Delhi High Court
M/S Ar Airways Pvt Ltd vs Union Of India & Ors. on 15 February, 2021
$~14
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision:15.02.2021
+ W.P.(C) 6109/2020 & CMs 21956/2020, 21958/2020
M/S AR AIRWAYS PVT LTD ..... Petitioner
Through Mr.Mukul Rohatgi, Sr. Adv.
and Mr.P.S.Narasimha, Sr.
Adv. with Mr.Abhishek Singh,
Mr.Rohan Jaitley,
Mr.A.K.Sinha, Mr.Amit Bhalla,
Mr.Shreshth Arya, Mr.Kanti,
Ms.Aditi Tripathi, Advs.
versus
UNION OF INDIA & ORS. ..... Respondents
Through Mr.Anil Soni, CGSC with
Mr.Devesh Dubey, Adv. for R-
1 to 3.
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA
NAVIN CHAWLA, J. (Oral)
1. The present petition was filed by the petitioner challenging the
Show Cause Notice dated 30.07.2020 issued by the respondent no. 2
to the petitioner, informing the petitioner that based on the inputs
received from the respondent no.3/Ministry of Home Affairs, the
respondent no. 1/Ministry of Civil Aviation vide its letter dated
26.06.2020 has denied the renewal of security clearance of the
petitioner. The Show Cause Notice mentioned that in view of the
denial of security clearance, the petitioner did not remain in
W.P.(C) No.6109/2020 Page 1
compliance with Para 11 of the Civil Aviation Regulations Section -3,
Series-C, Part-III and, therefore, the petitioner was called upon to
show cause as to why its Air Operator Permit be not cancelled.
2. This petition was first listed before this Court on 08.09.2020 till
when the petitioner was communicated the impugned orders dated
03.09.2020 and 04.09.2020, rejecting the approval of the Aircraft
Operator Security Program of the petitioner relying upon the denial of
security clearance to it and cancelling the Airport Entry Permits to its
employees.
3. The petitioner was also communicated an order dated
07.09.2020 whereby the respondent no.2 cancelled the Air Operator
Permit of the petitioner. The said communication inter alia recorded
that the reply received from the petitioner to the Show Cause Notice
was forwarded to the "Appropriate Authority for review and
comments." The Appropriate Authority, that is the respondent no.1,
reiterated its decision of denying the security clearance to the
petitioner vide its letter dated 01.09.2020. As the security clearance is
a pre-requisite for grant/renewal of the Air Operator Permit, the permit
of the petitioner was cancelled.
4. This Court vide its interim order dated 08.09.2020 stayed the
operation of the communication dated 07.09.2020 and 04.09.2020.
5. The petitioner thereafter filed an amended petition challenging
the subsequent orders dated 03.09.2020, 04.09.2020 and 07.09.2020 as
well.
W.P.(C) No.6109/2020 Page 2
6. The learned senior counsel for the petitioner submits that the
Impugned Orders are in violation of the principles of natural justice
inasmuch as the Show Cause Notice did not give the reasons for denial
of the security clearance to the petitioner. Demand of such reasons
was made by the petitioner even in its reply dated 10.08.2020 to the
show cause notice, however, instead of supplying the same, the
Impugned Orders dated 03.09.2020, 04.09.2020 and 07.09.2020 were
issued by the respondent nos. 1 and 2. He submits that in absence of
the reasons for denial of security clearance, the petitioner was clearly
prejudiced in answering the Show Cause Notice.
7. The learned senior counsel for the petitioner further submits that
even the Impugned Orders dated 03.09.2020, 04.09.2020 and
07.09.2020 did not give the reasons for denial of security clearance to
the petitioner. The said orders were in the nature of a „civil death‟ to
the petitioner inasmuch as they stopped the operation of the petitioner.
He submits that such order cannot, therefore, be sustained in absence
of reasons.
8. The learned senior counsel for the petitioner in support of his
submissions has also relied upon the judgment and order dated
02.02.2015 passed by this Court in WP(C) No.9131/2014, titled
Jindal Steel and Power Ltd. and Anr. vs. Union of India and Ors.,
wherein this Court in similar circumstances had directed the Show
Cause Notice to be treated as withdrawn and directed the respondent
no. 2 to serve a fresh notice on the petitioner therein for it to have an
opportunity of giving an effective reply. He further places reliance on
W.P.(C) No.6109/2020 Page 3
the judgment of this Court in A.K. Sharma vs. Director General of
Civil Aviation & Ors., MANU/DE/0443/2002 to contend that the
principles of natural justice would find application to the facts of the
present case.
9. The learned senior counsel for the petitioner further submits that
it is only in the Counter Affidavit now filed by the respondent no.3,
that it has been disclosed that the security clearance of the petitioner
was cancelled because of a criminal case registered against Sh.Ashok
Kumar Chaturvedi, who was considered as a beneficial owner of the
petitioner, and had been convicted in the said case. He submits that as
far as the said criminal case is concerned, Mr.Chaturvedi has been
released on bail by the High Court of Allahabad by an order dated
13.12.2010. The appeal of Mr.Chaturvedi challenging his conviction is
still pending before the High Court. He further submits that such
conviction has been treated as a disqualification under the Guidelines
dated 25.06.2018, however, the Guidelines not being in the public
domain, the petitioner is unable to make submissions if the conviction
of Mr. Chaturvedi could at all be considered as a disqualification
under the said Guidelines.
10. The learned senior counsel for the petitioner submits that the
conviction of Mr.Chaturvedi was in the year 2010 and his appeal has
been pending since that date. The petitioner was granted the Air
Operator Permit in 2005, which has been renewed from time to time,
lastly on 02.05.2019 till 11.05.2024. It is not shown by the respondent
W.P.(C) No.6109/2020 Page 4
as to how, based on such facts, the security clearance of the petitioner
could have been denied in the year 2020.
11. On the other hand, the learned counsel for the respondents
submits that the Air Operator Permit itself was made subject to grant
of security clearance in favour of the petitioner. He submits that the
petitioner, therefore, cannot obtain any benefit of such provisional
extension of the Air Operator Permit granted to the petitioner.
12. As far as the security clearance is concerned, the learned
counsel for the respondents submits that the petitioner did not disclose
in its application that Mr.Chaturvedi was the ultimate beneficial owner
of the petitioner company. This fact came to light only upon an
enquiry being raised by the Ministry of Home Affairs and response
thereto by the petitioner vide its letter dated 30.08.2019.
13. He submits that the conviction of Mr.Chaturvedi is itself a valid
ground for refusing the grant of security clearance to the petitioner.
14. The learned counsel for the petitioner further submits that the
respondents were under no obligation to disclose these facts in the
Show Cause Notice and/or in the Impugned Order denying the
renewal of the Air Operator Permit to the petitioner, as these are secret
in nature and need not be disclosed.
15. He lastly submits that even otherwise, the petitioner had an
alternate efficacious remedy in form of an appeal under Rule 3B of the
Aircraft Rules, 1937.
W.P.(C) No.6109/2020 Page 5
16. I have considered the submissions made by the learned counsels
for the parties.
17. It is not denied that the Air Operator Permit was granted to the
petitioner in the year 2005 and has been renewed from time to time
since that day. The last renewal of the permit, though provisional in
nature and subject to grant of security clearance, was on 02.05.2019
till 11.05.2024.
18. The Show Cause Notice dated 30.07.2020 issued to the
petitioner inter alia stated as under:
"Whereas, Ministry of Civil Aviation vide Letter
No.AV.14015/290/2015-DT dated 26 June 2020 conveyed
denial of renewal of security clearance of company and its
Board of Directors i.r.g. M/s AR Airways Pvt. Ltd. on the basis
of inputs received from Ministry of Home Affairs(MHA).
Whereas, due to denial of Security Clearance, M/s AR
Airways Private Limited doesn‟t remain in compliance with
Para 11 of CAR Section-3, Series-C, Part-III and as the instant
renewal issued vide letter AV.14015/11/2008-AT-I dated
02.05.2019 was subject to receipt of fresh security clearance
from MHA, and therefore, the subject renewal of AOP can‟t
remain in force.
In view of the above, M/s AR Airways Private Limited is
hereby directed to Show Cause as to why its AOP No.01/2005
should not be cancelled or suspended as per Sub-Rule (5) of
Rule 134A of the Aircrafts Rules, 1937 to be read in conjunction
with the para 12 of CAR Section-3, Series-C, Part-III, in view of
the denial of security clearance by Ministry of Civil Aviation
and consequent non compliance of para 11 of the subject CAR."
W.P.(C) No.6109/2020 Page 6
19. The Show Cause Notice, therefore, did not disclose the reasons
for denial of security clearance to the petitioner company. Clearly, in
absence thereof, the petitioner was handicapped in giving any
effective reply to the same.
20. The petitioner, by its letter dated 10.08.2020, even sought the
reasons/grounds upon which its security clearance had been
withdrawn. The respondent no. 1, however, issued the Impugned
Letter dated 03.09.2020, rejecting the approval of the Aircraft
Operator Security Program of the petitioner relying upon the denial of
security clearance to it. By the Impugned Order dated 04.09.2020, the
respondent no. 1 also cancelled the A.E.P. (Aerodrome Entry Permit)
and T.A.E.P (Temporary Aerodrome Entry Permit) to the petitioner.
21. The Impugned Order dated 07.09.2020 was thereafter issued,
stating inter-alia as under:
"4. Whereas, as per direction issued by MoCA vide letter
dated 27.07.2020 and as per existing regulations, a Show Cause
Notice (SCN) dated 30 July 2020 was issued to M/s AR Airways
Pvt. Ltd. as to why their AOP No.01/2005 should not be
cancelled or suspended due to withdrawal of Security
Clearance and M/s AR Airways Pvt. Ltd. was asked to submit
the reply to this office within 15 days of the issuance of Show
Cause Notice.
5. Whereas, M/s AR Airways Pvt. Ltd. submitted their reply to
this office Show Cause Notice dated 30 July 2020 and the reply
submitted by the AR Airways was forwarded to the appropriate
authority vide DGCA letter dated 20.08.2020, for review and
comments. The appropriate authority i.e. MoCA after review on
the basis of inputs given by MHA, reiterated the decision of
denying the security clearance of the Operator vide its letter
W.P.(C) No.6109/2020 Page 7
dated 01.09.2020 and accordingly, the security clearance in
respect of the Operator stands denied.
6. After careful examination of the facts of the case, all the
material on record, submissions made by the Operator and
comments & directions of MoCA, I am of a considered view
that:
i. The Security Clearance is a pre-requisite for grant,
renewal & continued validity of AOP and the security clearance
of the Operator stands denied by the competent authority i.e.
MoCA on the basis of inputs provided by the Competent
authority i.e. MHA.
ii. The submissions made by the Operator in reply to the
Show Cause Notice dated 30.07.2020 issued by the DGCA have
been examined by the competent authority i.e. MoCA and after
reviewing the material on record the competent authority has
reiterated the denial of security clearance and with this
reiteration there is no ambiguity in respect of denial of security
clearance of the Operator and consequently the Operator does
not remain in compliance with the provisions of para 11.3 of
DGCA Civil Aviation Requirements (CAR) Section 3 Series C
Part III.
iii. In renewal letter dated 02.05.2019, it was categorically
spelt out that renewal of AOP is subject to receipt of fresh
security clearance and AOP shall be liable to be suspended or
revoked if any adverse input or directions are received. Thus,
the continuation of AOP was contingent upon receipt of fresh
security clearance of the company and its directors and he same
was known to the operator.
iv. In view of nature of operation, the security clearance of
an entity involved in Non-Scheduled Air Transport Service is
sine-qua-non and cannot be seen in isolation.
v. Since, the security clearance is a pre-requisite for
grant/renewal of Air Operator Permit, the Air Operator Permit
No. 01/2005 issued to M/s AR Airways Pvt. Ltd. cannot remain
in force due to non availability/withdrawal of security
W.P.(C) No.6109/2020 Page 8
clearance of company and its Board of Directors i.r.o. M/s AR
Airways Pvt. Ltd.
8. Therefore, in view of above and in exercise of powers under
sub-rule 5 of Rule 134A of the Aircraft Rules, 1937 read along
with Para 11.3 and Para 12 of DGCA CAR Section 3 Series C
Part III, the Air Operator Permit No. 01/2005 in respect of M/s
AR Airways Pvt. Ltd. stands cancelled with immediate effect
and the Operator is hereby directed to surrender Air Operator
Permit No. 01/2005 to this office immediately but not later than
within one week from the date of issue of this Order."
22. A perusal of the impugned letters would show that apart from
merely reiterating that the security clearance of the petitioner had been
cancelled and that the respondent no. 1 had reiterated its decision
revoking the security clearance, no other reason was cited in the
Impugned Orders. The petitioner clearly remained unaware as to why
its security clearance had been revoked.
23. In A.K. Sharma (Supra), this court reiterated that the principles
of natural justice would naturally come into play even in respect of an
administrative action which affects the civil rights of a citizen, unless
they were specifically or by necessary implication, excluded.
24. In Oryx Fisheries Private Limited vs. Union of India and Ors.,
(2010) 13 SCC 427, it was held that at the stage of the show-cause, the
person proceeded against must be told the charges against him and the
allegations on which they are based and be given a reasonable
opportunity of making objections against proposed charges indicated
in the notice. The show cause notice, instead of telling him the
W.P.(C) No.6109/2020 Page 9
charges, cannot confront him with definite conclusions of guilty. If
that is done then the entire proceedings initiated by the show cause
notice gets vitiated by unfairness and the subsequent proceedings
become idle formality.
25. In the present case, it cannot be denied that the Impugned
Orders have adverse civil consequences on the petitioner inasmuch as
its operation as a Non-Scheduled Air Operator comes to a standstill
because of the same. It is therefore, beyond doubt that the principles of
natural justice have to be applied in such circumstances. The
respondent no. 2 has also issued a Show Cause Notice to the petitioner
before taking further steps of cancellation of the Air Operator Permit.
The only question before this Court is as to whether such Show Cause
Notice to the petitioner was to give/contain reasons as to why its
security clearance is being revoked.
26. The reason for revocation of the security clearance has now
been disclosed in the counter affidavit filed by the respondent no.3 as
under:-
"4. The entire matter was examined in consultation with
security agencies upon the inputs received and prevailing
guidelines/policy of the Ministry of Home Affairs. It was noted
M/s A.R. Airways Private Ltd. vide letter dated 30.08.2019
declared Shri Ashok Kumar Chaturvedi as ultimate beneficial
owner of the company. The said declaration of the company
was forwarded by Ministry of Civil Aviation vide OM dated
07.10.2019 to this Ministry. Security agencies provided
following inputs in respect of Shri Ashok Kumar Chaturvedi,
the ultimate beneficial owner of M/s A.R.Airways Private
Limited:
W.P.(C) No.6109/2020 Page 10
a) A case no.RC-003/1998/ACU-VII/AC-11/New Delhi was
registered on 26.02.1998 u/s 120-B IPC r/w section 420 IPC
and 13(2) r/w 13(1)(d) of PC Act, 1988 against Smt. Neera
Yadav, IAS (UP-71), former Chairperson cum Chief Executive
Officer, Noida & others, on the order dated 20.01.1998 passed
in a Writ Petition(C) No.150/97 by Hon‟ble Supreme Court of
India. The Court had directed the CBI to investigate
irregularities in allotment and conversion of certain plots of
land in NOIDA.
b) After investigation, seven Charge Sheets were filed in this
case but one charge sheet vide Court Case No.21/2002, arising
out of the above case, was filed against Smt. Neera Yadav, IAS
(UP-71) former Chairperson cum Chief Executive Officer,
NOIDA and Shri Ashok Chaturvedi S/o Shri D.N.Chaturvedi,
Chairman-cum-Managing Director of M/s Flex Industries Ltd.,
and Flex Engineering Ltd. NOIDA (UP) u/s 120-B IPC r/w
13(2) r/w 13(1)(d) of the PC Act, 1988 and substantive offence
thereof on 16.01.2002.
c) On 07.12.2010, the Special Judge (Anti Corruption), UP
(East) Ghaziabad convicted both the accused persons viz Smt.
Neera Yadav and Shri Ashok Chaturvedi and sentenced them to
04 years RI and fine of Rs.25,000/- and Rs.50,000/-
respectively.
d) Accused person, namely, Shri Ashok Chaturvedi filed a
Crl.Appeal No.7826/2010 in the Allahabad High Court,
challenging his conviction order which is pending.
e) The above inputs of the CBI against Shri A.K.
Chaturvedi, the ultimate beneficial owner of M/s A.R.Airways
Private Ltd., attracted security parameter, viz. "Conviction in
the Court of law in the cases of charge sheet filed for the
Prevention of Corruption Act" mentioned at serial no.23 of
Annexure-C, of the Guidelines, dated 25.06.2018, of MHA on
the assessment of proposals for national security clearance and
corrigendum issued for the said guidelines on 27.06.2018. This
qualifies for denial of security clearance to the company as per
the said guidelines.
W.P.(C) No.6109/2020 Page 11
It is further submitted that in view of zero tolerance for
corrupt practices and where additional inputs are of egregious
nature, and have the potential of impacting the integrity of the
sector and/or involve persons/institutions who embroiled in
corrupt deals nationally or investigations carried out have
resulted into conviction of key managerial persons connected in
the present or in the past with such companies the denial of the
security clearance in the matter is justified."
27. The allegations on which the security clearance has been
revoked were, therefore, not of such nature as could not have been put
to the petitioner for eliciting its response thereto. The submission of
the respondent that the same being secretive could not be put to the
petitioner cannot be accepted. The conviction of Mr. Chaturvedi and
the consequence thereof, was not of such nature so as to attract the
Official Secrets Act, 1923 or a plea of privilege by the respondents.
Therefore, the Show Cause Notice issued in absence of such
disclosure was clearly perfunctory in nature and could not have had
any meaningful response from the petitioner. There was a clear
violation of principles of natural justice.
28. The subsequent action of the respondent was equally tainted for
want of compliance with the principles of natural justice and cannot be
sustained. In fact, even the impugned orders did not contain the reason
for denial of security clearance to the petitioner.
29. The submissions of the learned counsel for the respondent that a
remedy of appeal is available to the petitioner also cannot be sustained
W.P.(C) No.6109/2020 Page 12
as the initial non-compliance with the principles of natural justice
cannot be remedied in such appeal.
30. In the Institute of Chartered Accountants of India vs. L.K.
Ratna and Ors. (1986) 4 SCC 537, the Supreme Court while
considering whether a Member of the Institute is entitled for a
personal hearing by the Council of the Institute after the Disciplinary
Committee has submitted its report to the Council of its enquiry into
the allegations of misconduct against the Member, rejected the
submissions of the Institute that it is not mandatory that the Member
should be heard by the Council before it proceeds to record its finding
as the Member has a right to appeal against such finding. It was held
as under:
"17. It is then urged by learned counsel for the appellant
that the provision of an appeal under Section 22-A of the
Act is a complete safeguard against any insufficiency in
the original proceeding before the Council, and it is not
mandatory that the member should be heard by the
Council before it proceeds to record its finding. Section
22-A of the Act entitles a member to prefer an appeal to
the High Court against an order of the Council imposing a
penalty under Section 21(4) of the Act. It is pointed out
that no limitation has been imposed on the scope of the
appeal, and that an appellant is entitled to urge before the
High Court every ground which was available to him
before the Council. Any insufficiency, it is said, can be
cured by resort to such appeal. Learned counsel
apparently has in mind the view taken in some cases that
an appeal provides an adequate remedy for a defect in
procedure during the original proceeding. Some of those
cases as mentioned in Sir William Wade's erudite and
classic work on "Administrative Law"5th Edn. But as that
learned author observes (at p. 487), "in principle there
W.P.(C) No.6109/2020 Page 13
ought to be an observance of natural justice equally at
both stages", and If natural justice is violated at the first
stage, the right of appeal is not so much a true right of
appeal as a corrected initial hearing: instead of fair trial
followed by appeal, the procedure is reduced to unfair trial
followed by fair trial."
And he makes reference to the observations of Megarry, J.
in Leary v. National Union of Vehicle Builders. Treating
with another aspect of the point, that learned Judge said:
"If one accepts the contention that a defect of natural
justice in the trial body can be cured by the presence of
natural justice in the appellate body, this has the result of
depriving the member of his right of appeal from the
expelling body. If the rules and the law combine to give the
member the right to a fair trial and the right of appeal,
why should he be told that he ought to be satisfied with an
unjust trial and a fair appeal? Even if the appeal is treated
as a hearing de novo, the member is being stripped of his
right to appeal to another body from the effective decision
to expel him. I cannot think that natural justice is satisfied
by a process whereby an unfair trial, though not resulting
in a valid expulsion, will nevertheless have the effect of
depriving the member of his right of appeal when a valid
decision to expel him is subsequently made. Such a
deprivation would be a powerful result to be achieved by
what in law is a mere nullity; and it is no mere triviality
that might be justified on the ground that natural justice
does not mean perfect justice. As a general rule, at all
events, I hold that a failure of natural justice in the trial
body cannot be cured by a sufficiency of natural justice in
an appellate body."
The view taken by Megarry, J. was followed by the Ontario
High Court in Canada in Re Cardinal and Board of
Commissioners of Police of City of Cornwall. The Supreme
Court of New Zealand was similarly inclined in Wislang v.
W.P.(C) No.6109/2020 Page 14
Medical Practitioners Disciplinary Committee and so was
the Court of Appeal of New Zealand in Reid v. Rowley.
18. But perhaps another way of looking at the matter lies
in examining the consequences of the initial order as soon
as it is passed. There are cases where an order may cause
serious injury as soon as it is made, an injury not capable
of being entirely erased when the error is corrected on
subsequent appeal. For instance, as in the present case,
where a member of a highly respected an publicly trusted
profession is found guilty of misconduct and suffers
penalty, the damage to his professional reputation can be
immediate and far-reaching. "Not all the King's horses
and all the King's men" can ever salvage the situation
completely, notwithstanding the widest scope provided to
an appeal. To many a man, his professional reputation is
his most valuable possession. It affects his standing and
dignity among his fellow members in the profession, and
guarantees the esteem of his clientele. It is often the
carefully garnered fruit of a long period of scrupulous,
conscientious and diligent industry. It is the portrait of his
professional honour. In a world said to be notorious for its
blase attitude towards the noble values of an earlier
generation, a man's professional reputation is still his most
sensitive pride. In such a case, after the blow suffered by
the initial decision, it is difficult to contemplate complete
restitution through an appellate decision. Such a case is
unlike an action for money or recovery of property, where
the execution of the trial decree may be stayed pending
appeal, or a successful appeal may result in refund of the
money or restitution of the property, with appropriate
compensation by way of interest or mesne profits for the
period of deprivation. And, therefore, it seems to us, there
is manifest need to ensure that there is no breach of
fundamental procedure in the original proceeding, and to
avoid treating an appeal as an overall substitute for the
original proceeding."
W.P.(C) No.6109/2020 Page 15
31. In Shri Farid Ahmed Abdul Samad & Anr. vs. The Municipal
Corporation of the city of Ahmedabad and Anr., (1976) 3 SCC 719,
the Supreme Court held that if an order at the inception is invalid, its
invalidity cannot be cured by its approval or by its confirmation by the
concerned Authorities. Paragraphs 24 to 26 of the said judgment are
quoted hereinbelow:
"24. We are clearly of opinion that Section 5A of the
Land Acquisition Act is applicable in the matter of
acquisition of land in this case and since no personal
hearing had been given to the appellants by the
Commissioner with regard to their written objections the
order of acquisition and the resultant confirmation order
of the State Government with respect to the land of the
appellants are invalid under the law and the same are
quashed. It should be pointed out, it is not a case of
failure of the rules of natural justice as such as appeared
to be the only concern of the High Court and also of the
city civil court. It is a case of absolute non-compliance
with a mandatory provision under Section 5A of the Land
Acquisition Act which is clearly applicable in the matter
of acquisition under the Bombay Act.
25. We should also point out that the acquisition order
must be an order valid under the law and the question of
appeal arises only after confirmation of the order by the
State Government. If the order is, at inception, invalid, its
invalidity cannot be cured by its approval of the Standing
Committee or by its confirmation of the State
Government.
26. Besides hearing of objections under Section 5A of the
Land Acquisition Act to be given by the Commissioner
under the Bombay Act cannot be replaced by a kind of
appeal hearing by the City Civil Judge. The Bombay Act
having assigned the duty of hearing objections to the
W.P.(C) No.6109/2020 Page 16
Commissioner, he alone can hear them and not the City
Civil Judge even assuming that all objections could be
entertained by him in appeal. (See Shri Mandir Sita
Ramji v. Ltd. Governor of Delhi.)"
32. In Oryx Fisheries Pvt. Ltd. (supra), the Supreme Court
reiterated that absence of reasons in the original order cannot be
compensated by disclosure of reasons in the appellate order. It
followed the law stated in the Institute of Chartered Accountants of
India (supra).
33. In Aslam Mohammed Merchant vs. Competent Authority &
Ors., (2008) 14 SCC 186, the Supreme Court held that once the Show
Cause Notice issued under the provisions of the Narcotic Drugs and
Psychotropic Substances Act, 1985 is found to be illegal, the same
would vitiate all subsequent proceedings.
34. In State of U.P. vs. Mohammad Nooh, 1958 SCR 595, the
Supreme Court held as under:
"11. On the authorities referred to above it appears to us
that there may conceivably be cases - and the instant case is
in point - where the error, irregularity or illegality touching
jurisdiction or procedure committed by an inferior court or
tribunal of first instance is so patent and loudly obtrusive
that it leaves on its decision an indelible stamp of infirmity
or vice which cannot be obliterated or cured on appeal or
revision. If an inferior court or tribunal of first instance acts
wholly without jurisdiction or patently in excess of
jurisdiction or manifestly conducts the proceedings before it
in a manner which is contrary to the rules of natural justice
and all accepted rules of procedure and which offends the
superior court„s sense of fair play the superior court may,
W.P.(C) No.6109/2020 Page 17
we think, quite properly exercise its power to issue the
prerogative writ of certiorari to correct the error of the
court or tribunal of first instance, even if an appeal to
another inferior court or tribunal was available and
recourse was not had to it or if recourse was had to it, it
confirmed what ex facie was a nullity for reasons
aforementioned. This would be so all the more if the
tribunals holding the original trial and the tribunals hearing
the appeal or revision were merely departmental tribunals
composed of persons belonging to the departmental
hierarchy without adequate legal training and background
and whose glaring lapses occasionally come to our notice.
The superior court will ordinarily decline to interfere by
issuing certiorari and all we say is that in a proper case of
the kind mentioned above it has the power to do so and may
and should exercise it. We say no more than that."
35. This Court in L.P.Desai vs. Union of India & Ors., (2003) 71
DRJ 553, held that mere fact that the petitioner therein had filed an
appeal and was heard in the appeal would not alter the situation that
the original order passed was in violation of the Principles of Natural
Justice and therefore, void ab initio. This Court held as under:
"18. Before parting with this case, it would be relevant to
note that though the aforesaid discussion has proceeded on
the assumption that no prejudice has been caused to the
petitioner, in point of fact prejudice has actually been
caused to the petitioner. This is so because the Show Cause
Notice was not issued to the petitioner. Even the show cause
notice issued to the company did not contain specific
allegations against the petitioner to which he could reply.
No opportunity as such was given to the petitioner to
represent against the proposed imposition of penalty.
Obviously, the petitioner was not heard before the order in
original was passed whereby the aforesaid penalty was
imposed upon him. The mere fact that he filed an appeal
W.P.(C) No.6109/2020 Page 18
and was heard in the appeal would not alter the situation.
The proceedings against him were void ab initio. Had the
petitioner been issued a notice in terms of section 4L of the
said Act, he could have represented against the imposition
of such penalty. He could have placed on record various
facts and circumstances to show that no offence was
committed by the company and that even if such offence was
committed by the company, he had no hand in it. All these
circumstances, if he were able to establish them, would have
absolve him of the liability of penalty which he now bears
like a garrotter round his neck. So, even if the question of
prejudice were to be taken up, it would be clear that the
order in original as well as the Appellate Order imposing a
penalty on the petitioner could not be sustained."
36. In view of the above, the impugned Show Cause Notice dated
30.07.2020 and the orders dated 03.09.2020, 04.09.2020 and
07.09.2020 are set aside, leaving it open to the respondents to proceed
against the petitioner in accordance with law, if so advised.
37. There shall be no orders as to cost.
NAVIN CHAWLA, J
FEBRUARY 15, 2021
R,N
W.P.(C) No.6109/2020 Page 19
