Holding

The State Government's revisional order was vitiated for violating the principles of natural justice, and the order was set aside, with the matter remitted for reconsideration after supplying the appellants with the relevant reports and inspection notes.

Summary

The appellants, construction firms, challenged a revisional order issued by the Andhra Pradesh Government that imposed a seigniorage fee on earth material used in a contract, alleging that the order was passed without notice and on the basis of inspection reports and material not supplied to them. The Supreme Court examined whether the State Government, while exercising its revisional jurisdiction under Rule 35‑A of the Andhra Pradesh Minor Mineral Concession Rules, violated the principles of natural justice, particularly the audi alteram partem rule. It held that the government acted on undisclosed materials and failed to provide the appellants with the inspection notes on which its decision rested, thereby breaching procedural fairness. The Court reiterated that courts cannot substitute their judgment for administrative discretion unless the action is so unreasonable that no reasonable authority could have taken it. Consequently, the Court set aside the High Court's order and remitted the matter to the State Government to reconsider after furnishing the required documents. The appeals were allowed without any order as to costs.

Issues considered

Whether the State Government, in exercising revisional jurisdiction, violated the principles of natural justice by not providing notice and the inspection reports to the appellants.
Whether the imposition of seigniorage fee on earth material was lawful in view of the Central Government's notification declaring earth as a minor mineral.
Whether the High Court erred in upholding the revisional order despite alleged procedural irregularities.

Legislation cited

Mines and Minerals (Development and Regulation) Act, 1957s. 15, s. 3(c)

Subjects

natural justiceadministrative lawrevisional jurisdictionaudi alteram partemnemo judex in causa suaseigniorage feeminor mineralprocedural fairnessjudicial review

Judgment

[2008) 14 S.C.R. 859

M/S NAGARJUNA CONSTRUCTION CO. LTD. A
v.
GOVT. OF ANDHRA PRADESH AND ORS.
(Civil Appeal No. 1438 of 2004)
OCTOBER 20, 2008
B
[DR. ARIJIT PASAYAT AND P. SATHASIVAM, JJ.]

Administrative law:
Principles of natural justice - Adherence to, by adminis-
trative authorities - Discussed. C
Administrative action - Judicial review of - Held: Court
cannot substitute its judgment for decision of administrative
authorities - Court should intervene only when administrative
action is unfair or unreasonable.
D
Doctrines/Principles: Principle of natural justice - Gen-
eral rules - Discussed.
Maxims:
'-f'
(i) audi alteram partem - Meaning of. E
(ii) nemo judex in causa sua - Meaning of.
(iii) nemo debet esse judex in propria causa sua -
Meaning of.
(iv) aliquis non debet esse judex in propria causa F
quia non potest esse judex at pars - Meanin'g of
(v) nemo potest esse simul actor et judex- Meaning
of
(vi) qui aliquid statuerit parte inaudita alteram G
actquam licet dixerit, haud acquum facerit -
Meaning of

859 H
860 SUPREME COURT REPORTS [2008] 14 S.C.R.

A The question which arose for consideration in the
instant appeals is whether State Government while exer- ~-
cising revisional jurisdiction, acted on certain materials
collected behind the back of appellants and the reports
submitted by certain authorities and thereby violated the
B principles of natural°justice.
Allowing the appeals and remitting the matter to State
Government, the Court
-l ;
HELD: 1. The basic principles of natural justice was
disregarded by the State Government while revising the
c order. It acted on materials which were not supplied to
the appellants. Additionally, the High Court,. for the first
time, made reference to the report/inspection notes which ,I

were not even referred to by the State Government while
exercising revisional power. The State Government has
D to re-consider the matter after supplying to the appellants
copies of reports/inspection notes on which the Depart-
ment case rests. It should also consider the effect of the
concession made by the Department in the earlier rounds '7--
of proceedings before the High Court. [Paras 30, 42] [875-
E F-G; 882-G]
2.1. Natural justice is another name for common
sense justice. Rules of natural justice are not codified
canons. But they are principles ingrained into the con-
science of man. Justice is based substantially on natural
F ideals and human values. The administration of justice is
to be freed from the narrow and restricted considerations
which are usually associated with a formulated law involv- ~

ing linguistic technicalities and grammatical niceties. [Para
33] [877-C-D]
G
2.2. The expressions "natural justice" and "legal· jus-
tice" do not present a water-tight classification. It is the
substance of justice which is to be secured by both, and -<
yvhenever legal justice fails to achieve this solemn pur-
pose; natural justice is called in aid of legal justice. Natu-
H ral justice relieves legal justice from unnecessary tech-
M/S NAGARJUNA CONSTRUCTION CO. LTD. v. 861
GOVT OF A. P. & ORS.
,._,,..y- nicality, grammatical pedantry or logical prevarication. It A
supplies the omissions of a formulated law. [Para 34] [877-
E-F]
2.3. The obligation to act fairly on the part of the ad-
ministrative authorities was evolved to ensure the rule of
law and to prevent failure of justice. This doctrine is B
complementary to the principles of natural justice which
)- the quasi-judicial authorities are bound to observe. It is
true that the distinction between a quasi-judicial and the
administrative action has become thin. Even so, the ex-
tent of judicial scrutiny/judicial review in the case of ad- c
ministrative action cannot be larger than in the case of
quasi-judicial action. If the High Court cannot sit as an
Appellate Authority over the decisions and orders of
quasi-judicial authorities, it follows equally that it cannot
do so in the case of administrative authorities. In the mat- D
ter of administrative action, it is well known, more than
one choice is available to the administrative authorities;
~--r they have a certain amount of discretion available to them.
They have "a right to choose between more than one
possible course of action on which there is room for rea-
sonable people to hold differing opinions as to which is E
to be preferred". The court cannot substitute its judgment
for the judgment of administrative authorities in such
cases. Only when the action of the administrative author-
ity is so unfair or unreasonable that no reasonable per-
son would have taken that action, can the court intervene. c
I

")>- [Para 31] (875-H; 876-A-E]
A.K. Kraipak v. Union of India (1969) 2 SCC 262 - relied
on.
Secy of State for Education and Science v. Metropolitan G
Borough Council of Tameside (1976) 3 All ER 665; Associ-
';--- ated Provincial Picture Houses Ltd. v. Wednesbury Corpn-
(1947) 2 all All ER 682 - referred to.
2.4. The adherence to principles of natural justice as
recognized by all civilized States is of supreme impor- H
862 SUPREME COURT REPORTS [2008] 14 S.C.R.

A tance when a quasi-judicial body embarks on determin-
ing disputes between the parties, or any administrative '+-·
action involving civil consequences is in issue. These
principles are well settled. The first and foremost principle
is what is commonly known as a1:1di alteram partem rule. It
B says that no one should be condemned unheard. Notice
is the first limb of this principle. It must be precise and un-
ambiguous. It should appraise the party determinatively the
case he has to meet. The time given for the purpose J..._
should be adequate so as to enable him to make his rep-
resentation. In the absence of a notice of the kind and
C such reasonable opportunity, the order passed becomes
· wholly vitiated. [Para 35 ] [877-G-H; 878-A]
Cooper v. Wandsworth Board of Works (1963) 143 ER
414 - referred to.
D 2.5. Principles of natural justice are tho~e rules which
have been laid down by the Courts as being the minimum
protection of the rights of the individual against the arbi-
trary procedure that may be adopted by a judicial, quasi-
judicial and administrative authority while making an or-
E der affecting those rights. These rules are intended to
prevent such authority from doing injustice. [Para 36]
[878-F]
Ray V. Local Government Board (1914) 1 KB 160 199:83
LJKB 86; General Council of Medical Education & Registra-
F tion of U.K. v. Sanckman (1943) AC 627: (1948) 2 All ER 337;
Board of Education v. Rice (1911) AC 179:80 LJKB 796;
Spackman v. Plumstead District Board of Works (1985) 10
AC 229:54 LJMC 81 - referred to.
2.6. Concept of natural justice has undergone a great
G deal of change in recent years. Rules of natural justice
are not rules embodied always expressly in a statute or
in rules framed thereunder. They may be implied from the --<
nature of the duty to be performed under a statute. What
particular rule of natural justice should be implied and
H what its contex~ should be in a given case must depend
MIS NAGARJUNA CONSTRUCTION CO. LTD. v. 863
GOVT. OF A. P. & ORS.

to a great extent on the fact and circumstances of that A
~
case, the frame-work of the statute under which the en-
quiry is held. The old distinction between a judicial act
and an administrative act has withered away. Even an ad-
ministrative order which involves civil consequences
must be consistent with the rules of natural justice. Ex- B
pression 'civil consequences' encompasses infraction of
not merely property or personal rights but of civil liber-
.>- ties, material deprivations, and non-pecuniary damages .
In its wide umbrella comes everything that affects a citi-
zen in his civil life. [Para 39] [880-F-H; 881-A] c
Drew v. Drew and Lebura (1855) 2 Macg. 1.8; James
Dunber Smith v. Her Majesty the Queen (1877-78) 3 App.
Case 614, 623 JC; Arthur John Specman v. Plumstead Dis-
trict Board of Works (1884-85) 10 App. Case 229, 240; Vionet v.
Barrett (1885) 55 LJRD 39, 41; Hookings v. Smethwick Local D
Board of Health (1890) 24 QBD 712; Ridge v. Baldwin (1963)
1 WB 569, 578; Maneka Gandhi v. Union of India (1978) 2
--r SCR 621; In re: H.K. (An Infant) (1967) 2 Q.B. 617, 630;
fairmount Investments Ltd. v. Secretary to State for Environ-
ment (1976) WLR 1255; Regina v. Secretary of State for Home E
Affairs Ex Parle Hosenball (1977) 1 WLR 766 - referred to.
2.8. Over the years by a process of judicial interpre ..
tation two rules have been evolved as representing the
principles of natural justice in judicial process, including
therein quasi-judicial and administrative process. They F
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 coun-
try but is shared in. common by all men. The first rule is
'nemo judex in causa sua' or 'nemo debet esse judex in pro- G
pria causa sua' that is, 'no man shall be a judge in his own
cause'. The form 'aliquis non deb et esse judex in propria
causa quia non potest esse judex at pars', that is, 'no man
ought to be ajudge in his own case, because he cannot
~,

act.as Judge and at the same time be a party'. The form H
864 SUPREME COURT REPORTS - [2008) 14 S.C.R.

A 'nemo potest esse simul actor et judex', that is, 'no one can 't'-
be at once suitor and judge' is also at times used. The
second rule is 'audi alteram partem', that is, 'hear the other
side'. At times and particularly in continental countries,
the form 'audietur at altera pars' is used, meaning very
8 much the same thing. A corollary has been deduced from
the above two rules and particularly the audi alteram partem
rule, namely 'qui aliquid statuerit parte inaudita alte,ram
actquam licet dixerit, haud acquum facerit' that is, 'he who -l.
shall decide anything without the other side having been
heard, although he may have said what is right, will not
c have been what is right'. In other words, as it is now ex- ,
pressed, 'justice should not only be done but should
manifestly be seen to be done'. [Para 41] [881-G-H; 882-
A-E]
Bosewe//'s case (1605) 6 Co.Rep. 48-b, 52,;a ..:.. referred
D
. to.
CASE LAW REFERENCE ...__,.__
(1969) 2 sec 262 relied on [Para 31]
(1976) 3 All ER 665 referred to [Para 31]
E
(1947) 2 all All ER 682 referred to [Para 31]
(1963) 143 ER 414 referred to [Para 35]
(1914) 1 KB 160 199 referred to [Para 37]
F (1943) AC 627 referred to [Para 37]
(1911) AC 179:80 LJKB 796 referred to [Para 38] -f·
(1985) 10 AC 229 referred to [Para 38]
(1855) 2 Macg. 1.8 referred to [Para 40]
G (1877-78) 3 App. Case 614 referred to [Para 40]
(1884-85) 10 App. Case 229 referred to [Para 40] -(
(1885) 55 LJRD 39, 41 referred to [Para 40]
(1890) 24 QBD 712 referred to [Para 40]
H (1963) 1 WB 569, 578 referred to [Para 40]
MIS NAGARJUNA CONSTRUCTION CO. LTD. v. 865
GOVT. OF A. P. & ORS.

(1978) 2 SCR 621 referred to [Para 40] A
~
(1967) 2 Q.8.617 referred to [Para 40]
(1976) WLR 1255 referred to [Para 40]
(1977) 1 WLR 766 referred to [Para 40]
(1605) 6 Co. Rep. 48-b, 52-a referred to [Para 41] B

CIVILAPPELLATE JURISDICTION: Civil Appeal No. 1438
of 2004
From the final Judgment and Order dated 9/1 /2003 of the
High Court Judicature, Andhra Pradesh at Hyderabad in Writ C
Petition No. 5683 of 2002
WITH
C.A. Nos. 1439, 1442, 1443 and 1444 of 2004
D
H.N. Salve, P.S. Patwalia, VA. Mohta, Arun Kathpalia, C.S.
Vaidyanathan, Anoop G. Choudhary, Suyodhan Byrapaneni,
Siddharth Patnaik, G. Arun, G. Ramakrishna Prasad, Manoj
Swarup, Rohit Sohgaura, D. Bharat Kumar, Anand, Azim H,
Laskar, M. lndrani, Neelkanta Nayal, Abhijit Sengupta, D. Bharat E
Kumar, Anand, Azim H. Laskar, lndrani, Abhijit Sengupta, Ram
Babu, Amit Sharma, Anupam Lal Das, Manoj Saxena, Rajnish
Singh, Rahul Shukla and T.V. George for the Appearing Par-
ties. ·

The Judgment of the Court was delivered by F
DR. ARIJIT PASAYAT, J. 1. Since common points are
involved in these appeals, they are disposed of by this com-·
man judgment.
2. Writ Petitions were filed by the appellants before the G
Andhra Pradesh High Court praying for quashing the order
passed by the State Government in Memorandum No.8817/
M.11(1)/2001-6, dated 4.2.2002 and the consequent demand ·
notice issued by the Director of Mines and Geology and the
proceedings of the Deputy Director, Mines and Geology. The H
866 SUPREME COURT REPORTS [2008] 14 S.C.R.

A appellant in each case is engaged in the business of construc-
tion, engineering and civil works. In each case the appellant
had participated in the tenders invited by the Bharat Heavy
Electricals Ltd. (in short 'SHEL') for the purpose of executing
their part of the contract which is with NTPC for levelling and
B grading. SHEL had awarded the contract to the appellant-com-
pany for ~xecution of the work. According to the appellant, the
material required for the purpose of execution of the contract in
terms of th,e specifications prescribed under the contract is earth,
morrum gravel and mixture of these or any other material ap-
e proved by th~ BHEL. The appellant had obtained rights for ex-
cavation of good earth from the ryots of patta lands in the vicin-
ity as well as from the quarry lease holders. Each appellant was
supplying the materials from the source in which they obtained
right of excavation of materials. Huge quantity of these materi-
D als was supplied under the contract. The Assistant Director of
Mines and Geology required BHEL to show cause as to why
action should not be initiated to realize a sum of money towards
seigniorage fee which includes five times penalty over and above
the normal seigniorage fee. The Assistant Director required
BHEL to produce documentary evidence, if any, with regard to
E the source from where the materials had been procured
alongwith the permits issued by the Department. BHEL filed a
detailed reply disputing the liability in the matter. It was indi-
cated that the requisite application for allotment of quarries and
other formalities were to be done directly by the sub contrac-
F tors concerned. The agencies have been paying the seignior-
age fee directly to the Department of Mines and Geology. In
between meeting was held between the agencies and Depart-
ment of Mines and Geology, SHEL and the contractors. De-
tailed minutes were drawn up according to which the Director
G of Mines and Geology expressed that type of filling materials
may have to be decided by the Department of Mines and not by
the contractors themselves.
3. Subsequently, demands were raised. Reference was
made to certain data supplied by BHEL to the Vigilance and
H
M/S NAGARJUNA CONSTRUCTION CO. LTD. v. 867
..... _,..,- GOVT. OF A. P. & ORS.

Enforcement Department. It was observed that filling material A
was partly gravel and partly ordinary clay in respect of which
seigniorage fee is liable to be paid. The appellant in each case
requested the authority to withdraw the demands while agree-
ing to pay the seigniorage fee under protest.
4. The Assistant Director, Mines and Geology again sent 8
demand notice. The Deputy Director of Mines and Geology
raised demand notice directing the appellant to pay a higher
sum being the balance of seigniorage fee after giving credit to
the fees already paid. At this stage the appellant submitted de-
tailed representation to the Secretary (Mines), Industries and C
Commerce Department, Government of Andhra Pradesh inter-
alia highlighting various contradictory notices issued by the
Assistant Director and the Deputy Director. The Government,of
Andhra Pradesh in exercise of suo motu revisional jurisdiction
under Rule 35-A of the Andhra Pradesh Minor Mineral Conces- D
sion Rules, 1966 (in short the 'Andhra Pradesh Rules') set asi,de
the revised demand issued by the Deputy Director confirming
the original demand and the appellant was directed to pay the
balance amount. Writ Petition was filed before the High Court
challenging the revisional order. The High Court by its order E
dated 20.7.2001 allowed the writ petition at the admission stage
holding that the order of the State Government is misconceived
and unsustainable on account of having been issued without
any notice to the affected persons. However, leave was granted
to the Government to initiate fresh proceedings if so desired F
and if so permitted by law after giving notice and opportunity to
the appropriate parties. Notices were issued to all the sub- con-
tractors and after hearing the parties the order impugned be-
fore the High Court was passed. Again challenge was made
before the High Court.
G
5. The first stand was that the Government ought not to
have passed the impugned order clubbing the companies with
the other sub contractors inasmuch as demands raised by the
Deputy Director in respect of each party were totally different.
Quantity and the nature of materials supplied by each of them H
868 SUPREME COURT REPORTS (2008] 14 S.C.R.

T----
A and the sources were different and merits of each case was to
be gone into separately and it was also submitted that the or-
der of the State Government was passed on surmises and as-
sumptions and indicated non application of mind.
6. It was also submitted that seigniorage fee on the total
S quantity of earth materials supplied by the company was levied
in utter disregard of the analyst report of the material and with- -~

out any authority to do so. Finally, it was submitted that copy of
the report submitted by the Deputy Director of Mines and Geol-
ogy who was purportedly instructed to inspect the area to as-
c certain the nomenclature of the materials supplied by the sub
contractors to the SH EL was not at point of time supplied to the
affected parties. It was submitted that the Government could
not have ignored the test and analyst report of the Department
of Civil Engineering and Soil Mechanics Division of Andhra
D Pradesh University which was a relevant piece of evidence. A
detailed counter affidavit was filed on behalf of the Joint Direc-
tor of Mines and Geology, Department of Mines and Geology, ~

Hyderabad. Allegations were disputed. The High Court ob-
served that the Deputy Director of Mines and Geology had
E played havoc in the matter. He had been placed under suspen-
sion. He was found guilty of the charges in the matter of short
levy and collection of seigniorage fee. Various charges were
framed against him and the enquiry officer appointed has sub-
mitted his report upholding him guilty of several charges.
F 7. The High Court came to hold that the plea of the Gov- ..,
ernment that said officer had acted in collusion with the appel-
lant was not without any basis. The High Court also observed
that in reply to the show cause notice SHEL had furnished a list
of five sub-contractors who were entrusted with the levelling
G work. In reply it was stated that the agency had paid certain
amounts towards seigniorage fee for the quantities burrowed
from the foot of the hills. It was further submitted that in line with
the provisions of the contract the agencies are under obligation
to accept and deal with the mining department directly. ' It was
H therefore the st2.nd of SHEL that it had no mens rea-and had
M/S NAGARJUNA CONSTRUCTION CO. LTD. v. 869
GOVT. OF A. P. & ORS .

..--r always made conscious effort to ensure payment of seignior- A
age fee by the agencies.
8. It was stated that BHEL was under the impression that
the matter would have been decided upon as the department
had inspected the sources presumably in the presence of agen-
cies as agreed in the meeting held on 4.9.1999. B

-·' )- 9. In the counter-affidavit it was also submitted that the ap-
pellants had failed to produce documentary evidence. The
Deputy Director had acted on the basis of information furnished
by SHEL. The High Court referred to BHEL's letter dated c
8.3.2000 whereby the details of total quantities of filling materi-
als supplied by sub contractors were furnished. According to
the data, various mines had been supplied as filling materials.
The High Court noticed that there was no evidence to show that
seigniorage fee had been paid in respect of filling material.
D
10. According to the High Court the main question that
~·
arose for consideration was the nature of the soil utilized by the
appellants in the levelling and grading work undertaken by them
under the agreement with SHEL.
E.
11. Stand of the appellants was that the bulk of the materi-
als used by the appellants-companies was earth and the same
was not subject to seigniorage fee. It was therefore contended
that the initiation of suo motu revisional power and the orders
passed are illegal as the order ignored the materials available
on record. F
:;--
12. It was pointed out that what was supplied was gravel
from the quarry and the ordinary earth from the patta land and
therefore the argument that the total material received by SHEL

,, was partly gravel from sources of foot hills and partly ordinary G
clay from the tank beds and, therefore, the material is subject to
seigniorage fee was vitiated for the reason that there was no
material supplied by one of the appellants i.e. Mis Nagarjuna
Construction Co. Ltd. from the foothills and the tank bed lands.

13. The State's stand as highlighted before the High Court H
870 SUPREME COURT REPORTS [2008] 14 S.C.R.

~
A was about the so-called collusion between the concerned Deputy
Director and the appellants and his giving No Objection for the
release of the amounts by BHEL. The High Court referred to
para 3.03.01 of the specifications of the contract. We will deal
with this aspect later. .._

B 14. The High Court primarily focused on the role allegedly
played by the concerned Deputy Director. It was observed that ~ .....,
no permission was taken by any of the appellants to quarry min-
ing as required under law and they had also not made available
the details of purchase and lease of private lands for the pur-
c pose of excavation of materials. It did not accept the stand that
what was utilized was only earth material for filling purpose and
the same was not subject to seigniorage fee. The High Court
observed that this version of the appellants cannot be accepted
as a gospel truth and the conduct of the appellants showed that
D they were playing hide and seek with the statutory authorities.
15. The High Court noted objection of appellants that the
1--
inspection report was not made available either by the Depart-
ment or the Government as to enable the appellant to file its
objections. It rejected the plea with the foll~wing observations:
E
"However, it is urged that the said inspection report is not
made available either by the Department or the
Government so as to enable the petitioner-company to
file its objections. The petitioner-company admittedly
F supplied some quantity of gravel also. The source from
whom the gravel is purchased and the details of transit "i'
waybills are not furnished by the petitioner-company at
any point of time. No efforts ever have been made by the
petitioner-company to identify and reveal the source of
supply of material consumed and utilized by it for the
G
purpose of filling in fulfillment of its contractual obligation. -(
Everything is shrouded in mystery. Neither the petitioner-
company nor the other sub contractors responded to the
repeated queries of the department. The record contains
the inspection notes of the sites from where the petitioner-
H
.1·.

MIS NAGARJUNA CONSTRUCTION CO. LTD. v. 871
GOVT. OF A. P. & ORS.

company excavated the materiaL The memorandum of A
··T
grounds, which has been treated as an explanation, does
not contain any objection as to the non supply of the
inspection report. There is no plea of any prejudice having
been caused on account of non supply of the said
inspection notes. It is not .as if the petitioner-company. 8
-
demanded for the Inspection notes during the hearing of
the revision and the Government failed to furnish the same.
).
In the absence of any such plea and demonstration of any
prejudice having been caused on account of non supply of
the inspection notes the impugned order cannot be set c
aside on that score."
16. The High Court also did not find any substance in the
plea relating to non consideration of the test and analysis re-
port of the Civil Engineering Department of Andhra University. It
was held that it was a self service devise adopted by the appel- D
lant. Therefore, it was held that since the Government had ar-
-t rived at to its decision after hearing the parties no interference
. -'( is called for.
17. So far as the question of penalty is concerned, it was
E
held that though mens rea is an essential ingredient but the fatual
position left no manner of doubt that the appellant was not act-
ing bona fide. The High Court did not also attach importance to
the stand taken by the Department in the earlier writ petitions.
Accordingly, all the writ petitions were dismissed.
F
18. The basic stand of the appellants in the appeals is that
,. the basic principles of natural justice have not been followed in
the present case. The authorities have acted on certain materi-
als which were collected behind the back of the appellants and
the reports submitted by certain authorities. The High Court's
G
conclusion that no prejudice was caused by non supply is really
a conclusion without any foundation. Finally, in view of the ac-
"').
cepted stand of the State Government in the earlier writ peti-
tions it would not be open for the State Government to take dia-
metrically opposite stand to levy the seigniorage fee. It was also
H
872 SUPREME COURT REPORTS [2008] 14 S.C.R.

A submitted that the report of the Department of Civil Engineer-
ing of Andhra Pradesh University was obtained by Govern men-
'T-··
tal authorities. The High Court should not have accepted the
stand of the State Government as to why the report was not to
be considered. It was also pointed out that the portion of the
B contract as quoted by the High Court was incomplete. There-
fore, it was submitted that view of the High Court is clearly un-
sustainable.
-\
19. Reference was also made to the judgment dated
3.3.1999 in Writ Petition Nos. 1990, 2271 and 2741 of 1999
c filed by the appellant where it was held as follows:
"the power to collect seigniorage fee at the rates mentioned
in Schedule I read with Rule 10 is subject to filling material
being declared as minor mineral under Section 3(c) as
the fact that earth is a "filling material" cannot be disputed.
D
As the State Government under Section 15 has the power
to levy fee in respect of the minor mineral as declared by
the Central Government under Section 3(c) by a notification
"r -
published in the official gazette, and since no proceeding
is placed before me declaring Earth as minor mineral by
E
the Central Government by a notification published in the
official gazette, and in the absence of a notification issued
by the Central Government declaring earth as mi_nor
mineral, the State Government i::, not competent to collect
seigniorage fee under Rule 10 read with Schedule 1".
F
20. The Central Government by Notification No.GSR
No.95(E) dated 3.2.2000 had notified the earth as a minor min-
era I and has enabled the State Government to levy seigniorage
fee under Rule 10 of the Rules on earth also. The schedule was
G amended and the entry was re-numbered in the following man-
ner:
"Item 8: Morram/Gravel-Rs.13-(Rupees thirteen) per cubic ~

meter".
21. The High Court noted that since the amendment came
H
M/S NAGARJUNA CONSTRUCTION CO. LTD. v. 873
GOVT. OF A. P. & ORS.

~ r after the contract period was over, it was really of no ~onse- A
quence.
22. It, however, .accepted the stand of the State Govern-
ment that only that ordinary earth which does not contain any
mineral content whatsoever alone was exempted from payment
of seigniorage fee and there is hardly any earth which do.es not 8
.contain fine particles or other minerals in respect of which
)
seigniorage fee is liable to be charged.
23. Learned counsel for the State, on the other hand, sup-
ported the judgment of the High Court and stated that the con- c
duct of the appellants disentitled them from getting inequitable
relief. Further more, there was no foundation in the plea that
what the State Government had stated earlier would act as an
estoppel.
24. We shall first deal with the plea relating to incorrect D
reflection of the conditions in the contract. The High Court has
referred to para 3.03.01 of the specifications of the contract. It
reads as follows:
"The material used for constructing the embankment by
earth filling shall be Morram, Gravel, a mixture of these or E
any other material approved by the Engineer."
25. This is not the correct quotation. In the instant case the
expression "earth" is missing. The actual clause reads as fol-
lows: F
"The material used for constructing embankment by earth
filling shall be earth, morrum, gravel and mixture of these
or any other material approved by the engineers. The
materials shall be free from lumps, clouds, boulders or
rock pieces roots and vegetations, harmful salts and G
chemicals, organic material, silt, fine sand expansive clays
in order to provide stable embankment. Further, in the
said specification, it is clearly mentioned that the material
for embankment shall be as obtained from a particu·1ar
source with the preference given to material becoming H
874 SUPREME COURT REPORTS [2008] 14 S.C.R.

A available from nearby road excavation under the same
contract or any other excavation under the same contract."
26. Additionally, it is noticed the High Court has relied on
certain records which purportedly contain the inspection notes
of the sites from where the appellants had excavated the mate-,
B rial. It is to be noted that for the first time before the High Court
these records were produced. Since there was no reference to
the so called inspection notes at any point of time the question -\
of the appellant pleading prejudice because of non-supply of
the same does not arise. The High Court observed that since
c the appellant had not demanded for the inspection notes during
,__ --,.:_,_ hearing of the revision there was no question of any prejudice.
The approach is clearly wrong. At no point of time, not even at
the time of hearing of revision petition or in the revisional order
there is any reference to the so called inspection notes. Added
D to that, the High Court did not consider the effect of the stand
taken by the Government earlier.
27. In the earlier round of proceedings the respondents 'r
had categorically admitted that the appellants utilized earth only -
E as filling material. In the additional counter-affidavit filed by the
Joint Secretary of Mines, in the present case it was explained
that in the counter affidavit filed on behalf of the respondents
dated -1 a.2.1999 in Writ Petition No.1990/99, the then Assis-
tant Director made a statement that the excavated material is
earth which is also liable to levy seigniorage fee. This was a
F mistake. By the time the counter-affidavit was filed,-the Depart- -
ment had no precise knowledge of the locations where excava- -+
tion was going on or the nature of the soil which was being ex-
cavated. It was much later i.e. in December, 1999 pursuant to a
meeting between the various contractors and the concerned
G officials during which it was decided that the locations should
be disclosed to the Department. Then the Deputy Director and
Assistant Director inspected the areas and opined that the ex-
cavated material was not simply earth but gravel and clay. The
High Court found the explanation to be convincing. What the
H High Court seems to have overlooked is t~at there was a spe- -
M/S NAGARJUNA CONSTRUCTION CO. LTD. v. 875
GOVT. OF A. P. & ORS.
~r-
cific admission in the earlier cases. It is also not borne out from A
the records as to when the so called inspection notes of the
Deputy Director and the Assistant Director were made and what
was the nature of their report. The High Court's observation that ,
the counter affidavit earlier was on account of inadvertence is
without any basis. The observations of the High Court that there B
was no question of sending the samples to the Department of
}
Civil Engineering are also unsustainable. As a matter of fact it
is not a case that the appellants _themselves had sent the
samples. lrJ fact, the samples were sent by the Department apart ,
from the samples being sent by the appellants. The High Court's c_
observations that they were rightly ignored by Government do
not stand to reason. Jhe report was available on record and
was not by an ordinary authority, and was by the Department of '
Aridhra Pradesh University.
28. ""(he High Court did not acGept the vi~w expressed by_ D
a learned Single Judge while disposing of writ petition No.4579
" --f of 2001 filed by one of the s1,1b contractors Mis Gayatri Projects
Ltd. Though that- order was not challenged by the Department,
the Division Bench thought that the decision was not proper. In

-
an_y event, that question is of no relevance in the present case. ~
The High Court rightly observed that since the ame11dments re-
ferred to, were introduced after:,the expiry of the contract period
they were really of non consequence. -

29. Looked at from any angle the judgment of the High
, Court is unsustainable. F
1
30. The basic principles of natural justice seem to have been
disregarded by the State-Government While revising the order. It
acted on materials which were not supplied to the appellants.
Additionally the High Court for the first time made reference to
G
the report/inspecUon notes which was not even referred to by the
~
State Government while exercising revisional power.

31. The obligation to act fairly on the part of the adniihis-
trative authorities was evolved to ensure the rule of law and to
prevent failure of justice. This doctrine is complementary to the H
876 SUPREME COURT REPORTS [2008] 14 S.C.R. •,

;~
•'
A principles of natural justice which the quasi-judicial authorities
are bound to observe. It is true that the distinction between a
quasi-judicial and the administrative action has become thin,
as pointed out by this Court as far back as 1970 in AK Kraipak
v. Union of India (1969 (2) SCC 262). Even so the extent of
B judicial scrutiny/judicial review in the case of administrative ac-
tion cannot be l'arger than'in the case of quasi-judicial action. If
the High Court cannot sit as·an Appell9te Authority over the de-
cisions and orders of quasi-judicial authorities, it follows equally
that it cannot do so in the case of administrative authorities. In ~

j
c the matter of administrative action, it is well known, more than
one choice is available to the administrative authorities; they
have a certain amount of discretion available to them. They have
"a right to choose between more than one possible course of
action on which there is room for reasonable people to hold
differing opinions as to which is to be preferred" (as per Lord
D
Diplock)n Secy of State for Education and Science v. Metro-
politan Borough Council of Tameside, 1976(3) All ER 665 at
pp.695f). The court cannot substitute its judgment for the judg- ~-

ment of administrative authorities in such cases. Only when the
action of the administrative authority is so unfair or unreason-

-
E able that no reasonable person would have taken that action,
can the court intervene. To quote the classic passage from the
judgment of Lord Greene, M.R. in Associated Provincial Pie-
ture Houses Ltd. v. Wednesbury Corpn: (1947 (2) all All ER
pp.682H-683A)
F
"It is true the discretion must be exercised reasonably.
i
Now what does that mean? Lawyers familiar with the
phraseology commonly used in relation to exercise of
statutory discretions often use the word 'unreasonable' in
a rather comprehensive sense. It has frequently been used
G
and is frequently· used as a general description of the
things that must not be done. For instance, a person
entrusted with the discretion must, so to speak, direct "" ~
l

himself properly in law. He must call his own attention to
the matters which he is bound to consider. He must exclude
H
M/S NAGARJUNA CONSTRUCTION CO. LTD. v. . 877
GOVT. OF A. P. & OR
·t
from his consideration matters which are irrelevant to what A
he has to consider. If he does not obey those rules, he
may truly be said, and often is said, to be actin·g
'unreasonably'. Similarly, there may be something so
absurd that no sensible person could ever dream that it
lay within the powers of the authority." B
32. The conclusions regarding absence of prejudice are,
therefore, not sustainable.

33. Natural justice is another name for commonsense jus-
tice. Rules of natural justice are not codified canons. But they are c
principles ingrained into the conscience of man. Natural justice is.
1
the administration of justice in a commonsense liberal way. Jus-
tice is based substantially on natural ideals and human values. The
administration of justice is to be freed from the narrow and restricted
considerations which are usually associated with a formulated law
D
involving linguistic technicalities and grammatical niceties. It is the
-~ substance of justice which has to determine its form.
34. The expressions "natural justice" and "legal justice" do
not present a water-tight classification. It is the substance of
justice which is to be secured by both, and whenever legal jus- E
A tice fails to achieve this solemn purpose, natural justice is called
in aid of legal justice. Natural justice relieves legal justice from
unnecessary technicality, grammatical pedantry or logical pre-
varication. It supplies the omissions of a formulated law. As Lord
Buckmaster said, no form or procedure should ever be permit- F
ted to exclude the presentation of a litigants' defence.

35. The adherence to principles of natural justice as rec-
ognized 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 conse- G
~ quences is in issue. These principles are well settled. The first
--+ and foremost principle is what is commonly known as audi
alteram partem rule. It says that no one should be condemned
unheard. Notice is the first limb of this principle. It must be pre-
. cise and unambiguous. It should appraise the party H
~ ,,
' ~ ~ ~

...
878 SUPREME COURT REPORTS [2008] 14 S.C.R. )>.

--..

A determinatively the case he has to ineet. Time given for the pur- T-·
pose should be adequate so as to enable him to make his rep-
resentation. In the absence of a notice of the kind and such rea-
sonable opportunity, the order passed becomes wholly vitiated.
Thus, it' is but essential that a ·party should be put on notice of
B the case tfefore any adverse order is passed against him. This
. is one of the most important principles of natural justice. It is
·after a11 an approved rule of fair play. The concept has gained -\
significance and shades with time. When the historic document
was made at Runnymede in 1215, the first statutory recognition
c of this principle found its way into the "Magna Carta". The clas-
sic exposition of Sir Edward Coke of natural justice requires to
"vocate interrogate and adjudicate". In the celebrated case of ...
~

Cooper v. Wandsworth Board of Works (1963 (143) ER 414),
the principle was thus stated:
D "Even God did not pass· a sentence upon Adam, before
he was called upon to make his defence. "Adam" says
God, "where art thou has thou not eaten of the tree whereof · ' "r .
I commanded thee that though should not eat" .
.Since then the principle has been chiselled, honed and
E
refined, enriching its content. Judicial treatment has added light
and luminosity to the concept; like polishing of a diamond. ....
·-.. 36. Principles of natural justice are those rules which have
been laid down by the Courts as being the minimum protection
F of the rights of the individual against the arbitrary procedure that
may be adopted by a judicial, quasi-judicial and administrative
authority while making an order affecting those rights. These rules
are intended to preve·nt such authority from doing injustice.
37. Wh~at is meant by the term 'principles of natural justice'
G is not easy to determine. Lord Summer (then Hamilton, L.J.) in
Ray v. Local Government Board (1914) 1 KB 160 at p.199:83 ,..
LJKB 86) described the phrase as sadly lacking in precision. In
General Council of Medical Education & Registration of U. K.
v. Sanckman (1943 AC 627: (1948) 2 All ER 337), Lord Wright
H observed that it was not desirable to attempt 'to force it into any
M/S NAGARJUNA CONSTRUCTION CO. LTD. v. 879
GOVT. OF A. P. & ORS.
·~
procusteam bed' and mentioned that one essential requirement A
was that the Tribunal should be impartial and have no personal
interest in the controversy, and further that it should give 'a full
and fair opportunity' to every party of being heard.
38. Lord Wright referred to the leading cases on the sub-
B
ject. The most important of them is the Board of Education v.
} Rice (1911 AC 179:80 LJKB 796), where Lord Loreburn, LC.
observed as follows:
"Comparatively recent statutes have extended, if they have
originated, the practice of imposing upon departments or c
offices of State the duty of deciding or determining
questions of various kinds. It will, I suppose usually be of
an administrative kind, but sometimes, it will involve matter
of law as well as matter. of fact, or even depend upon
matter of law alone. In such cases, the Board of Education
D
will have to ascertain the law and also to ascertain the
-<f
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 as though it
were a trial.. .. The Board is in the nature of the arbitral ·E
tribunal_, and a Court of law has no jurisdiction to hear
appeals from the determination either· upon law 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 F
the Act to determine, then there is a remedy by mandamus
and certiorari".

Lord Wright also emphasized from the same decision the
observation of the Lord Chancellor that the Board can obtain
G
..., information in any way they think best, always giving a fair op-
portunity to those who are parties to the controversy for correct-
ing or contradicting any relevant statement prejudicial to their
view". To the same effect are the observations of Earl of
Selbourne, LO in Spackman v. Plumstead District Board of
H
880 SUPREME COURT REPORTS [2008] 14 S.C.R.

--t' .
A 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 person who is to decide is to proceed, law will imply
no more than that the substantial requirements of justice
B shall not be viotated. 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 the
matter and he must act honestly and impartially and not
c 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".
D
Lord Selbourne also added that the essence of justice
consisted in requiring that all parties should have an opportu- )-
nity 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
E rule of natural justice contained in the oft-quoted phrase 'justice
should not only be done, but should be seen to be done'.
39. Concept of natural justice has undergone a great deal
of change in recent years. Rules of natural justice are not rules
F embodied always expressly in a statute or in rules framed there-
under. They may be implied from the nature of the duty to be
performed under a statute. What particular rule of natural jus-
, tice should be implied and what its context should be in a given
case must depend to a great extent on the fact and circum-
stances of that case, the frame-work of the statute under which
G
the enquiry is held. The old distinction between a judicial act ...
and an administrative act has withered away. Even an adminis-
~
trative order which involves civil consequences must be con-
sistent with the rules of° natural justice. Expression 'civil conse-
quences' encompasses infraction of not merely property or per-
H
M/S NAGARJUNA CONSTRUCTION CO. LTD. v. 881
GOVT. OF A. P. & ORS .
._ T.
sonal rights but of civil liberties, material deprivations, and non- A
pecuniary damages. In its wide umbrella comes everything that
affects a citizen in his civil life.
40. 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 jus- 8
) tice'. In James DunberSmith v. Her Majesty the Queen (1877-
78(3) App.Case 614, 623 JC) Sir Robert 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) C
App. Case 229, 240), Earl of Selbourne, S.C. preferred the
phrase 'the substantial requirement of justice'. In Vionet v. Barrett
(1885(55) LJRD 39, 41), Lord Esher, MR defined natural jus-
tice as 'the natural sense of what is right and wrong'. While,
however, deciding Hookings v. Smethwick Local Board of D
Health-(1890 (24) QBD 712), Lord Fasher, M.R. instead of us-
--1 / ing the definition 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
Appeal countered natural justice with 'fair-play in action' a phrase E
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'. In fairmount Investments Ltd. v. Secretary to State
for Environment (1976 WLR 1255) Lord Russell of Willowan F
r- somewhat picturesquely described natural justice as 'a fair crack
of the whip' while Geoffrey Lane, LJ. In Regina" v. Secretary of
State for Home Affairs Ex Pa rte Hosenball ( 1977 ( 1) WLR 766)
preferred the homely phrase 'common fairness'.
41. How then have the principles of natural justice been G
,~ interpreted in the Courts arid within what limits are they to be
confined? Over the years by a process of judicial interpretation
two rules have been evolved as representing the principles of
natural justice in judicial process, including therein quasi-judi-
cial and administrative process. They constitute the basic ele- H
882 SUPREME COURT REPORTS [2008] 14 S.C.R.

A ments of a fair hearing, having their roots in the innate sense of
man for fair-play and justice which ·is not the preserve of al'.ly
particular race or country but is shared in common by all men.
The firs_t rule is 'nenio judex in causa sua' or 'nemo debet esse
judex in propria causa sua' as stated in (1605) 12 Co.Rep.114
8 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' (C.o: Litt. 1418), that is, 'no man
ought to be a judge in his own ·case, hecause he cannot'-act as
Judge and at the same time be a party'. The form 'nemo potest
esse sim~I actor et judex', that is, 'no one can be at once suitor
C 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 de- ·
duced from the above two rules and particularly the audi alteram
D partem rule; namely 'qui aliquid statuerit parte inaudita alteram
· actquam licetdixerit, haud acquum facerit' that is, 'he who shall .
decide anything without the other side having been heard,. al-"
though 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
E in other words, as it is now expressed, 'justice should not only
be done but should manifestly be seen to be done'. 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
F assailed by virtue of Its inherent defect, but the proceedings
are not terminated. ··
42. We, therefore, set aside the impugned order of the High
Court. The matter is remitted to the State Government to re-con-
sider the matter after supplying to the appellants copies of re-
G ports/inspection notas on which the Department case rests. It shall
also consider the effect of the concession made by the Depart-
ment in the earlier rounds of proceedings before the High Court.
43. The appeals are allowed but without any order as to costs.
H D.G. Appea,ls allowed.