MANAGEMENT OF M/S M.S. NALLY BHARAT ENGG. CO. LTD.versusSTATE OF BIHAR & ORS.

           MANAGEMENT OF MIS M.S. NALLY BHARAT
A                    ENGG. CO. LTD.
                                       v.
                        STATE OF BIHAR & ORS.

                            FEBRUARY 9, 1990
B
       [K. JAGANNATHA SHETTY AND T.K. THOMMEN, JJ.]

          Industrial Disputes Act, 1947: Section 33-B-Transfer of pro-
    ceedings-Obligation to record reasons-Whether mandatory-Denial
    of opportunity to management to represent-Order whether vitiated.
c         Sub-section (1) of S. 33-B of the Industrial Disputes Act, 1947
    provides that the appropriate Government may, by order in writing
    ~nd for reasons to be stated therein, withdraw any proceedings pending
    before a Labour Court or Tribunal and transfer it for disposal to
    another Labour Court or Tribunal.
D
          Respondent No. 4, a workman of the appellant-company at
    Dhanbad, was caught red-handed while stealing certain goods. The
    domestic enquiry found him guilty of committing theft. Consequently,
    he was dismissed from service. The dispute arising therefrom was refer-
    red to the Labour Court, Dhanbad under S. IO(l)(c) of the Act for
E   adjudication. When the matter was pending consideration the respon-
    dent sought transfer of the case to the Labour Court at Patna on the
    plea that since he was residing at his village near Patna it would be
    difficult for him to attend the proceedings at Dhanbad. That application
    was made without intimation to the management. The Government,
    however, without giving opportunity to the management transferred
F   the case to Patna by a notification dated August 8, 1988 issued under
    S. 33B of the Act. The writ petition filed by the management seeking to
    quash the notification was dismissed by the High Court on the view that
    no prejudice was being caused to the management and no allegation of
    ma/a fide had been made against the presiding officer.

G         Allowing the appeal by special leave, the Court.

          HELD: 1.1 The power to transfer a pending case uner S. 33B of
    the Industrial Disputes Act is not a mere administrative but quasi-
    judicial power and the appropriate Government cannot transfer a case
    on the basis of allegations of one party without giving a reasonable
H   opportunity to the other party to represent its point of view. Such

                                      290
                    NALLY BHARAT CO. v.STATE OF BJHAR                    291

    allegations may not be valid or relevant or may not be true at all. That
    could be tested only if the other patty has notice of the same. [296A-C]    A

          Punjab Worsted Spinning Mills, Chheharta v. State of Punjab &
    Ors., [1965] II LLJ 218 and Management of Sri Rani Lakshmi Ginning
    & Weaving Mills Ltd. v. State of Madras, [1975] 3 FLR 166, referred
    ~.                                                                          B
         Jay Engineering Works Ltd. v. Fourth Industrial Tribunal,
    Calcutta, [1977] (Lab) I.C. 1739; Muthe Steels (India) Ltd. v. Labour
    Court, Hyderabad, [1979] (Lab) I.C. 325 and Pioneer Ltd. v. Labour
    Court, Gorakhpur, [1983] (Lab) I.C. 335, overruled.

          1.2 What is important in the modern administration is the fair-       c
    ness of procedure with elimination of element of arbitrariness, for fair-
    ness is a fundamental principle of good administration. It is a rule to
    ensure that vast power in the modern State is not abused but properly
    exercised. The State power is used for proper and not for improper
    purposes. The authority is not misguided by extraneous or irrelevant        D
'   consideration. Fairness is also a principle to ensure that statutory
    authority arrives at a just decision either in promoting the interest
    or affecting the rights of persons. The concept that 'justice should
    not only be done but be seen to be done' is the essence of fairness and
    is equally applicable to administrative authorities. Fairness is thus
    a prime test for proper and good administration. It has no set form or      E
    procedure. It does not necessarily r-equire a plurality of hearings or
    representations and counter representations. It depends upon the facts
    of each case. [297C, 299C-E]

          Ridge v. Baldwin, [1964] AC 40; A.K. Kraipak & Ors. v. Union
    of India, [1970] l SCR 457; Keshav Mills Co. Ltd. v. Union of India, F
    [1973] 3 SCR 22; Pearlbergv. Varty, [1972] l WLR 534, 547; Mohinder
    Singh Gill v. Chief Election Commissioner, [1978] 1 SCC 405; Maneka
    Gandhi v. Union of India, [1978] 2 SCR 621; Swadeshi Cotton Mills v.
    Union of India, [1981] 1 SCC 664; Royappa v. State of Tamil Nadu,
    [1974] 2 SCR 348; Union of fadia v. Tulsi Ram, [1985] (Supp.) 2 SCR
    131; Charan Lal Sahu & Ors. v. Union of India, JT 1989 4 SC 582; G
    Natural Justice by Paul Jackson, 2nd ed. p. 11 and Pannalal Binjraj &
    Anr. v. Union of India, [1957] 31ITR565, referred to.

          1.3 In the instant case, the State had withdrawn the pending
    reference from the Labour Court, Dhanbad and transferred it to
    another Labour Court at the distant District of Patna, on the represen- H
    292                   SUPREME COURT REPORTS            [1990) l S.C.R.

A   talion of the workman without getting it verified from the management.
    The State in fairness ought to have got it verified by giving an oppor-
    tunity to the management which was a party to the pending reference.
    The management was not required to establish particular prejudice
    for want of such opportunity. The non-observance of natural justice
    was itself prejudice to the management and proof of prejudice indepen-
B
    dently of proof of denial of natural justice was unnecessary. Denial of
    the opportunity to the management was thus a fatal flaw to the decision
    of the Government. [300H-301A, B-D)

         S.L. Kapoor v. Jagmohan, [1981) I SCR 746 and Altco Ltd. v.
    Sutherland, [1971] 2Lloyd's Rep. 515, referred to.
c
          2. The expression 'may' in Suh-s. (1) of S. 33B of the Act only
    makes it discretionary in so far as the appropriate Government taking a
    decision as to whether the power conferred thereunder has to be exer-
    cised or not. But when once a decision has been taken to transfer a
    pending case then the requirement of giving reasons becomes manda-
D   tory. The authority would be under legal obligation to record reasons in
    support of its decision. Failure to give reasons or giving reasons not
    germane would thus be fatal to the decision. [295C-D)

         Associated Electrical Industries (P) Ltd. v. Its Workmen, [1961)
    II LLJ 122 and Ajanta Industries v. Central Board of Taxes, [1976] 2
E   SCR 884, referred to.

          2.2 In the instant case, the Government has stated that the work-
    man was having his residence at his village near Patna and it would be,
    therefore, inconvenient for him to attend the Labour Court regularly at
    Dhanbad. Most of the factors, however, do not point that way. The
F   workman and his family members seem to be still residing in the colony
    quarter at Dhanbad. His two sons are studying in a school at a nearby
    village. The letter dated September 8, 1988 of the Headmaster of the
    said school speaks of that fact. The letter from the Assistant Electrical
    Engineer in proof of the electricity supplied to the quarter occupied by
    the workman at Dhanbad is also relevant. As against these materials,
G   the workman has not produced any proof in support of his allegation
    that he has been residing in a village home near-Patna. He has not
    denied the documents annexed to the special leave petition and not
    seriously disputed the factum of his residence in the colony quarter at
    Dhanbad. The Government was, therefore, misled by the representa-
    tion of the workman. [JOIE-HJ
H
     NALLY BHARAT CO. v. STATEOFBIHAR [JAGANNATHASHETIY,J.J              293

           3. The notification dated August 8, 1988 is quashed. The Labour
                                                                                A
     Court, Dhanbad shall proceed to dispose of the matter as expeditiously
     as possible. [302Al

           CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1102
     of 1990.
                                                                                B
          From the Judgment and Order dated 7.10.1988 of the Patna High
     Court in C.W.J.C. No. 2075 of 1988.

          A.K. Sen, K.D. Prasad, J. Krishna and Mrs. Naresh Bakshi for
     the Appellant.

           S.K. Sinha and U.S. Prasad for the Respondents.                      c

           The Judgment of the Court was delivered by:

           K. JAG ANNA THA SHETTY, J. Special Leave is granted.
                                                                                D
          This appeal from an order oI the Patna High Court raises an
)    important question as to the scope of section 33-B of the Industrial

l    Disputes Act, 1947 ('The Act').

            'I'he facts can be quite shortly stated: The appellant-company is
     mainly engaged in construction of coal washeries on contract basis in      E
     different collieries and also doing allied and incidental work. Shivaji
     Prasad Sinha-respondent No. 4 was a Senior Supervisor in the com-
     pany's establishment at Dhanbad. It is said that he was caught red
     handed when carrying 55 pieces of e1ectromagnetic clutch plates kept
     concealed in the tool box of his scooter. The management held
     domestic enquiry into the incident and found him guilty of committing      F
     theft. He was accordingly dismissed from service. The dispute arising
     therefrom was referred under Section JO(J)(c) of the Act to Labour
     Court Dhanbad for adjudication. The Labour Court registered the
     case as reference case No. 4 of 1988 and issued notice to the parties.
     The parties entered appearance and filed their respective pleadings.
     When the matter was thus pending consideration the respondent              G
     seems to have written to the Government stating that it would be

-<   difficult for him to attend the Labour Court Dhanbad since he has
     been residing at Hajipur and it would be convenient for him if the case
     is transferred to Labour Court Patna. That application was made with-
     out intimation to the management. The Government however, has
     acceded to the request of the respondent and without opporiunity to        H
                                                                \




    294                  SUPREME COURT REPORTS            I1990] 1 S.C.R.

    the management transferred the case to Labour Court Patna. The
A   Notification issued in that regard reads as follows:

               "NOTIFICATION                  Patna dated 8th August 1988

               S.O. In exercise of powers conferred by sub-section (1) of
B              Section 33-B of the Industrial Disputes Act, 1947 (14 of
               1947) the Governor of Bihar after careful consideration of
               the application of the petitioner Shri Shivajee Prasad Sinha
               wherein he has prayed for the transfer of adjudication pro-
               ceedings to Patna keeping in view to the difficulties expres-
               sed by him to attend the labour court, Dhanbad, regularly
               due to his residence at Ha jipur is pleased to withdraw the
c              proceeding shown in Annexure 'A' pending before Labour
               Court, Dhanbad and transfer the said proceeding to the
               Labour Court, Patna for speedy disposal from the stage at
               which the case is transferred."

D         The management moved the High Court by way of writ petition .
    under Article 226 of the Constitution to. have the Notification
    quashed. The High Court did not agree and summarily dismissed the
    writ petition with an observation:

               "Since no prejudice is being caused to the petitioner and no
                                                                               J
E              allegation of mala fide has been made against the presiding
               officer, Patna, we are not inclined to interfere with the
               order under challenge.

                    This application is dismissed"

F         The management in the appeal challenges the Government
    notification withdrawing and transferring the pending case from the
    Labour Court Dhanbad to Labour Court Patna.

         Since the impugned notification has been issued under Section
    33-B of the Act, we may for immediate reference set out that Section.
G   Omitting immaterial words, it is in these terms:

               "33.B. Power to transfer certain proceedings:

               (I) The appropriate Government may, by order in writing
               and for reasons to be stated therein, withdraw any proceed-
H              ing under this Act pending before a Labour Court,
     NALLY BHARAT CO. v. STATEOFB!HAR [JAGANNATHASHETTY,J.]              295

                Tribunal, or National Tribunal and transfer the same to
A               another Labour Court, Tribunal or National Tribunal, as A
                the case may be, for the disposal of the proceeding and the
                Labour Court, Tribunal or National Tribunal to which the
                proceeding is so transferred may, subject to special direc-
                tions in the order of transfer, proceed either de nova or
                from the stage at which it was so transferred."             'B

.r          The Section 33-B provides power to the appropriate Government
     to withdraw any proceedings pending before a labour court or Tri-
     bunal and transfer it for disposal to another labour court or Tribunal.
     It could be exercised suo motu or on representations of the parties.
     The expression 'may' in sub-section (1) of Section 33-B only makes
     it discretionary in so far as the appropriate Government taking a decision c
     as to whether the power conferred thereunder has to be exercised or
     not. But when once a decision is taken to transfer a pending case then
     the requirement of giving reasons becomes mandatory. The authority
     is under legal obligation to record reasons in support of its decision.
     Reasons would be life of the decision. Failure to give reasons or giving D
     reasons not germane would be fatal to the decision.


L            In Associated Electrical Industries (P) Ltd. v. Its Workmen,
      [ 1961] II LLJ 122, 130 the Government withdrew and transferred a
     .reference from one tribunal to another tribunal merely stating that
      expediency required the withdrawal and transfer. The validity of the E
      order of withdrawal and transfer was challenged inter-alia on the
      ground that no reasons were stated for passing.the order. Gajendraga-
      dkar, J., (as he then was) speaking for this Court observed that the
      requirement about the statement of reasons to be recorded must be
I
      complied with both in substance and in letter. To say that it is expe-


~
      dient to withdraw a case from one tribunal and transfer it to another F
      does not amount to giving reasons as required by the Section.

           In the instant case, the key question for consideration is whether
     the Government before accepting .the representation of the workman
     and transferring the case from the labour court, Dhanbad to labour
     court, Patna should have given an opportunity to the management? G
     The validity of the reasons given by the Government for transferring
-(   the case is another question to be considered.

           We will presently consider the question but before doing so a
     brief survey of some of the High Courts decisions bearing on this aspect
     may be usefully made. The Punjab High Court in Workman of Punjab H
    296                   SUPREME COURT REPORTS            [1990] I S.C.R.

    Worsted Spinning Mills Chheharta v. State of Punjab & Ors., [1965] ll
A
    LLJ 218 has expressed the view that the power to transfer pending case
    under section 33-B is not a mere administrative but quasi-judicial
    power and the appropriate Government cannot transfer a case on the
    basis of allegations of one party without giving reasonable opportunity
    to other party to represent its point of view. This was also the view
B   recognised by the Madras High Court in Management of Sri Rani
    Lakshmi Ginning and Weaving Mills Ltd. v. State of Madras, [1975] 3
    fLR 166 at 167. It was explained by the Madras High Court that the
    reasons given by a party who moved for transfer may not be valid or
    relevant or may not be true at all. Whether such reasons in fact exist
    and whether those reasons have any relevance for a transfer could be
    tested only if the other party has notice of the same.
c
          The High Courts of Calcutta, Andhra Pradesh and Allahabad
    have however, taken contrary view. In Jay Engineering Works Ltd. v.
    Fourth Industrial Tribunal, Calcutta, [1977] (Lab) IC 1739 at 1750 the
    Calcutta High Court has observed that it would be difficult to
D   appreciate how under such circumstances, the Government could be
    called upon to give a notice to the parties before making an order
    under section 33-B. There could be no principle involved in giving
    such a notice. Nobody's rights could possibly have been effected in
    taking such action anci there is no question of observing the principle'    j
    of natural justice. The Andhra Pradesh High Court in Muthc Stee/1
E   (India) Ltd. v. Labour Court, Hyderabad, [1979] (Lab) IC 325 at 329
    has adopted a similar line of reasoning. It was emphasized that Section
    33-B in terms does not contemplate any notice being given before a
    transfer is made of any proceeding from one Labour Court to another.
    There is no right to any party to have any question decided by a
    particular court. An arbitrary exercise of power of transfer is
F   adequately safeguarded by the statutory requirement to record
    reasons for such transfer. The Allahabad High Court In Pioneer Ltd.
    v. Labour Court, Gorakhpur, [ 1983] (Lab) IC 335, 338 has also expres-
    sed similar views.

          After the leading English case of Ridge v. Baldwin, [1964] AC 40
G   and an equally important case of this Court in A.K. Kraipak & Ors. v.
    Union of India, [1970] 1 SCR 457 there was a turning point in the
    development of doctrine of natural justice as applicable to administra-
    tive bodies. Both the authorities laid down that for application of rules
    of natural justice the classification of functions as 'judicial' or
    'administrative' is not necessary. Lord Reid in Ridge case explained,
H   'that the duty to act judicially may arise from the very nature of the
    NALLYBHARATCO. v. STATEOFBIHAR[JAGANNATHASHETTY,J.]                  297

    function intended to be performed and it need not be shown to be
                                                                                A
    super added'. Hegde, J., in Kraipak case said that under our Constitu-
    tion the rule of law pervades over the entire field of administration.
    Every organ of the State under our Constitution is regulated and con-
    trolled by the rule of law. The concept of rule of law would lose its
    vitality if the instrumentalities of the State are .not charged with the
    duty of discharging their functions in a fair and just manner. The          B
    requirement of acting judicially in essence is nothing but a require-
r   ment to act justly and fairly and not arbitrarily or capriciously. The
    procedures which are considered inherent in the exercise of a judicial
    power are merely those which facilitate if not ensure a just and fair
    decision.

          What is thus important in the modern administration is the fair-
                                                                                c
    ness of procedure with elimination of element of arbitrariness. The
    State functionaries must act fairly and reasonably. That is, however,
    not the same thing to state that they must act judicially or quasi-
    judicially. In Keshav Mills Co. Ltd. v. Union of India, [1973] 3 SCR 22
    Mukherjea, J., said (at JO):                                                D

               "The administrative authority concerned should act fairly,
               impartially and reasonably. Where administrative officers
               are concerned, the duty is not so much to act judicially as to
               act fairly."
                                                                                E
           The procedural standards which are implied by the duty to act
    fairly has been explained by Lord Pearson in Pear/berg v. Varty, [1972]
     l WLR 534, 547:

               "A tribunal to whom judicial or quasi-judicial functions are
               entrusted is held to be required to apply those principles       F
               (i.e. the rules of natural justice) in performing those func-
               tions unless there is a provision to the contrary. But where
               some person or body is entrusted by Parliament with
               administrative or executive functions there is no presump-
               tion that compliance with the principles of natural justioe is
               required although, as 'Parliament is not to be presumed to       G
               act unfairly', the courts may be able in suitable cases
               (perhaps always) to imply an obligation to act with
(              fairness."

        In Mohinder Singh Gill v. Chief Election Commissioner, [1978] 1
    SCC 405 at 434 Krishna Iyer, J. commented that natural justice though       H
    298                    SUPREME COURT REPORTS             [1990) 1 S.C.R.

    varying is the soul of the rule as fair play in action. It extends to both
A
    the fieids of judicial and administrative. The administrative power in
    a democratic set-up is not allergic to fairness in action and discre-         )
    tionary executive justice cannot degenerate into unilateral injustice.
    Good administration demands fair play in action and this simple
    desideratum is the fount of natural justice. Fairness is flexible and it is
B   intended for improving the quality of government by injecting fairplay
    into its wheels.

          In Maneka Gandhi v. Union of India, [1978) 2 SCR 621
    Bhagwati, J., expressed similar thought that audi alteram partem is a
    highly effective rule devised by the Courts to ensure that a statutory
    authority arrives at a just decision and it is calculated to act as a
c   healthy check on the abuse or misuse of power.

          In Swadeshi Cotton Mills v. Union of India, [1981) 1 SCC 664
    Sarkaria, J., speaking for himself and Desai, J., said that irrespective
    of whether the power conferred on a statutory body or tribunal is
D   administrative or quasi-judicial, a duty to act fairly, that is, in con-
    sonance with the fundamental principles of substantive justice is
    generally implied. The presumption is that in a democratic polity wed-
    ded to the rule of law, the State or the Legislature does not intend that
    in the exercise of their statutory powers its functionaries should act
    unfairly or unjustly. In the same case, Chinnappa Reddy, J., added (at
E   212) that the principles of natural justice are now considered so funda-
    mental as to be 'implicit in the concept of ordered liberty'. They are,
    therefore, implicit in every decision-making function, call it judicial,
    quasi-judicial or administrative. The learned Judge went on to state
    that where the statute is silent about the observance of the principles
    of natural justice, such statutory silence is taken to imply compliance
F   with the principles of natural justice. The implication of natural justice
    being presumptive, it should be followed by the authotities unless it is
    excluded by express words of statute or by necessary.implication.

          Citations could be multiplied since there is fairly abundant case
    law has come into existence: See, for example, Royappa v. State of
G   Tami{Nadu, [l974)2SCR348andUnionofindiav. TulsiRam, [1985)
    (Supp.) 2 SCR 131. More recently in a significant judgment in Charan
    Lal Sahu & Ors. v. Union of India, JT 1989 (4) SC 582 learned Chief
    Justice Sabyasachi Mukharji has referred to almost all the authorities
    of this Court on this aspect and emphasized that the principles of
    natural justice are fundamental in the constitutional set up of this
H   country. No man or no man's right should be affected without an
    NALLY BHARAT CO. v. STATEOFBIHAR (JAGANNATHASHETTY,J.]             299

    opportunity to ventilate his views. The justice is a psychological yearn- A
    ing, in which men ·seek acceptance of their view point by having an
    opportunity before the forum or the authority en joined or obliged to
    take a decision affecting their right.

          It may be noted that the terms 'fairness of procedure', 'fair play
    in action', 'duty to act fairly' are perhaps used as alternatives to B
    "natural justice" without drawing any distinction .. But Prof, Paul Jack-
    son points out that "Such phrases may sometimes be used to refer not
    to the obligation to observe the principles of natural justice but, on the
    contrary, to refer to a standard of behavio11r which, increasingly, the
    courts require to be followed even in circumstances where the duty to
    observe natural justice is inapplicable" (Natural Justice by Paul Jack- C
    son 2nd ed. p. 11).

          We share the view expressed by Professor.Jackson. Fairness, in
(   our opinion, is a fundamental principle of good administration. It is a
    rule to ensure the vast power in the modern state is not abused but
    properly exercised. The State power is used for proper and not for D
    improper purposes. The authority is not misguided by extraneous or
    irrelevant consideration. Fairness is also a principle to ens11re that
    statutory authority arrives at a just decision e_ither in promoting the
    interest or affecting the rights of persons. To use .the time hallowed
    phrase "that justice should not only be done but be seen to be done" is
    the essence of fairness equally applicable to administrative authorities. E
    Fairness is thus a prime test for proper and good administration. It has
    no set form or procedure. It depends upon the facts of each case. As
    Lord Pearson said in Pear/berg v. Varty, (at 547), fairness does not
    necessarily require a plurality of hearings or representations· and
    counter representations. Indeed, it cannot have too much elaboration
    of procedure since wheels of administration m11st move quickly.           F

         A case with a not dissimilar problem was in Pannalal Binjraj and
    Anr. v. Union of India, [1957] 31 ITR 565. There the Commissioner of
    Income Tax by the power vested 11nder section 5(7A) of Income Tax
    Act, 1922, transferred an assessee's case· from one Income Tax Officer
    to another without hearing the assessee. Sec'tion 5(7A) of the Income G
    Tax Act, 1922 provided:

(               "The Commissioner of Income-Tax may iransfer any case
                from one Income-Tax Officer subordinate to him to
                another, and the ·cental Board of Revenue may transfer any
                case from any one Income-Tax Officer to another. Such H

                                                                                  . '
                                                                                    (i
     300                   SUPRjlME COURT REPORTS            [ 1990] I S.C.R.

                 transfer may be made at any stage of the proceedings, and
A                shall not render necessary the re-issue of any notice already
                 issued by the Income tax Officer from whom the case is
                 transferred."

           This Sectjon did not provide for affording an opportunity to the
     !ISSessee before transferring his case from one Income Tax Officer to
     another. The assessee-challenged the constitutional validity of the Sec-
     tion. This Court upheld its validity on the ground that it is a provision
     for administrative convenience. N.H. Bhagwati, J., speaking for this
     Court, however remarked (at 589):

                 " . . . . . it would be prudent if the principles of natural
c'               justice are followed, where circumstances permit, before
                 any order of transfer under section 5(7A) of the Act is
                 made by the Commissioner of Income-Tax or the Central
                 Board of Revenue, as the case may be, and notice is given
                 to the party affected and he is afforded a reasonable
D                opportunity of representing his views on the question and
                 the reasons of the order are reduced however briefly to
                 writing ... There is no presumption against the bona fide
                 or the honesty of an assessee and normally the income-tax
                 authorities would not be justified in refusing to an assessee
                 a reasonable opportunity of representing his views when
                 any order to the prejudice of the normal procedure laid
                 down in section 64( 1) and (2) of the Act is sought to be
                 made against him, be it a transfer from one Income-Tax
                 Officer within the State to an Income-Tax Officer without
                 it, except of course where the very object of the transfer
                 would be frustrated if notice was given to the party
F                affected."

           Section 5(7 A) was replaced by Section 127 of the Income Tax
     Act, 1961, which now makes it obligatory to record reasons in making
     the order of transfer after affording a reasonable opportunity of being
     heard to the assessee in the matter. In Ajantha Industries v. Central
G    Board of Taxes, I1976] 2 SCR 884 this Court considered the validity of
     a transfer order passed under Section 127 and it was held that merely
     recording of reasons on the file was not sufficient. It was essential to
     give reasons to the affected party. The order of transfer in that case
     was quashed for not communicating reasons to the assesse.e,

ff         In the present case, the State has withdrawn the pel)~ip.g refe-
      NALLY BHARAT CO. v. STATEOFBIHAR [JAGANNATHASHETTY,J.]                 301

      rence from the Labour Court, Dhanbad and transferred it to another            A
      Labour Court at the distant District of Patna, on the representation of
      the workman, without getting it verified from the management. The
      State in fairness olight to have got it vefified by giving an opportuflit)'
      to the management which is a party to the pending reference. Denial
      of that opportunity is a fatal flaw to the decision of the Goveriiineii!.

             The iilartagerilent need not esiabtish particular prej.udice fot
      want of such npportiinity, lri S.L kapoor v. Jagmohan, [1981i 1 SCR
      746 at 765 Chirtna)Jpa Reddy, J,, after referring to the observation of
      Donaldson, i., in AltcO Ltd. v. Sutheriand; [1971) 2 Lloyd's Rep. 515
      said that the concept that justice inust not only be done but be seen tO
      be done is basic to out system arid it is conerned not witii a case of C
      actual injustice but with the appearance of injustice or possibie
      injustice, It was emphasized that the principles of natural justice know
      of rlo exclusionary fiiie dependent on whether it would have made atty
      difference if natutai justice had beeri observed, The non-obsetvatke of
      natural justice is itseif ptejudice to any mah and proof of prejudke f)
      independently of proof of denial of natural justice is unnecessary.

            This takes us to the reasons given by the Gdverinrient iii Support
 I    of the order of ttansfot. The Govetnineni has stated that the workman
/l.   is having his residence at Hajijlur and ii wouid be therefore, iricon-
      veiiienl for him to attend the la56ur court tegulariy at bhanbad, How' E
      ever, most of the factors do riot point that way. The workman aiid his
      family members seem to be still residirtg in colony quarter at Dhartbad
      (Annexure C). His two s6ris ate studying in De Nobili School at
      Mugma Which is a rteilfby village, Reference may be made to a letter
      dated September S; 1988 (Annexute D) of the Headmaster of tlie
      Schooi in which the children of the workman ate sWdying, Refeteiice fl
      may also be made to a letter (Arinexute E) fto!h ilie Assistant EiMlfl'
      cal Engineer in proof of tiie eieciticity supplied to the quarter occupied
      by the workman at bhanbad. As against these itiatetial; the wotkiiiiili
      has noi produced any proof iil support of his aliegatioll that Ile hiis
      been residing in a village home near Patna. In fact; iri the eotifi!er-
      affidavit, he lias riot denied tlie documents annexed to !lie Sjletii!l       o
      Leave Petition, and riot seriously disputed the factuiil of his tesidertce
      in the colony quarter at Dhailbad. Even the alleged tecoriiinellda!ion
      of the Ward Cominissioner referred ii! his couri!etcaffidavit has iibl
      been ptodliced.   we  have; tlietefore, no liesitatioii in holdiilg thiit the
      Govetfitiient Was misted hy tlie tepteselltatiofl of fii.e wotkiiiaiJ,
                                                                                    H
    302                     SUPREME COURT REPORTS             ['1990] 1 S.C.R.

A         In the result, we allow the appeal and quash the notification
    dated August 8, 1988 by which the Government of Bihar transferred
    the case from the Labour Court, Dhanbad to the Labour Court, Patna.          )
    The Labour Court, Dhanbad shall now proceed to dispose of the mat-
    ter as expeditiously as possible.
B    _,,    In the circumstances of the case, we make no order as to costs.

    P.S.S                                                    Appeal allowed.




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