Principles of Natural Justice VIII / The Revival of Ray XCI

Posted on by Rudrajyoti Nath Ray

RBI has been issuing ‘Master Directions’ on diverse issues since 2016.

Every proceeding which involves civil consequences or adversely affects a citizen should be in accordance with Principles of Natural Justice. Erusian Equipment & Chemicals Ltd. v. State of West Bengal, (1975) 1 SCC 70 held, since blacklisting affects privileges of a blacklisted person, fundamentals of fair play require, such a person be provided an opportunity of being heard. Mangilal v. State of Madhya Pradesh, (2004) 2 SCC 447 held, statutory silence should be taken to imply need to observe Principles of Natural Justice. Cantonment Board v. Taramani Devi, 1992 Supp (2) SCC 501 held, audi alteram partem is a part of Article 14.  

‘Master Directions on Frauds’ entails significant civil consequences and do not expressly provide an opportunity of being heard. Thus, audi alteram partem must then be read into ‘Master Directions on Frauds’ to save them from vice of arbitrariness.

– Hon’ble Chief Justice of India, Hon’ble Justice Dr. D.Y. Chandrachud, State Bank of India v. Rajesh Agarwal, [Civil Appeal No. 7300 of 2022].

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Blacklisting has always been viewed by this Court as a drastic remedy, subject to rigorous scrutiny [See, Erusian Equipment & Chemicals Ltd. v. State of West Bengal, (1975) 1 SCC 70; B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd., (2006) 11 SCC 548; Kulja Industries Ltd. v. Chief General Manager Western Telecom Project BSNL, (2014) 14 SCC 731]. What is significant is, while setting out guidelines prescribed in USA, Court in Kulja Industries Ltd. noticed, comprehensive guidelines for debarment were issued there for protecting public interest from those contractors and recipients who are non-responsible, lack business integrity or engage in dishonest or illegal conduct or are otherwise unable to perform satisfactorily.

In a case of an ordinary breach of contract, where explanation offered raises a bona fide dispute, blacklisting/debarment as a penalty ought not to be resorted to; debarring a person, albeit for a certain number of years, is civil death resulting in serious consequences.  

– Hon’ble Justice K.V. Viswanathan, Blue Dreams Advertising Pvt. Ltd. v. Kolkata Municipal Corporation, [Special Leave Petition (Civil) No. 11682 of 2018] decided on 07.08.2024.

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'The Last Word' seeks to include not only wise and witty sayings but also curiosities. These words are not of obligation but of delight. I am not alone in my refusal to believe, law is tedious. For all who escaped these percipient eyes, mea culpa maxima. History, after all, has many cunning passages, contrived corridors and issues.