ADMINISTRATIVE LAW CASES

1. Swadeshi Cotton Mills v UOI

Principle: The word “immediate” in section 18-A of the Industries (Development and
Regulation) Act cannot stand in the way of the application of the rules of natural justice.
Doctrine of Natural Justice and the Exceptions.
Facts
Swadeshi Cotton Mills Co. Ltd. (hereinafter referred to as the Company). It was incorporated
as a private company with an authorised capital of Rs. 30 lakhs. There were six sub-parts and
company maintained 6 undertakings for the same.
1978: Now, therefore, in exercise of power conferred by clause (a) of sub-section (1) of
Section 18AA of the Industries (Development and Regulation) Act, 1951, the Central
Government hereby authorises the National Textile Corporation Limited (hereinafter referred
to as the Authorised person) to take over the management of the whole of the said industrial
undertakings. The same was challenged as a Writ petition. The HC
The case was decided in 1981. The Government took over Swadeshi Cotton Mills in 1978
under the Industries (Development and Regulation) Act, 1951, on the grounds that the
output of products would be dramatically decreased and quick action was necessary to
safeguard it. National Textile Corporation Limited was given control of the company for a
five-year period. The Act gives the Centre Government the authority to impose instructions in
the case of any public limited company that is unable to function efficiently. In response to
the government’s directive, the corporation decided to file a writ case in the Delhi High
Court. The government’s order was affirmed by the High Court. The appellant then
petitioned the Supreme Court for a reversal.
Legal Point
Chapter III-A consisting of Sections 18A, 18-AA, 18-B, 18-C, 18-D, 18-E and 18-F deal with
"direct management or control of Industrial Undertakings by Central Government in certain
cases". Sec. 18-A empowers the Central Government by notified order, to authorise any
person or body of persons to take over the management of the whole or any part of an
industrial undertaking or to exercise in respect of the whole, or any part of the undertaking
such functions of control as may be specified in the order
Issues
Whether it is necessary to observe the rules of natural justice before issuing, a notified order
under Section 18AA, or enforcing a decision under Section 18AA
Whether the provisions of Section 18AA and/or Section 18F impliedly exclude rules of
natural justice relating to prior hearing
Arguments
Appellants
there is nothing in the language, scheme or object of the provisions in Section 18AA and/or
Section 18F which expressly or by inevitable implication, excludes the application of the
principles of natural justice or the giving a pre-decisional hearing, adapted to the situation, to
the owner of the undertaking.
It is submitted that mere use of the word "immediate" in sub-clause (a) of Section 18AA (1)
does not show a legislative intent to exclude the application of audi alterm partem rule,
altogether.
Section 18F does not exclude a pre-decisional hearing. Just pne clause of 18AA (i) has
immediate that too not in explicit exclusion
‘Immediacy’ does not exclude a duty to act fairly, because, even an emergent situation can
co-exist with the canons of natural justice.
Where the civil consequences of the administrative action- as in the instant case-are grave
and its effect is highly prejudicial to the rights and interests of the person affected and there is
nothing in the language and scheme of the statute which unequivocally excludes a fair
predecisional hearing, and the post-decisional hearing provided therein is not a real remedial
hearing equitable to a full right of appeal,
Respondent
the presumption in favour of audi alteram partem rule stands impliedly displaced by the
language, scheme, setting, and the purpose of the provision in Section 18AA.
The purpose of an order under Section 18AA is not to condemn the owner but to protect the
scheduled industry. The issue under Section 18AA is not solely between the Government and
the management of the industrial under taking.
Section 18F does not specify any period of time within which the aggrieved party can seek
the relief thereunder, the opportunity of full, effective and post-decisional hearing has to be
given within a reasonable time.
Judgement
The rules of natural justice can operate only in areas not covered by any law validly made.
They can supplement the law but cannot supplant it (Kraipaik case)
The Court further emphasised the necessity of striking pragmatic balance between competing
requirements of acting urgently and fairly
A comparison of the provisions of Section 18A(1)(b) and Section 18AA(1)(a) would bring
out two main points of distinction: First, action under Section 18A (1)(b) can be taken only
after an investigation had been made under Section 15: while under Section 18AA(1)(a) or
(b) action can be taken without such investigation.
From a plain reading of Section 18AA, it is clear that it does not expressly in unmistakable
and unequivocal terms exclude the application of the audi alteram partem rule at the pre-
decisional stage.
The appelants were awre of the grounds of takeover, Second, they are in no position to deny
the take-over. Lastly, given a full opportunity to present their case, at the time of
investigation.
"In our opinion, since the appellants have received a fair treatment and also all reasonable
opportunities to make out their own case before Government they cannot be allowed to make
any grievance of the fact that they were not given a formal notice calling upon them to show
cause why their undertaking should not be taken over or that they had not been furnished with
a copy of the report.
The second reason-which is more or less a facet of the first-for holding that the mere use of
the word "immediate" in the phrase "immediate action is necessary", does not necessarily and
absolutely exclude the prior application of the audi alteram partem rule, is that immediacy or
urgency requiring swift action is a situational fact having a direct nexus with the likelihood of
adverse effect on fall in production.
The third reason for our forbearance to imply the exclusion of the audi alteram partem rule
from the language of Section 18AA(1) (a) is, that although the power thereunder is of a
drastic nature and the consequences of a take-over are far-reaching and its effect on the rights
and interests of the owner of the undertaking is grave and deprivatory, yet the Act does not
make any provision giving a full right of a remedial hearing equitable to a full right of appeal,
at the post-decisional stage.
The court overruled the High Court’s judgment, ruling that Section 18AA does not preclude
the rule of audi alteram partem at the pre-decisional stage. The court acknowledged the
notion of post-decisional hearings, holding that in instances when prior notice or an
opportunity to be heard is not feasible, authorities may make required judgments, but they
must be followed by a complete remedial hearing. In terms of judicial review of the order, the
Apex Court disagreed with the respondent and held that taking prompt action is a question of
fact, and therefore the court has the authority to intervene if the administration’s approach is
unreasonable since they build their opinions by gathering information. By failing to provide
an opportunity to be heard in this case, the government violated the natural justice principle.
A void administrative choice was approved by post-decisional hearing. An order assuming
control over the administration of an organization by the Government without earlier notice
or hearing was held to be bad as it abused the audi alteram partem rule. Be that as it may, the
Court approved the impugned order on the grounds that the Government had consented to
give post-decisional hearing.
2. In Re Delhi Laws Act
Principle: Delegation of Powers
http://www.manupatra.com/roundup/333/Articles/In%20re%20Delhi%20Laws%20Act
%20Case.pdf
https://www.juscorpus.com/wp-content/uploads/2021/02/15.-Ashmira-Moon.pdf
3. UOI v Cyanide India Ltd.
Principle: Subordinate legislation shall not be questioned unless method adopted by
legislating body is arbitrary and opposed to principal statutory provisions.
Facts
a public spirited litigant had complained about the unscrupulous exploitation of the Indian
Drug and Pharmaceutical Market by multinational Corporations by putting in circulation low-
quality and even deleterious drugs.
The problem is that of high prices, bearing, it is said, little relation to the cost of production to
the manufacturers. A manufacturer was, under the provisions of that Order, free to continue
to sell the drug at the price reported by him to the Central Government at the time of the
commencement of the order, but was under an obligation not to increase the price without the
prior approval of the Central Government. The price which the manufacturer of Barlagan
Ketone, reported to the Central Government in 1971 was Rs. 24,735.68 per Kg. After the
1979 Drugs (Prices Control) Order came into force, the distinction between essential and
non-essential bulk drugs was abolished and a maximum price had to be fixed for Barlagan
Ketone also like other bulk drugs. The manufacturer applied for fixation of price at Rs. 8,500
per Kg. The Government, however, fixed the price at Rs. 1,810 per Kg. For the moment,
ignoring the price fixed by the Government, we see that the price of Rs. 24,735 per Kg. at
which the manufacturer was previously selling the drug and at which he continues to market
the drug to this day because of the quashing of the order fixing the price by the High Court, is
so unconsciously high even compared with the price claimed by himself that it appears to
justify the charge that some manufacturers do indulge in 'profiteering'.
Section 3(1) of the Essential Commodities Act enables the Central Government, if it is of
opinion 'that it is necessary or expedient so to do for maintaining or increasing supplies of
any essential commodity or for securing their equitable distribution and availability at fair
price', to 'provide for regulating or prohibiting by order, the production, supply and
distribution thereof and trade and commerce therein'. In particular, Section 3(2)(c) enables
the Central Government, to make an order providing for controlling the price at which any
essential commodity may be bought or sold. It is in pursuance of the powers granted to the
Central Government by the Essential Commodities Act that first the Drugs (Prices Control)
Order, 1970 and later the Drugs (Prices Control) Order, 1979 were made. Armed with
authority under the Drugs (Prices Control) Order, 1979 the Central Government issued
notifications fixing the maximum prices at which various indigenously manufactured bulk
drugs may be sold by the manufacturers.
Issues
Arguments
Paragraph 3 of the 1979 Order enables the Government, with a view to regulating the
equitable distribution of any indigenously manufactured bulk drug specified in the first or the
second schedule and making it available at a fair price
learned Counsel for the respondents was that unlike other price control legislations, the Drugs
(Prices Control) Order was designed to induce better production by providing for a fair return
to the manufacturer. Great emphasis was laid on the second clause of paragraph 3 of the 1979
Order which provides that in fixing the price of a bulk drug, the Government may take into
account the average cost of production of such bulk drug manufactured by an efficient
manufacturer and allow a reasonable return on net worth.
the prescription in paragraph 3 Clause 2 that the average cost of production of the drug
manufactured by an efficient manufacturer should be taken into account and that a reasonable
return on net worth should be allowed and the provision for a review of the order determining
the price, established that price-fixation under the Drugs (Prices Control) Order 1979 was a
quasi-judicial activity obliging the observance of the rules of natural justice.
Judgement
Price fixing is a legislative function and not a quasi judicial function. Thus, principles of
natural justice cannot be applied.
The power to subordinate legislation is enabling provision. legislative action, plenary or
subordinate, is not subject to rules of natural justice. the legislature directs the subordinate
legislating body to make 'such enquiry as it thinks fit' before making the subordinate
legislation. In such a situation, while such enquiry by the subordinate legislating body as it
deems fit is a condition precedent to the subordinate legislation, the nature and the extent of
the enquiry is in the discretion of the subordinate legislating body and the subordinate
legislation is not open to question on the ground that the enquiry was not as full as it might
have been
The Order made under Section 3(2)(c) controlling the price of an essential commodity may
itself prescribe the manner in which price is to be fixed but that will not make the fixation of
price a non-legislative activity, when the activity is not directed towards a single individual or
transaction but is of a general nature, covering all individuals and all transactions. The
legislative character of the activity is not shed and an administrative or quasi-judicial
character acquired merely because guidelines prescribed by the statutory order have to be
taken into account.
in matter of this nature, where prices of essential commodities are fixed in order to maintain
or increase supply of the commodities or for securing the equitable distribution and
availability at fair prices of the commodity, it is not right that the court should make any
interim order staying the implementation of the notification fixing the prices.
Appeals allowed
4. Atlas cycle industries v. State of Haryana
https://articles.manupatra.com/article-details/Case-Analysis-Atlas-Cycle-Industries-v-the-
State-of-Haryana
https://blog.ipleaders.in/laying-procedure-atlas-cycle-industries-ltd-v-state-haryana/
5. Empress v Burrah
Principle: Conditional Legislation. Power of the General to change.
Facts

Two persons, Burah and Book Singh, have been convicted on a charge of murder by the
Deputy Commissioner of the Cossyah and Jynteeah Hills and sentenced to death. The
sentence was commuted to transportation for life by the Chief Commissioner of Assam on the
23rd April 1876. On the 9th July, 1870 the officer, in charge of the Kamrup jail forwarded to
this Court petitions of appeal from these prisoners, unaccompanied by copies of the
judgment.

In the year 1835, an Act was passed (Act VI of 1835), by which the functionaries in political
charge of the "Cossyah Hills" were placed under the control and superintendence, in criminal
matters, of the Court of Nizamut Adawlut. From the records of this Court it appears that, on
the 16th June, 1835, the Court informed the Government of Bengal that the Political Agent of
the Cossyah Hills had submitted returns of criminal business for Jynteeah also.

The arrangement of the duties of the Political Agent of the Cossyah Hills remained as above
stated until 1854, when an order was issued by the Governor of Bengal (1st March, 1854) to
the Commissioner of Assam, communicating his determination to separate the civil functions
of the Political Agent in the Cossyah Hills from the command of the Sylhet Light Infantry,
and to vest the former in an Assistant Commissioner, subordinate to the Commissioner of
Assam. All the criminal appeals which in Regulation Provinces would go to the Sessions
Judge, wont to the Deputy Commissioner of Assam, and were apparently disposed of by him
in the same manner as any other criminal appeals in Assam.
Under these circumstances, there can be no doubt that this Court had at one time jurisdiction
in the Cossyah and Jynteeah Hills. The only question therefore is, whether this jurisdiction
has been taken away, and this renders it necessary to consider the recent legislation with
regard to these districts.

Issues
Whether the Act was valid?
Whether the General had the power to delegate and change jurisdiction?
Arguments
the Act of 1869 does itself actually take away the jurisdiction of this Court. Secondly, that
even if it does not do so, it evinces a final determination of the legislative authority that this
jurisdiction shall be taken away, and that it only leaves it to the Lieutenant-Governor to fix
the exact date of the Act coming into operation
Even if the Lieutenant-Governor be vested with a discretion to determine whether or no the
jurisdiction of this Court shall be taken away, still there is nothing which renders such a
delegation of authority illegal.
When Act XXII of 1869 was passed, the last provisions had not come into existence. This
Act was passed by the G ever nor-General in Council under the General powers conferred by
Section 22 of the Indian Councils' Act, subject to the limitation specified in that section.
Act XXII of 1869 is, as regards the Cossyah and lynteeah Hills, not a law, and because if it is
a law it is one which the Legislative Council of India is expressly prohibited from making, I
should hold that it is so far void.
Judgement
Parliament has provided for the exercise of the legislative authority of India by certain
councils at meetings duly constituted; further that, if any change in the legislative machinery
is necessary, Parliament has provided how and by whom that change is to be made; that the
power to make this change is vested by Parliament in the Executive Government alone, no
such power being vested in any of the Legislative Counsel. 
The fixing of such date is a ministerial not a legislative act; but the determination whether the
law shall be applied at all is not a ministerial, but a legislative act. As this determination was
not arrived at by the Supreme Legislature, but was remitted to the discretion of the
Lieutenant-Governor, it convent he said that the Legislature excluded the Cossyah and
Jynteeah Hills from the jurisdiction of the High Court; it went no further than to say that if at
any time, the Lieutenant-Governor shall think fit to exclude them he may do so. 
In the case of Queen v. Burah, nature and extent of Legislature power and the feasibility of its
delegation was considered by the Privy Council. The Privy Council, in this case, held that
Councils of Governor-General was supreme Legislature and has ample number of powers and
who are entitled to transfer certain powers to provincial executors. At the time of passing of
New Delhi Act of 1912, the Privy Council accepted the transfer of Legislature power to the
Executive.
The authority regarding delegated legislation in the pre-independence period was primarily
held by Queen v. Burah. In this case, the Act in question (Act XXII of 1869) deals with the
Governor General’s power to bring the Act in effect, determine what laws were to be
applicable and the power to extend application of provisions of the Act. Here an Act was
passed by the Indian legislature to remove Garo Hills from the civil and criminal jurisdiction
of Bengal and vested the powers of civil and criminal administration in an officer appointed
by the Lt. Governor of Bengal. The Lt. Governor was further authorized by S.8 of the Act to
extend any provision of this Act with incidental changes to Khasi and Jaintia Hills. One
Burah was tried for murder by the Commissioner of Khasi and Jaintia Hills and was
sentenced to death.
The question was whether these functions would be categorized as delegated legislation. The
court held that the above-mentioned powers were conferred only on the fulfilment of certain
conditions and hence this was conditional legislation, a concept all together different from
delegated legislation. The court also stated that “It is a general principle of law in India that
any substantial delegation of legislative authority by the legislature of the country is void”.
The case thus lays down that substantive delegation i.e. delegation if the important functions
are void in India and that delegation, if at all possible, would have to be conditional.
 jurisdiction in the Cossyah and Jynteeah Hills is now the same as it was before the
notification was issued by the Lieutenant-Governor, and we ought, therefore, to send for the
record of this case, in order to see whether the appeal should be admitted.
6. Panama Refining Company v. Ryan
Facts
In 1933, the President of the US issued Executive Order 6199 via the National Industrial
Recovery Act (NIRA). This order prohibited the transporting of petroleum as well as
petroleum products in interstate and foreign commerce if they had been produced in excess of
the amounts permitted by the states. Panama Refining Co. operated an oil refinery and sought
an injunction against enforcing the regulations that were created under the NIRA. Panama’s
contention succeeded in the lower court, however, the intermediate appellate court removed
the injunction.
Issue
Whether the executive order regulating the petroleum commerce was constitutional in nature?
Judgement
 8-1 majority: held that the order was indeed not constitutional in nature.
 SC held that in enacting the order, the US President had in fact subsumed legislative
powers that the Congress does not have the power to delegate; Congress cannot delegate
legislative powers to other branches of the government in order to sustain the democratic
system of government.
 At the instance when it allows the executive branch to formulate rules, Congress must
provide policies and standards for formulating the same. However, the same was not done
in case of the present scenario of the regulation of oil transportation. The lack of any
limits on executive discretion concerned the Court, hence, the order was rendered
unconstitutional.
 Dissenting opinion: there were enough standards to guide the President’s actions so that
the delegation of power is constitutional. The President was essentially enforcing the
goals of the Congress to regulate interstate commerce to prevent unfair competition and
the misuse of resources + that the elasticity of the government is crucial for the
government to continue to function when faced with new problems.
7. Gwalior Rayon Silk Manufacturing v. Union of India
Lengthy case, read headnote pls, brain not functioning.
8. Makhan Singh v. State of Punjab
Facts
Subsequent to the Chinese aggression on 8th September, 1962, the President had declared a
national emergency in India, under Art 352 of the Constitution, on 26 October, 1962. The
Defence of India Ordinance 1962 was promulgated on this day.
An ordinance was promulgated on 3rd November 1962 that suspended the rights of the
citizens of India to move any court for the enforcement of the rights under Article 21 and 22
of the Constitution of India, for the time during which proclamation of emergency issued on
26 October 1962 would be in force, under Article 359(1).
The amendment of the Presidential order passed on 11 November, also extended this
suspension of the right to move the Court to Article 14 of the Constitution, subsequent to
which the appellants were detained under Rule 30(1)(b).
There were altogether 26 criminal appeals,9 against the Punjab HC decision and 17 against
the Bombay HC decision. All the appellants were detenues who had been detained by the
Punjab and the Maharashtra State Governments under Rule 30(1)(b) of the Defence of India
Rules – they had applied to the Punjab HC and Bombay HC under Section 491(1)(b) CrPC
and alleged that they had been illegally detained. Their contention was that s. 3(2)(15)(i) and
s. 40 of the Defence of India Act of 1962 (No. 51 of 1962) and Rule 30(1)(b) under which
they have been detained were Constitutionally invalid, because they contravened their
fundamental rights under Articles 14, 21 and 22(4), (5) & (7) of the Constitution, and so, they
claimed that an order should be passed in their favour directing the respective State
Governments to set them at liberty.
The petitions were dismissed on the ground that the Presidential Order which had been issued
under Art 359 creates a bar which precludes them from approaching the HC under Section
491(1)(b) CrPC.
The High Court of Allahabad in a similar case had favoured the detenues, and it was the
difference of opinion in the Bombay High Court and Punjab High Court that lead to the
formation of the Special Bench for the appeal.
Issues raised
What was the true scope and effect of a Presidential Order issued under Article 359(l)?
What is the nature of the proceedings which are barred by the Presidential Order issued under
Article 359(1)?
Did the bar created by the Presidential Order operate in respect of applications for habeas
corpus made by detainees, not under Article 226 of the Constitution, but section 491 of the
Criminal Procedure Code?
Appellant’s Arguments
Argued that Art 359 is not an emergency legislation properly so called and on the merits,
strongly resisted the suggestion made by respondent that - if two reasonable constructions are
possible, we should adopt that which is in favour of the grant of power to the President and
not in favour of the citizens fundamental rights.
Relied upon Nakkuda Ali v. M.F. DeS, and King Emperor v. Vimalabai Deshpande.
Respondent’s Arguments
Contended that in construing an emergency provision like Art 359(1), we must bear in mind
the fact that the said Article is intended to deal with a situation which has posed a threat to
the security of India, and so, fundamental rights guaranteed by Part III which are un-
doubtedly of vital importance to the democratic way of life guaranteed by the Constitution
have to be regulated during an emergency, because the very security of the nation is exposed
to serious jeopardy.
The security of the nation on such a solemn occasion must have precedence over the liberty
of the individual citizens, and so, it is urged that if Art 359 is capable of two constructions,
one in favour of the fundamental rights of the citizens, and the other in favour of the grant of
power to the President to control those rights, the Court should lean in favour of the grant
rather than in favour of the individual citizen's fundamental rights.
Judgement
The court concluded that Art 359 is reasonably capable of only one construction and that is
the construction which has been put on it by the Punjab HC and Bombay HC.
Court observed that – as soon as a Proclamation of Emergency has been issued under Art 352
and so long as it lasts, Art 19 is suspended, and the power of the legislature and the executive
is to that extent made wider. The suspension of Art 19 during the pendency of the
Proclamation of emergency removes the fetters created on the legislative and executive
powers by Art 19 and if the legislatures make laws or the executive commits acts which are
inconsistent with the rights guaranteed by Art 19, their validity is not open to challenge either
during the 'continuance of the emergency or even thereafter. As soon as the Proclamation
ceases to operate, the legislative enactments passed and the executive actions taken during the
course of the said emergency shall be inoperative to the extent to which they conflict with the
rights guaranteed under Art 19 because as soon as the emergency is lifted, Art 19 which was
suspended during the emergency is automatically revived and begins to operate.
Art 358 clarifies that the things done or omitted during emergency cannot be challenged even
after the emergency is over.
Art 359 does not purport to expressly suspend any fundamental right – authorises authorises
the President to issue an order declaring that the right to move any court for enforcement of
such of the rights in Part III as may be mentioned in the order and all proceedings pending in
any court for the enforcement of the rights so mentioned shall remain suspended for the
period during which the Proclamation is in force or for such shorter period as may be
specified in the order. What the Presidential Order purports to do by virtue of the power
conferred on 'the President by Art 359(1) is to bar the remedy of the citizens to move any
court for the enforcement of the specified rights. The rights are not expressly suspended, but
the citizen is deprived of his right to move any court for their enforcement.
Since the object of Art. 359(1) is to suspend the rights of the citizens to move to any court,
the consequence of the Presidential Order may be that any proceeding which may be pending
at the date of the Order remains suspended during the time that the order is in operation and
may be revived when the said Order ceases to be operative, and fresh proceedings cannot
be taken by a citizen after the Order has been issued, because the Order takes away right to
move any court and during the operation of the Order, the said right cannot be exercised by
instituting a fresh proceeding contrary to the Order. If a fresh proceeding falling within the
mischief of Art. 359(1) and the Presidential Order issued under it is instituted after the Order
has been issued, it will have to be dismissed as being incompetent.
In determining the question on whether a specific proceeding falls within the mischief of the
Presidential Order or not, what should be examined isn’t so much the form which the
proceeding has taken or the words in which the relief is claimed, as the substance of the
matter and consider whether before granting the relief claimed by the citizen, it might be
necessary for the Court to enquire into the question whether any of his specified fundamental
rights are contravened. If any relief cannot be granted to the citizen without determining the
question of the alleged infringement of the said specified fundamental rights, that’s a
proceeding which falls under Art. 359(1) and would, therefore, be hit by the Presidential
Order issued under the said Article.
The Supreme Court conceded that the right to claim relief under the Code was a right which
was distinct and separate from that conferred by Articles 32 and 226 of the Constitution. It
was stressed that what was to be examined was not the technical procedural form in which
the action was initiated or not whether it was by a writ petition under Article 32 or Article
226 of the Constitution, or by proceedings sanctioned by ordinary statue, but rather that it
was the “substance of the matter” which was decisive. Therefore, proceedings taken under
Section 491 of the Criminal Procedure Code would be on the same footing as writ petitions
under the Constitution and would, with respect to pleas based on rights conferred by the
Articles specified in that Presidential Order, be equally liable to attract the procedural bar.
The true test to determine whether a particular proceeding is barred is to examine the
substance and not the form.
9. Cellular Operators of India v. TRAI
Facts
TRAI notified the Telecom Protection (Ninth Amendment) Regulations, 2015, on 16 October
2015 – every originating service provider who provides cellular mobile telephone services is
made liable to credit only the calling consumer, and not the receiving consumer with Rs. 1 for
each call drop, which takes place within the network, up to a maximum of 3 call drops per
day.
Further, the service provider needs to provide details of the amount credited to the calling
consumer within four hours of the occurrence of a call drop either through SMS/USSD
message in the case of a post-paid consumer, such details of amount credited in the account
of the calling consumer were to be provided in the next bill.
Various writ petitions were filed in the Delhi High Court challenging the validity of this
Regulation. However, the validity of the impugned regulation was upheld and the Writ
Petitions were dismissed by the Delhi High Court. Against this impugned judgment, a group
of appeals were placed before the Hon’ble Supreme Court of India.
Issue
Whether the Ninth Amendment of the Telecom Consumers Proection Regulations is ultra
vires Section 36 r/w Section 11 of the TRAI Act, 1997?
Whether the impugned regulation violates the appellant’s fundamental rights under Article 14
and Article 19(1) (g) of the Constitution?
Appellant’s Arguments
Contended that the Ninth Amendment of the Telecom Consumers Protection Regulations is
ultra vires Section 36 r/w Section 11 of the TRAI Act, 1997 – pointed out that the t present
impugned regulation has nothing to do with ensuring compliance of the terms and conditions
of licence, and none of such terms and conditions empowers the Authority to levy a penalty
based on ‘no fault liability’. There is already a Quality of Service Regulations, 2012 made
under the same provision, i.e. Section 36 r/w Section 11 and the present impugned regulation
is contrary to the Quality of Service Regulations.
These regulations, being subordinate legislations, is arbitrary and unreasonable, and affects
the fundamental rights guaranteed under Article 14 and Article 19(1)(g) of the Constitution.
Since, these regulations establish a strict no fault penal liability, it is manifestly arbitrary and
unreasonable. Further it is argued that TRAI has no power to interfere with the licence
agreement between Union of India and Service Providers.
Respondent’s Arguments
Attorney General, on behalf of TRAI, submitted that – when read in light of the Statement of
Objects and Reasons of the TRAI Act, 1997, it is clear that the Impugned regulation has been
made bearing this object in mind and that the Impugned regulation conforms to Section 11(1)
(b)(i) and (v) and is otherwise not ultra vires the Act.
Relied upon a statistic that shows an average of 36.9% of call drops takes place owing to the
fault of the consumer – the rest take place because of the fault of the service provider.
Therefore, the Impugned regulation should be read down so that service providers are made
to pay only for faults attributable to them, which would come to a rough figure of 63% of
what is charged, for amounts payable to the consumers under the Impugned regulation.
Argued that both Quality of Service Regulations and the Impugned regulations are a parallel
set of regulations which must be read separately (both having been framed by TRAI) to
protect consumer interest.
Judgement
SC observed that the Regulation making power under the said TRAI Act is wide and
pervasive, and is not trammelled by the provisions of Section 11, 12(4) and 13. However, this
power should be exercised consistently with the Act and the Rules in order to carry out the
purposes of the Act. The impugned regulation refers to Section 11(1)(b)(i) and (v) as the
source of power under which the impugned regulation has been framed.
The Section 11(1)(b)(i) empowers the TARI to ensure the compliance of the terms and
conditions of the licence. After analysing Clause 28 of Quality of Performance Regulation,
the Hon’ble Supreme Court concluded that, the Impugned regulation is not referable to
Section 11(1)(b)(i) and (v) of the Act and hence it is de hors Section 11. Because, the
Regulation has not been made to ensure compliance of the terms and conditions of the licence
nor has it been made to lay down any standard of quality of service that needs compliance.
Under Section 36, not only does the Authority have to make regulations consistent with the
Act and the Rules made thereunder, but it also has to carry out the purposes of the Act. Since
the Regulation does not carry out the purpose of the Act, it is ultra vires the Act.
The Impugned regulation is based on the fact that the service provider is 100% at fault, at the
same technical paper dated November 13, 2015, which shows that an average of 36.9% can
be call drops owing to the fault of the consumer. Hence, the Court observed: “this being the
case, it is clear that the service provider is made to pay for call drops that may not be
attributable to his fault, and the consumer receives compensation for a call drop that may be
attributable to the fault of the consumer himself”. Therefore, the Court observed that, a strict
penal liability laid down on the erroneous basis that the fault is entirely with the service
provider is manifestly arbitrary and unreasonable.
10. State of UP v. Renusagar
Facts
The U.P. Electricity Duty Act, 1952 was introduced to levy duty on consumption of electrical
energy. The object of the act stated that, tax levied will be calculated according to the
quantity of electricity consumed. An amendment was made in 1959, according to which an
exemption from paying electricity duty was provided to consumers in a scheduled industry,
this schedule included “Metallurgical Industries”. In 1971, another amendment took place,
and it was stated that,

 An electricity duty will be levied on the licensee for the energy sold to a consumer.
 An electricity duty will be levied on the licensee for the consumption of energy in or
upon residential or commercial premises
 There would be a duty on consumption of electricity by any other person from “his own
source of generation”.
Hindalco, R2, established an aluminium factory at Renukut in 1959. In 1964, R1, Renusagar,
a wholly owned subsidiary of the respondent no. 2, was incorporated. R1 acquired sanction
from the State government under Section 28(2) of the Indian Electricity Act, 1910 to supply
electricity to R2. Hence, R1 became the licensee eligible to pay electricity duty. R2 wrote an
application to the state government to grant exemption to R1 for the payment of electricity
duty – application rejected by the government on the ground that imposition of electricity
duty is not an unbearable burden on Hindalco, and it would be against public interest to grant
exemption.
R2 approached Allahabad HC – court quashed the GO; directed to reconsider the application
for exemption by R2 – state govt concluded that the exemption was not justified; R1 directed
to pay Rs. 11,96,83,153.80 as electricity duty within a stipulated time period.
R2 failed to do so, hence, state government approached District Magistrate, Mirzapur.
Issue
Whether Hindalco and Renusagar should be treated as one concern and the consumption of
energy by Hindalco must be regarded as consumption by Hindalco from own source of
generation?
Appellant’s Arguments
Contended that there was no need for lifting the corporate veil – no warrant either in law or in
fact to lift the corporate veil and to treat Renusagar as Hindalco’s own source of generation.
The veil is to be lifted only in such cases where the company has been formed to escape legal
obligations.
The two companies are indeed separate entities. The profits and balances of both the
companies are calculated distinctly. For purposes of tax, even if a parent company wholly
owns the subsidiary company, they are treated as two separate juristic entities.
Respondent’s Arguments
Electricity is indeed a raw material for the production of aluminium – state government had
assured that adequate power would be provided to them at a very cheap and economical rate
for aluminium production – hence, aluminium plant by R2 was set up and R2 was allowed to
expand its capacity on the condition that – (a) installation of its own power plant; (b) the
power plant could be later taken over by the state government.
Hence, to reduce complications in the event of a takeover, it was decided that they’d make a
100% owned subsidiary which would supply power only to R2.
Argued that – R1 is different from the licensees mentioned under the Indian Electricity Act,
1910. It is not a free or individual entity; it is a captive source of generation of R2. The
sanction provided to the R1. is different from other sanctions in the sense that, the holder is
allowed to supply power “only” to R2.
The three clauses of Section 3(1)(5), UP Electricity Act, must be interpreted by way of
harmonious construction. Section 3 (1)(a) must not defeat the purpose of section 3(1)(c). The
distinction, if any, is made, would be arbitrary and irrational. Therefore, amounting to
violation of Article 14 of the Constitution of India.

R1 must be regarded as the alter ego of Hindalco, its own source of generation, within the
meaning of Section 3(1)(c).

Judgement
SC observed that the person generating and consuming energy are the same and hence,
corporate veil must be lifted. Hindalco and Renusagar were inextricably linked together –
Renusagar had no separate existence apart from Hindalco. Hence, they must be treated as one
concern and the consumption of energy by Hindalco must be regarded as consumption from
its own source.
The Supreme Court was in agreement with the judgement of the High Court in lifting the
corporate veil as it was an error on the part of the appellants to not treat the subsidiary
as “own source of generation” of the parent company. It was held that in the facts of this case,
the corporate veil must be lifted.
Thus, the government did not act in violation of either the principles of natural justice or
arbitrarily or in violation of the principles established in judicial precedents.
Appeal dismissed.

11. Union of India & Ors Vs. M/s. Indo-Afghan Agencies Ltd, 1968
Facts: The Textile Commissioner published a scheme called the ‘Export Promotion Scheme’
providing incentives to exporters of woollen goods. The scheme was extended by a Trade
Notice to exports of wooden goods to Afghanistan. M/s Indo-Afghan Agencies, respondents,
a firm dealing in woollen goods at Amritsar exported woollen goods to Afghanistan of the
free on board (f.o.b.) value of Rs. 5,03,471/-. The Deputy Director in the office of the Textile
Commissioner, Bombay issued to the respondents an Import Entitlement Certificate for Rs.
1,99,459 only/-. Therefore, respondents made representation to the Deputy Director and to
the Union Government that they should be granted Import Entitlement Certificate for the full
f.o.b value of the goods exported but there was no response.
HC: Therefore, petition under Art. 226 of the Constitution in HC by respondents. The High
Court held that the Export Promotion Scheme specifically provided for granting certificates
to import materials of the "value equal to 100% of the f.o.b. value of the goods exported",
and the respondents were entitled to obtain import licences for an amount equal to 100% of
the f.o.b. value,
Hence, The Union of India, the Textile Commissioner and the Joint Chief Controller of
Imports and Exports have appealed to this Court with certificate granted by the High Court.
Respondent: The Scheme was statutory in character and obliged the Textile Commissioner,
to issue import certificates of the full value of the exports, unless the exporter was after due
investigation under cl. 10 of the Scheme, shown to have "overinvoiced" the goods exported.
And a person exporting goods in pursuance of the Scheme who was denied an import
certificate of the full f.o.b. value could seek the assistance of the High Court. The Textile
Commissioner in the present case made his order without informing the respondents and
giving them an opportunity to explain the materials on the basis of which the "import
entitlement" of the respondents was proposed to be reduced, hence this is inconsistent with
the rules of natural justice.
Appellants: Textile Commissioner was the sole judge, it was open to that Officer to reduce
the import entitlement below the f.o.b. value of the goods exported, and exercise of the power
conferred upon him is not limited by the terms of cl. 10 of the Scheme, and is not, except on
proof of mala fide exercise open to judicial review. Import and export policy of the
Government is based on availability of foreign exchange requirement of goods for internal
consumption, economic climate in the country, and other related matters, and has in its very
nature to be flexible, and on that account the power of the Government to modify or adjust it
as the altered circumstances necessitate, cannot be restricted on the ground that promises
made by the Government in different situations are not carried out.
Judgment:
The Government is not exempt from liability to carry out the representation made by it as to
its future conduct and it cannot on some undefined and undisclosed ground of necessity or
expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of
its own obligation to the citizen on an ex parte appraisement of the circumstances in
which the obligation had arisen.
(1) Whether the Schemes for implementing the Import Trade Policy are merely
executive or administrative instructions, or are legislative directions as well,
depends not on their form, or the method of publication or the source of their
authority. but it is their substance that determines their true character. It cannot be assumed
merely because the policy is general in terms and deals with the grant of licences for import
of goods and related matters, that it is statutory in character. But even if it is only
executive or administrative in character, courts have power in appropriate cases to compel
performance of the obligations imposed by the Schemes upon thedepartmental authorities.
(2) The Textile Commissioner was not the sole judge of the quantum of import licence to
be granted to an exporter and courts are competent in appropriate cases to grant relief, if,
contrary to the Scheme, the Government and its officers at their mere whim ignore the
promises made by the Government and arbitrarily decline to grant the promised import
licence to an exporter who has acted to his prejudice relying upon the representation. Where a
person has acted upon representations made in an Export Promotion Scheme that import
licence upto the value of the goods exported will be issued, and had exported goods, his
claim for the import licence for the maximum value permissible by the scheme
cannot be arbitrarily rejected. In such a case reduction in the amount of import
certificate may be justified on the ground of misconduct of the exporter in relation to the
goods exported or on special considerations such as difficult foreign exchange position, or
other matters having a bearing on the general interests of the State. But, where, as in
the present case, the Scheme provided for the rant of import entitlement of the
value and not 368 up to the value, of the goods exported, the Textile
Commissioner should in the ordinary course, grant import certificate for the full value of
the goods exported: he may reduce that mount only after the enquiry contemplated by cl. 10
of the Scheme, that is, enquiry made after giving an opportunity to the respondents
and held in a manner consistent with the rules of natural justice and the basic concepts
of justice and fair-play.
(3) Executive necessity, if any, does not release the Government from honoring its
solemn promises relying on which citizens have acted to their detriment especially
when the representation in the Scheme was not' subject to any implied term that the
Government will not be bound to grant the import certificate for the full value of the
goods exported if they deem it inexpedient.
(4) The respondents were not seeking to enforce any contractual right: they are seeking
to enforce compliance with the obligation which is laid upon the Textile
Commissioner by the terms of the Scheme. The claim of the respondents was rounded
upon the equity which arose in their favour as a result of the representation made on
behalf of the Government in the Export Promotion Scheme, and the action taken by the
respondents acting upon the representation. Even though the case did not fall
within the terms of s. 115 of the Evidence Act, it was still open to a party who had acted
on a representation made by the Government to claim that the Government should be
hound to carry out the promise made by it, though not recorded in the form of a formal
contract as required by the Constitution.
Dismissed.

12. Hira Nath Mishra And Ors. vs The Principal, Rajendra Medical college, 1973
Facts: The appellants were Second Year students of the college and lived in a Hostel
attached to the college. There was another Hostel for girl students. On one night, some male
students of the college entered into the compound of the girls hostel and were seen walking
without clothes of them. They went near the windows of the rooms of some of the girls and
tried to pull the hand of one of the girls. Some five of these boys then climbed up along the
drain pipes to the terrace of the girls Hostel. On seeing them the girls raised an alarm
following which the students ran away, The girls recognized four out of these male students-
three of them being the present appellants and the fourth being one Upendra Prasad Singh.
Hence, complaint registered for trespassing into the premises of the girls hostel and gross
misconduct. Accordingly, enquiry held. Each student was duly heard. Their statements were
recorded. After making the necessary enquiry, they were expelled from the college for a
minimum period of two calendar years and also from the Hostel.
HC: The male students’ chief contention was that rules of natural justice had not been
followed before the Order was passed against them expelling them from the college. They
submitted that the enquiry, if any, had been held behind their back; the witnesses who gave
evidence against them were not examined in their presence, there was no opportunity to
cross-examine the witnesses with a view to test their veracity, that the Committee's report
was not made available to them and for all these reasons the enquiry was vitiated and the
order passed by the Principal acting on the report was illegal. The High Court held that the
requirements of natural justice had been satisfied. The petition was, therefore, dismissed.
Hence, this appeal.
Issue: Whether the enquiry violated principles of natural justice?
Judgement:
the doctrine of natural justice cannot be imprisoned within the strait-jacket of a rigid formula
and its application depends upon several factOrs. In the present case the complaint made to
the Principal related to an extremely serious matter as it involved not merely internal
discipline but the safety of the girl students living in the Hostel under the guardianship of the
college authorities. The Principal was, therefore, under an obligation to make a suitable
enquiry and punish the miscreants.
The Police could not be called in because if an investigation was started the female students
out of sheer fright and harm to their reputation would not have cooperated with the police.
Nor was an enquiry, as before a regular tribunal, feasible because the girls would not have
ventured to make their statements in the presence of the miscreants because if they did, they
would have most certainly exposed themselves to retaliation and harassment thereafter. The
college authorities are in no position to protect the girl students outside the college precincts.
Therefore, the authorities had to devise a just and reasonable plan of enquiry which, on the
one hand, would not expose the individual girls to harassment by the male students and, on
the other, secure reasonable opportunity to the accused to state their case.
Accordingly, an Enquiry Committee was appointed, The Committee whose integrity could
not be impeached, collected and sifted the evidence given by the girls. Thereafter the students
definitely named by the girls were informed about the complaint against them and the charge.
They were given an opportunity to state their case. the appellants say, they were in their own
Hostel at the time but there was no evidence in that behalf. The requirements of natural
justice must depend on the circumstances of the case, the nature of the inquiry the rules under
which the tribunal is acting, the subject-matter that is being dealt with, and so forth. Hence,
under the circumstances of the case the requirements of natural justice were fulfilled.
Dismissed.

13. Barium Chemicals Ltd. And Anr vs The Company Law Board, 1966
Lengthy case. Read headnote.

14. Rai Sahib Ram Jawaya Kapur And Ors. vs The State Of Punjab, 1955
Facts: The petitioner, along with five others, was engaged in the business of preparing,
printing, and publications of textbooks for various school level classes, especially the primary
and secondary level books in the State of Punjab under the name of “Uttar Chand Kapur and
Sons”. It was reported that, changes were incorporated through policy of nationalisation of
text books, issued a series of notifications since 1950. Through this notification, the
publishing, printing and selling of the books were taken by the Government exclusively in
their own hands and the private publishers were altogether ousted from this business. The 5%
royalty, in substance, represents the price for the sale of the copyright and it is paid to an
author or any other person who, not being the author, is the owner of the copyright and is
hence competent in law to transfer the same of the Government.
It is against this notification that the complaints of the petitioners are mainly directed u/a 32
of constitution.
Petitioners:
 Notification not only placed unwarrantable restrictions upon the rights of the petitioners
to carry on their business but have practically ousted them and other fellow-traders from
 the business altogether. It is said that no restrictions could be imposed upon the
petitioners' right to carry on the trade which is guaranteed under article 19(1)(g) of the
Constitution by mere executive orders without proper legislation and that the legislation,
if any, must conform to the requirements of clause (6) of article 19 of the Constitution.
 It was not open to the Government to deprive the petitioners of their interest in any
business or undertaking which amounts to property without authority of law and without
payment of compensation as is required under article 31 of the Constitution.
Respondents:
 The said activity was covered under the ambit of their inferred leader power as
attributable to the evolving period, the chief currently has an expanded ambit of abilities
and capacities instead of the customary capacity of keeping up with state security and
respectability.
 The counsel further contended that they acted under the procedure required and hence not
only making it completely intra-vires their powers but also in line with the fundamental
rights of the petitioner.
Issues:
 Whether the said notifications violate the fundamental rights of the petitioners under
Article 19 (1) (g) of the Indian Constitution or not?
 Whether legislative backings are required for the purpose and do that needs to be
complied with as per article 19(6) or not?
Judgment:
With respect to the first question on whether there was a violation of fundamental rights of
the petitioners through the act by the state government, the court refused to accept the
petitioners argued that there was a violation of fundamental rights under article 19(1) (g). It
observed that, when it comes to school books, it is the school who should suggest the kind of
books, and it is not the right of publishers to insist the students or school for acceptance of
their books as textbooks. It noted that when a trader is lucky enough in the market, his goods
would be secured, but if he loses any such trade, then he or she shall not state that his or her
fundamental right to have the customers has been violated. Thus, it stated and held that the
scopes of such chances are incidental to each business, and there is no fundamental right in
the present case.
With respect to the second issue, the court firstly the importance of articles 73 and 162 of the
Indian Constitution as it deals with executive powers and the extent to which parliament and
state powers are executed. In that way, it was observed by the court that a modern state
should be expected to engage in all the activities that are required for the welfare of the
people of the country. It also observed that in order to carry on particular trade or business, it
is indeed required that special legislation is enacted for additional requirement of powers
other than what has been provided to an executive as per law. In that situation, special
legislation would be required to encroach upon the privacy rights, for that matter. As the
question of whether there was a violation of the fundamental rights of petitioners was
dismissed, it is also immaterial to state whether the government could, in a way, have powers
to establish a monopoly without law under article 19(6) of the constitution shall remain
immaterial as well.
Thus the petition was dismissed by the Supreme Court of India1.

15. A. K. Kraipak & Ors. Etc vs Union Of India & Ors, 1969
Refer to the headnote.

16. Gullapalli Nageswara Rao vs Andhra Pradesh State Road Corporation

Vv lengthy case. Headnote.

1
https://legalvoiceblog.wordpress.com/2016/12/02/ram-jawayya-kapur-vs-state-of-punjab-giving-touchstone-
for-a-federal-constitution-via-separation-of-powers/ (For more detailed analysis, if needed)