regarding alleged violation of the principles of
natural justice cannot be maintained and are, therefore, set aside. [95-D)

B.C.Chaturvedi v. Union of India and Ors., (1995) 6 SCC 749; Union --
E of India and Anr. v. G. Ganayutham, [1997) 7 SCC 463 and Chainr1an and
Managing Director, United Commercial Bank and Ors v. P.C. Kakkar, [2003}
4 sec 364, relied on.

Om Kumar and Ors. v. Union ofIndia, [2001 J 2 SCC 386, referred to.

F Wednesbury case, (1948) 1KB223 and Council for Civil Services Union
v. Minister of Civil Service, (1983) 1 AC 768, referred to:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2300 of2005.

Frorri the Judgment and Order dated 20.1.2004 of the Kerala High
G Court in W.A. No. 589 of 2000.
Sudhir Chandra and Ravindra Kumar with him for the Appellant

Shrish Kumar Misra for the Respondent .

H The Judgment of the Court was delivered by
CANARA BANK v. V.K. AWASTHY [PASAYAT, J.] 85
ARIJIT PASAYAT, J. Leave granted. A
Challenge in this Appeal is to correctness of the judgment rendered by
a Division Bench of the Kerala High Court holding that the order directing
respondent's dismissal from service was in violation of the principles of
natural justice. Therefore, it was held that the order was passed without
proper application of mind regarding the findings recorded by the Disciplinary B
Authority on the basis of report of the enquiry officer, r''Vi relating to
imposition of punishment. However, High Court permitted the respondent -
· writ petitioner to make a detailed representation to the Disciplinary Authority
in respect of the enquiry proceedings and findings, within a stipulated time
and direction was given to the Disciplinary Authority to consider the C
submission and pass a fresh order. High Court further directed that the period
during which respondent was out of service was to be treated as period under
suspension, and the employee was to be paid subsistence allowance. It would
be relevant to note that the respondent filed a Writ Petition questioning the
order directing his dismissal from service. Learned Single Judge came to D
hold that the quantum of punishment i.e. dismissal from service was
disproportionate to the misconduct proved. It was however, held that no
prejudice was caused to the writ petitioner and there was no violation of
principles of natural justice. Both the writ petitioner and the present appellant
had preferred writ appeals before the High Court, which were heard and
disposed of by the impugned common judgment. E
In support of the appeal, Mr. Sudhir Chandra, learned Senior Advocate
submitted that the show cause notice was issued on 2.7.1992. Since the
respondent was not working at the Branch where he was originally posted
and was living at Kanpur, the notice was served on him on 6.8.1992 and 15 F
days, time was granted for the purpose of filing response. Order was passed
on 17.8.1992. Even though the respondent-employee preferred an appeal
before the prescribed Appellate Authority, in the Memorandum of Appeal
there was no stand taken that there was any prejudice caused to him on
account of the fact that the order was passed prior to the expiry of the
indicated period. He was given personal hearing by the Appellate Authority. G
Before him also no such stand was taken and no plea regarding any prejudice
was raised. That being the position, the learned Single Judge was right in
holding that there was no prejudice caused. The Division Bench has clearly
missed these vital factors and, therefore, its view regarding violation of the
principles of natural justice cannot be maintained. Further, in view of the H
86 SUPREME COURT REPORTS [2005) 3 S.C.R.

A proved misconduct, the punishment imposed cannot in any way be held to be
disproportionate. ln any event, there was hardly any scope within the limited
scope of judicial review to interfere with the quantum of punishment.

ln response, learned counsel for the respondent-employee submitted
that prejudice is writ large and did not be pleaded. Merely because no specific
B ground regarding prejudice was taken either in the Memorandum of Appeal
or at the time of personal hearing that does not cure the fatal defect of
violation of principles of natural justice.

lt is not in dispute that in the meantime the respondent has reached the
C age of superannuation, even if the order of dismissal is kept out of
consideration. In the instant case, undisputedly respondent-employee did not
raise any ground relating to violation of principles of natural justice in either
the Memorandum of Appeal or, at the time of personal hearing before the
Appellate authcrity.

D Additionally, there was no material placed by the employee to show as
to how he has been prejudiced. Though in all cases the post-decisional hearing
cannot be a substitute for pre-decisional hearing, in the case at hand the
position is different The position was illuminatingly stated by this Court in
Managing Director, ECJL, Hyderabad and Ors. v. B. Karunakara and Ors.,
E [I 993 J 4 sec 727 at para 31 which reads as follows:

"Hence, in all cases where the enquiry officer.s report is not furnished
to the delinquent employee in the disciplinary proceedings, the Courts
and Tribunals should cause the copy of the report to be furnished to
the aggrieved employee ifhe has not already secured it before coming
F to the Courtffribunal and give the employee an opportunity to show
how his or her case was prejudiced because of the non-supply of the
report. If after hearing the parties, the Court/Tribunal comes to the
conclusion that the non-supply of the report would have made no
difference to the ultimate findings and the punishment given, the
Court/Tribunal should not interfere with the order of punishment.
G
The Court/Tribunal should not mechanically set aside the order of
punishment on the ground that the report was not furnished as is
regrettably being done at present. The courts should avoid resorting
to short cuts. Since it is the Courts/Tribunals which will apply their
judicial mind to the question and give their reasons for setting aside
H or not setting aside the order of punishment, (and not any internal
CANARA BANK v. V.K. AWASTHY [PASAYAT, J.] 87

appellate or revisional authority), there would be neither a breach of A
the principles of natural justice nor a denial of the reasonable
opportunity. It is only if the Court/Tribunal finds that the furnishing
of the report would have made a difference to the resi:lt in the case
that it should set aside the order of punishment. Where after following
the above procedure, the Court/Tribunal sets aside the order of B
punishment, the proper relief that should be granted is to direct
reinstatement of the employee with liberty to the :tutLcrity/management
to proceed with the inquiry, by placing the employee under suspension
and continuing the inquiry from the state of furnishing him with the
report. The question whether the employee would be entitled to the
back-wages and other benefits from the date of his dismissal to the C
date of his reinstatement if ultimately ordered, should invariably be
left to be decided by the authority concerned according to law, after
the culmination of the proceedings and depending on the final outcome.
If the employee succeeds in the fresh inquiry and is directed to be
reinstated, the authority should be at liberty to decide according to D
law how it will treat the period from the date of dismissal till the
reinstatement and to what benefits, if any and the extent of the benefits,
he will be entitled. The reinstatement made as a result of the setting
aside of the inquiry for failure to furnish the report, should be treated
as a reinstatement for the purpose of holding the fresh inquiry from
the stag~. of furnishing the report and no more, where such fresh E
inquiry is held. That will also be the correc~ position in law."

It is to be further noted that in the appeal before the Appellate Authority
findings of the Inquiry Officer and Disciplinary Authority were challenged
and, therefore, the question of any prejudice does not arise. Since employee
had the opportunity to meet the stand of the Bank, it was to his advantage, F
and opportunity for personal hearing was also granted. Keeping in view what
was observed in B. Karunakara 's case (supra) there was no question of
violation of principles of natural justice.

The crucial question that remains to be adjudicated is whether principles G
of natural justice have been violated; and if so, to what extent any prejudice
has been caused. It may be noted at this juncture that in some cases it has
been observed that where grant of opportunity in tenns of principles of natural
justice do not improve the situation, "useless fonnality theory" can be pressed
into service.
H
88 SUPREME COURT REPORTS [2005] 3 S.C.R.

A Natural justice is another name for commonsense justice. Rules of natural
justice are not codified canons. But they are 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 f~eed from the narrow
B and restricted considerations which are usually associated with a formulated
law involving linguistic technicalities and grammatical niceties. It is the
substance of justice which has to determine its form.

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
C by both, and whenever legal justice 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 permitted to exclude
the presentation of a litigants. defence.
D
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 consequences is in issue. These principles are well settled.
E 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 precise and unambiguous. It should
appraise the party determinatively the case he has to meet. Time given for the
purpose 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
F order passed becomes wholly vitiated. Thus, it is but essential that a party
should be put on notice of the case before any adverse order is passed against
him. This is one of the most important principles of natural justice. It is after
all an approved rule of fair play. The concept has gained significance and
shades with time. When the historic document was made at Runnymede in
G 1215, the first statutory recognition 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:

H
CANARA BANK v. V.K. AWASTHY [PASAYAT, .I.]· 89

"Even God did not pass a sentence upon Adam, before he was A
called upoQ_ to make his defence. "Adam" says God, "where art
thou has thou not eaten of the tree whereof I commanded thee that
though should not eat''.

Since then the principle has been chiselled, honed and refined, enriching its
content. Judicial treatment has added light and luminosity to the concept, like B
polishing of a diamond.

Principles of natural justice are those 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, quasi- C
judicial and administrative authority while making an order affecting those
rights. These rules are intended to prevent such authority from doing injustice.

What is meant by the term 'principles of natural justice' is not easy
to determine. Lord Summer (then Hamilton, L.J.) in Ray v. Local Government
Board, (1914) 1KB160 at p.199:83 LJKB 86) described the phrase as sadly D
lacking in precision. In Genera/Council of Medical Education & Registration
of U.K. v. Sanckman, (1943) AC 627: (1948] 2 All ER 337, Lord Wright
observed that it was not desirable to attempt 'to force it into any procusteam
bed' an.d mentioned that one essential requirement was that the Tribunal
should be impartial and have no personal interest in the controversy, and E
further that it should give 'a full and fair opportunity', to every party of being
heard.

Lord Wright referred to the leading cases on the subject. The most
important of them is the Board of Education v. Rice, (1911) AC 179:80
LJKB 796), where Lord Loreburn, L.C. observed as follows: F
"Comparatively recent statutes have extended, if they have
originated, the practice of imposing upon departments or offices of
State the duty of deciding or determining questions of various kinds.
It will, l suppose usually be of an administrative kind, but sometimes,
it will involve matter of law as well as matter of fact, or even depend G
upon matter of law alone. In such cases, the Board of Education will
have to ascertain the law and also to ascertain the facts. I need not
and that in doing either they must act in good faith and fairly listen
to both sides for that is a duty lying upon everyone who decides
anything. But I do not think they are bound to treat such a question H
90 SUPREME COURT REPORTS [i005] 3 S.C.R.

A as though it were a trial... ... " The Board is in the nature of the arbitral
tribunal, and a Court of law has no jurisdiction to hear appeals from
the determination either upon !aw or upon fact. But if the Court is
satisfied either that the Board have not acted judicially in the way I
have described, or have not determined the question which they are
required by the Act to determine, then there is a remedy by mandamus
B and certiorari".

Lord Wright also emphasized from the same decision the observation of the
Lord Chancellor that the Board can obtain information in any way they think
best, always giving a fair opportunity to those who are parties to the
C controversy for COl'.fecting or contradicting any relevant statement prejudicial
to their view''. To the same effect are the observations of Earl of Selboume,
LO in Spackman v. Plumstead District Board of Works, (1985) 10 AC 229:54
LJMC 81 ), where the learned and noble Lord Chancellor observed as follows:

"No doubt, in the absence of special provisions as to how the
D person who is to decide is to proceed, Jaw will imply no more than
that the substantial requirements of justice shall not be violated. He
is not a judge in the proper sense of the word; but he must give the
parties an opportunity of being heard before him and stating their
case and their view. He must give notice when he will proceed with
E the matter and he must act honestly and impartially and not under the
dictation of some other person or persons to whom the authority is
not given by law. There must be no malversation of any kind. There
would be no decision within the meaning of the statute if there were
anything of that sort done contrary to the essence of justice".

F Lord Selboume also added that the essence of justice consisted in requiring
that all parties should have an opportunity of submitting to the person by
whose decision they are to be bound, such considerations as in their judgment
ought to be brought before him. All these cases lay down the very important
rule of natural justice contained in the oft-quoted phrase 'justice should not
G only be done, but should be seen to be done'.

Concept of natural justice has undergone a great 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
H natural justice should be implied and what its context should be in a given
CANARA BANK v. V.K. AWASTHY [PASAYAT. J.] 91

case must depend to a great extent on the fact and circumstances of that case, A
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. Expression 'civil consequences'
encompasses infraction of not merely property or personal rights but of civil B
liberties, material deprivations, and non-pecuniary damages. In its wide
umbrella comes everything that affects a citizen in his civil life.

Natural justice has been variously defined by different Judges. A few
instances will suffice. In Drew v. Drew and Lebura, (1855) 2 Macg. 1.8,
Lord Cranworth defined it as 'universal justice'. In James Dunber Smith v.
Her Majesty the Queen, (1877-78)3 App. Case 614, 623 JC Sir Robort P.
Collier, speaking for the judicial committee of Privy council, used the phrase
'the requirements of substantial justice', while in Arthur John Specman v.
Plumstead District Board of Works, (1884-85) 10 App.Case 229, 240, Earl
ofSelboume, S.C. preferred the phrase 'the substantial requirement of justice'.
In Vionet v. Barrett, (1885) 55 LJRD 39, 41, Lord Esher, MR defined natural D
justice as 'the natural sense of what is right and wrong'. While, however,
deciding Hookings v. Smethwick Local Board of Health, (1890) 24 QBD 712,
Lord Fasher, M.R. instead of using the definiti<;>n given earlier by him in
Vionet's case (supra) chose to define natural justice as 'fundamental justice'
In Ridge v. Baldwin, (1963) 1 WB 569, 578, Harman LJ, in the Court of E
Appeal countered natural justice with 'fair-play in action' a phrase favoured
by Bhagawati, J. in Maneka Gandhi v. Union of India, [1978] 2 SCR 621.
In re R.N. (An lnfaot) (1967) 2 8617, 530, Lord Parker, CJ, preferred to
describe natural justice as 'a duty to act fairly'. Infairmount Investments Ltd.
v. Secretary to State for Environment, (1976) WLR 1255 Lord Russell of
Willowan somewhat picturesquely described natural justice. as 'a fair crack of F
the whip' while Geoffrey Lane, LJ. In Regina v. Secretary of State for Home
Affairs Ex Parle Hosenbal/, (1977 ) I WLR 766 preferred the homely phrase
'common fairness'.

How then have the principles of natural justice been interpreted in the
Courts and within what limits are they to be confined? Over the years by a G
process of judicial interpretation two rules have been evolved as representing
the principles of natural justice in judicial process, including 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 H
92 SUPREME COURT REPORTS [2005] 3 S.C.R.

A shared in common by all men. The first rule is 'nemo judex ·in causa sua' or
'nemo debet esse judex in propria causa sua' as stated in (1605) 12 Co.Rep.114
that is, 'no man shall be a judge in his own cause' Coke used the form
'aliquis non debet esse judex in propria causa quia non potest esse judex at
pars. (Co.Litt. 1418), that is, 'no man ought to be a judge in his own case'
B because he cannot act as Judge and at the same time be a party' The form
'nemo potest esse simul actor etjudex', that is, 'no one can 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 much the same thing.
A corollary has been deduced from the above two rules and particularly the
C audi alterarn partem rule, namely 'qui aliquid statuerit parte inaudita alteram
actquam licet dixerit, haud acquum facerit' that is, 'he who shall decide
anything without the other side having been heard, although he may have
said what is right, will not have been what is right' (See Bosewell 's case
(1605) 6 Co.Rep. 48-b, 52-a) or in other words, as it is now expressed,
'justice should not only be done but should manifestly be seen to be done'
D Whenever an· order is struck down as invalid being in violation of principles
of natural justice, there is no final decision of the case and fresh proceedings
are left upon. All that is done is to vacate the order assailed by virtue of its
inherent defect, but the proceedings are not terminated. '

E What is known as 'useless formality theory' has received consideration
of this Court in MC. Mehta v. Union of India, [1999] 6 SCC 237. It was
observed as under:

"Before we go into the final aspect of this contention, we would
like to state that case relating to breach of natural justice do also
F occur where all facts are no~ admitted or are not all beyond dispute.
In the context of those cases there is a considerable case-law and
literature as to whether relief can be refused even if the court thinks
that the case of the applicant is not one of 'real substance' or that
there is no substantial possibility of his. success or that the result will
not be different, even if natural justice is followed (See Malloch v.
G Aberdeen Corpn., [1971] 2 All ER 1278, HL (per Lord Reid and
Lord Wilberforce), Glynn v. Keele University, [1971] 2 All ER 89;
Cinnamond v. British Airports Authority, [1980] 2 All ER 368, CA
and other cases where such a view has been held. The latest addition
to this view is R v. Ealing Magistrates. Court, ex p. Fannaran,
(1996) 8 Admn. LR 351, 358) See de Smith, Suppl. P.89 (1998)
H
__,.._ CANARA BANK v. V.K. AWASTHY (PASAYAT, J.] 93

where Straughton, L.J. held that there must be 'demonstrable beyond A
doubt. that the result would have been different. Lord Woolf in Lloyd
v. McMohan, [1987] 1 All ER ll 18, CA has also not disfavoured
refusal of discretion in certain cases of breach of natural justice. The
New Zealand Court in McCarthy v. Grant, (1959) NZLR 1014
however goes halfway when it says that (as in the case of bias), it is
.... sufficient for the applicant to show that there is 'real likelihood-not
certainty- of prejudice.' On the other hand, Gamer Administrative
B
Law (8th Edn. 1996. pp.271-72) says that slight proof that the result
would have been different is sufficient. On the other side of the

-- argument, we have apart from Ridge v. Baldwin, (1964) AC 40:
[1963] 2 All ER 66, HL), Megarry, J. in John v. Rees, (1969] 2 All
ER 274 stating that there are always 'open and shut cases. and no
absolute rule of proof of prejudice can be laid down. Merits are not
c
for the court but for the authority to consider. Ackner, J has said that
_,,
--,, the 'useless formality theory' is a dangerous one and, however
inconvenient, natural justice must be followed. His Lordship observed D
~:
that 'convenience and justice are often not on speaking terms' More
recently, Lord Bingham has deprecated the 'useless formality theory'
in.R. v. Chie/Constable of the Thames Valley Police Forces, exp.

-- Cotton (1990 IRLR 344) by giving six reasons (see also his article
'Should Public Law Remedies be Discretionary?" 1991 PL. p.64). A
detailed and emphatic criticism of the 'useless formality theory.. has E
been made much earlier in 'Natural Justice, Substance or Shadow' by
Prof D.H. Clark of Canada (see 1975 PL.pp.27-63) contending that

-- Malloch (supra) and Glynn (supra) were wrongly decided. Foulkes
(Administrative Law, 8th Edn. 1996, p.323), Craig (Administrative
Law, 3rd Edn. P.596) and others say that the court cannot prejudge F
what is to be decided by the decision-making authority. De Smith
(5th Edn. 1994, paras 10.031 to 10.036) says courts have not yet
committed themselves to any one view though discretion is always
with the court. Wade (Administrative Law, 5th Edn. 1994, pp.526- ·
530) says that while futile writs may not be issued, a distinction has
to be made according to the nature of the decision. Thus, in relation
G
to cases other than those relating to admitted or indisputable facts,
there is a considerable divergence of opinion whether the applicant
can be compelled to prove that the outcome will be in his favour or
I\ he has to prove a case of substance or if he can prove a 'real likelihood'
of success or if he is entitled to relief even if there is some remote H
.,'
94 SUPREME COURT REPORTS [2005] 3 S.C.R.
-.
A chance of success. We may, however, point out that even in· cases
where the facts are. not all admitted or beyond dispute, there is a
considerable unanimity that the courts can, in exercise of their
'discretion', refuse certiorari, prohibition, mandamus or injunction
even though natural justice is not followed. We may also state that
there is yet another line of cases as in State Bank of Patiala v. S.K.
B
Sharma, [1996] 3 SCC 364 and Rajendra Singh v. State of MP.,
(1996] 5 SCC 460 that even in relation to statutory provisions requiring
notice, a distinction is to be made between cases where the provision
is intended for individual benefit and where a provision is intended
._
to protect public interest. In the former case, it can be waived while
/
c in the case of the latter, it cannot be waived.

We do not propose to express any opinion on the correctness or t
otherwise of the 'useless fonnality theory' and leave the matter for
decision in an appropriate case, inasmuch as the case before us,
'admitted and indisputable' facts show that grant of a writ will be in
D vain as pointed by Chinnappa Reddy, J."
I;
I

As was observed by this Court we need not to go into 'useless fonnality
theory' in detail; in view ofthe fact that no prejudice has been shown. As is
rightly pointed out by learned counsel for the appellant unless failure of ·
E justice is occasioned or .that it would not be in public interest to do so in ------.
particular case, this Court may refuse to grant relief to the concerned employee.
(see Gadde Venkateswara Rao v. Govt. of A.P. and Ors., AIR (1966) SC
828). It is to be noted that legal formulations cannot be divorced from the

F
fact situation of the case. Personal hearing was granted by the Appellate
Authority, though not statutorily prescribed. In a given case post-decisional
hearing can obliterate the procedural deficiency of a pre-decisional hearing.
- '

(See Charan Lal Sahu v. ·union of India etc., AIR (1990) SC 1480 ..

The aforesaid position in law was again reiterated in Canara Bank and
Ors. v. Debasis Das and Ors., [2003] 4 SCC 557.
G lnevitably, the conclusion arrived at by the Division Bench that there
was violation of principles of natural justice cannot be maintained.

Coming to the question whether the punishment awarded was
disproportionate, it is to be noted that the various allegations as laid in the ,,.
H departmental proceedings reveal that several acts of misconduct unbecoming i:..
CANARA BANK v. V.K. AWASTHY [PASAYAT, J.) 95
a bank official were committed by the respondent. A
It is to be noted that the detailed charge sheets were served on the
respondent-employee who not only submitted written reply, but also
participated in the proceedings. His explanations were considered and the
Inquiry Officer held the charges to have been amply proved. He recommended
dismissal from service. The same was accepted by the Disciplinary Authority. B
The proved charges clearly established that the respondent-employee failed
to discharge his duties with utmost integrity, honesty, devotion and diligence
and his acts were prejudicial to the interest of the bank. In the appeal before
the prescribed Appellate Authority, the findings of the Inquiry Officer were
challenged. The Appellate Authority after analyzing the materials on record C
found no substance in the appeal.

The scope of interference with quantum of punishment has been the
subject-matter of various decisions of this Court. Such interference cannot be
a routine matter.
• Lord Greene said in 1948 in the famous Wednesbury case ( 1948 (I) KB
D
223) that when a statute gave discretion to an administrator to take a decision,
the scope of judicial review would remain limited. He said that interference
was not permissible unless one or the other of the following conditions was
satisfied, namely the order was contrary to law, or relevant factors were not
considered, or irrelevant factors were considered; or the decision was one E
which no reasonable person could have taken. These principles were
consistently followed in the UK and in India to judge the validity of
administrative action. It is equally well known that in 1983, Lord Diplock in
Council for Civil Services Union v. Minister of Civil Service, (1983) 1 AC
768 (called the CCSU case) summarized the principles of judicial review of F
administrative action a·s based upon one or other of the following viz., illegality,
procedural irregularity and irrationality. He, ·however, opined that

.... "proportionality" was a "future possibility" .

In Om Kumar and Ors. v. Union of India, [2001] 2 SCC 386, this Court
observed, inter alia, as follows: G
"The principle originated in Prussia in the nineteenth century and
has since been adopted in Germany, France and other European
countries. The European Court of Justice at Luxembourg and the
European Court of Human Rights at Strasbourg have applied the
principle while judging the validity of administrative action. But even H
96 SUPREME COURT REPORTS [2005] 3 S.C.R.

A long before that, the Indian Supreme Court has applied the principle
of "proportionality" to legislative action since 1950, as stated in
detail below.

By "proportionality", we mean the question whether, while
regulating exercise of fundamental rights, the appropriate or least-
B restrictive choice of measures has been made by the legislature or the
administrator. so as to achieve the object of the legislation or the
purpose of the administrative order, as the case may be. Under the
principle, the court will see that the legislature and the administrative
authority "maintain a proper balance between the adverse effects
which the legislation or the administrative order may have on the
c rights, liberties or interests of persons keeping in mind· the purpose
which they were intended to serve".· The legislature and the
administrative authority are, however, given an area of discretion or
a range of choices but as to whether the choice made infringes the
rights excessively or not is for the court. That is what is meant by
D proportionality.

xxx xxx xxx xxx xxx

The development. of the principle of "strict scrutiny" or
"proportionality" in administrative law in England is, however, recent.
Administrative action was traditionally being tested on Wednesbury
E
grounds. But in the last few years, administrative action affecting the
freedom of expression or liberty has been declared invalid in several
cases applying the principle of "strict scrutiny". In the case of these
freedoms, Wednesbury principles are no longer applied. The courts
in England could not expressly apply proportionality in the absence
F of the convention but tried to safeguard the rights zealously by treating
the said rights as basic to the common Jaw and the courts then applied
the strict scrutiny test. In the Spycatcher case Attorney General v.
Guardian Newspapers Ltd, (No.2) (1990) 1 AC 109 (at pp. 283-
284), Lord Goff stated that there was no inconsistency between the
convention and the common law. In Derbyshire County Council v.
-
G

-
Times Newspapers Ltd., (I 993) AC 534, Lord Keith treated freedom
of expression as part of common law. Recently, in R. v. Secy. of State
for Home Deptl., exp. Simms, [ 1999] 3 All ER 400 (HL), the right
of a prisoner to grant an interview to a journalist was upheld treating
the right as part of the common law. Lord Hobhouse held that the
H policy of the administrator was disproportionate. The need for a more
CANARA BANK v. V.K. A WAS THY [PASA Y AT, J.] 97
intense and anxious judicial scrutiny in administrative decisions which A

- engage fundamental human rights was re-emphasised in in R. v. Lord
Saville exp., [1999] 4 All ER 860 CA, at pp. 870,872. In all these
cases, the English Courts applied the "strict scrutiny" test rather than
describe the test as one of "proportionality". But, in any event, in
respect of these rights "Wednesbury" rule has ceased to apply.
B
However, the principle of "strict scrutiny" or "proportionality"
and primary review came to be explained in R. v. Secy. of State for
the Home Deptt. exp Brind, (1991) l AC 696. That case related to
directions given by the Home Secretary under the Broadcasting Act,
1981 requiring BBC aild IBA to refrain from broadcasting certain C
matters through persons who represented organizations which were
proscribed under legislation concerning the prevention of terrorism.
The extent of prohibition was linked with the direct statement made
by the members of the organizations. It did not however, for example,
preclude the broadcasting by such persons through the medium of a
film, provided there was a "voice-over" account, paraphrasing what D
they said. The applicant's claim was based directly on the European
Convention of Human Rights. Lord Bridge noticed that the Convention
rights were not still expressly engrafted into English law but stated
that freedom of expression was basic to the Common law and that,
even in the absence of the Convention, English Courts could go into E
the question (see p. 748-49).

"whether the Secretary of State, in the exercise of his discretion,
could reasonably impose the restriction he has imposed on the
broadcasting organisations"

and that the courts were F
"not perfectly entitled to start from the premise that any restriction

- of the right to freedom of expression requires to be justified and
nothing less than an important public interest will be sufficient
to justify it".
G
Lord Templeman also said in the above case that the courts could go
into the question whether a reasonable minister could reasonably have
concluded that the interference with this freedom was justifiable. He
said that "in terms of the Convention" any such interference must be
both necessary and proportionate (ibid pp. 750-51).
H
98 SUPREME COURT REPORTS [2005) 3 S.C.R.

A In the famous passage, the seeds of the principle of primary and
secondary review by courts wer~ planted in the administrative law by
Lord Bridge in the Brind case (1991) l AC 696. :w11ere Convention
rights were in question the courts could exercise a right of primary •
review. However, the courts would exercise a right of secondary
review based only on Wednesbury principles in cases not affecting
B the rights under the Convention. Adverting to cases where fundamental
freedoms were not invoked and where administrative action was
questioned, it was said that the courts were then contiiled only to a
secondary review while the primary decision would be with the
administrator. Lord Bridge explained the primary and secondary review
c as follows:

"The primary judgment as to whether the particular
competing public interest justifying the particular restriction
imposed falls to be made by the Secretary of State to whom
Parliament has entrusted the discretion. But, we are entitled to
D exercise a secondary judgment by asking whether a reasonable
Secretary of State, on the material before him, could reasonably
make the primary judgment."

But where an administrative action is challenged as "arbitrary" under
Article 14 on the basis ofRoyappa [1974] 4 SCC 3 (as in cases where
E punishments in disciplinary cases are challenged), the question will
be whether the· administrative order is "rational" or "reasonable"
and the test then is the Wednesbury test. The courts would then be
confined only to a secondary role and will only have to see whether .-.
the administrator has done well in his primary role, whether he has
F acted illegally or has omitted relevant factorsI from consideration or
has taken irrelevant factors into consideration or whether his view is
one which no reasonable person could have taken. If his action does
not satisfy these rules, it is to be treated as arbitrary. In G.B. Mahajan
v. Jalgaon Municipal Council, [ 199 I] 3 SCC 91 at p. 111
Venkatachaliah, J. (as he then was) pointed out that "reasonableness"
G of the administrator under Article 14 in the context of administrative
law has to be judged from the stand point of Wednesbury rules. In
Tata Cellular v. Union of India, [1994] 6 SCC 651 at pp. 679-80),
Indian Express Newspapers Bombay (P) Ltd. v. Union of India, [ 1985]
I SCC 641 at p. 691, Supreme Court Employees. Welfare Assn. v.
H Union of India. [ 1989] 4 SCC 187 at p. 241 and U. P. Financial
CANARA BANK v. V.K. AWASTHY [PASAYAT, J.] 99

Corpn. v. Gem Cap(India) (P) Ltd., [1993] 2 sec 299 at p. 307 A
while judging whether the administrative action is ''arbitrary'' under
Article 14 (i.e. otherwise then being discriminatory), this Court has
confined itself to a Wednesbury review always.

The principles explained in the last preceding paragraph in respect
of Article 14 are now to be applied here where the question of B'
"arbitrariness" of the order of punishment is questioned under Article
14.

xxx xxx xxx xxx xxx

Thus, from the above principles and decided cases, it must be C
held that where an administrative decision relating to punishment in
disciplinary cases is questioned as "arbitrary" under Article 14, the
court is confined to Wednesbury principles as a secondary reviewing
authority. The court will not apply proportionality as a primary
reviewing court because no issue of fundamental freedoms nor of
discrimination under Article 14 applies in such a context. The court D
while reviewing punishment and if it is satisfied that Wednesbury
principles are violated, it has nonnally to remit the matter to the
administrator for a fresh decision as to the quantum of punishment.
Only in rare cases where there has been long delay in the time taken
by the disciplinary proceedings and in the time taken in the courts, E
and such extreme or rare cases can the court substitute its own view
as to the quantum of punishment."

In B.C. Chaturvedi v. Union of India and Ors., (1995] 6 SCC 749 it
was observed:
F
"A review of the above legal position would establish that the
disciplinary authority, and on appeal the appellate authority, being
fact-finding authorities have exclusive power to consider the evidence
with a view to maintain discipline. They are invested with the
discretion to impose appropriate punishment keeping in view the
magnitude or gravity of the misconduct. The High Court/Tribunal, G
while exercising the power of judicial review, cannot normally
substitute its own conclusion on penalty and impose some other
penalty. If the punishment imposed by the disciplinary authority or
the appellate authority shocks the conscience of the High Court/
Tribunal, it would appropriately mould the relief, either directing the H
100 SUPREME COURT REPORTS [2005} 3 S.C.R.

A disciplinary/appellate authority to reconsider the penalty imposed, or
to shorten the litigation, it may itself, in exceptional and rare cases,
impose appropriate punishment with cogent reasons in support
thereof."

In Union of India and Anr. v. G. Ganayutham, (1997] 7 SCC 463, this
B Court summed up the position relating to proportionality in paragraphs 31
and 32, which read as follows:

"The current position of proportionality in administrative law in
England and India can be summarized as .follows:

c (1) To judge the validity of any administrative order or
statutory discretion, nonnally the Wednesbury test is to be applied
to find out if the decision was illegal or suffered from procedural
improprieties or was one which no sensible decision-maker could,
on the material before him and within the framework of the law,
have arrived at. The court would consider whether relevant matters
D had not been taken into account or whether irrelevant matters
had been taken into accoun~ or whether the action was not bona
fide. The court would also consider whether the decision was
absurd or perverse. The court would not however go into the
correctness of the choice made by the administrator amongst the
E various alternatives open to him. Nor could the court substitute
its decision to that of the administrator. This is the Wednesbury
(1948 I KB 223) test.
(2) The court would not interfere with the administrator's
decision unless it was illegal or suffered from procedural
impropriety or was irrational ii in the sense that it was in
F
outrageous defiance of logic or moral standards. The possibility
of other tests, including proportionality being brought into English
administrative law in future is not ruled out. These are the CCSU
4;=
{I 985 AC 374) principles.
(3)(a) As per Bugdaycay (1987 AC 514), Brind (1991
G
(l) AC 696) and Smith (1996 {I) All ER 257) as long as the
Convention is not incorporated into English law, the English
courts merely exercise a secondary judgment to find out if the
decision-maker could have, on the material before him, arrived
at the primary judgment in the manner he has done.
H
CANARA BANK v. V.K. AWASTHY [PASAYAT, J.] 101

(3)(b) If the Convention is incorporated in England A
making available the principle of proportionality, then the English
courts will render primary judgment on the validity of the
administrative action and find out if the restriction is
disproportionate or excessive or is not based upon a fair balancing
of the fundamental freedom and the need for the restriction
thereupon.
B
(4)(a) The position in our country, in administrative law,
where no fundamental freedoms as aforesaid are involved, is that
the courts/tribunals will only play a secondary role while the
primary judgment as to reasonableness will remain with the
executive or administrative authority. The secondary judgment C
of the court is to be based on Wednesbury and CCSU principles
as stated by Lord Greene and Lord Diplock respectively to find
if the executive or administrative authority has reasonably arrived
at his decision as the primary authority.
(4)(b) Whether in the case of administrative or executive D
action affecting fundamental freedoms, the courts in our country
will apply the principle of "proportionality" and assume a
primary role, is left open, to be decided in an appropriate case
where such action is alleged to offend fundamental freedoms. It
will be then necessary to decide whether the courts will have a E
primary role only if the freedoms under Articles 19, 21 etc. are
involved and not for Article 14.
Finally, we come to the present case. It is not contended before
us that any fundamental freedom is affected. We need not therefore
go into the question of "proportionality". There is no contention that F
the punishment imposed is illegal or vitiated by procedural impropriety.
As to "irrationality'', there is no finding by the Tribunal that the
decision is one which no sensible person who weighed the pros and
cons could have arrived at nor is there a finding, based on material,
that the punishment is in "outrageous" defiance of logic. Neither

- Wednesbury nor CCSU tests are satisfied. We have still to explain
"Ranjit Thakur, [1987] 4 SCC 611)".
In Chair;nan and Managing Director, United Commercial Bank and
Others v. P.C. Kakkar, [2003] 4 SCC 364 the rigid standards to be adopted
G

when considering the case of Bank officials were highlighted.
H
,
102 SUPREME COURT REPORTS (2005) 3 S.C.R.

A Aforesaid being the position, the decisions of the learned Single Judge
on the quantum of punishment and of the Division Bench regarding alleged
violation of the principles of natural justice cannot be maintained and are,
therefore, set aside. The inevitable conclusion is that the order of dismissal
as passed by the Appellant-Bank does not suffer from any infirmity. Appeal
B is accordingly allowed, but with no order as to costs.
B.B.B. Appeal allowed.