ADMINISTRATIVE

LAW
16
 Introduction
 Need for Administrative Law
 Sources of Administrative Law
 Administrative Discretion
 Judicial Control over Administrative Actions
 Principles of Natural Justice
 Exceptions to Natural Justice
 Liability
 Quasi-Contractual Liability
SELF  Suit Against
TEST state in torts
QUESTIONS
 Damages
 Liability of the public servant
 Liability of public corporation
 Self Test Questions

Answer the following:

1. Describe the provisions relating to cross border
mergers in Companies Act 2013.
2. What are the requirements relating to notice
required under Section 230 of the Companies Act
2013?
3. Companies Act simplified the mergers between
smaller companies. Do you agree?
EXPECTED
MARKS COVERAGE
(1 to 5)
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 ADMINISTRATIVE LAW
INTRODUCTION
Administrative law is that branch of law that deals with powers, functions and responsibilities of various
organs of the state.
Administrative law is the law relating to administration. It determines the organisation, power and duties
of the administrative authorities.
Administrative law is the by-product of ever increasing functions of the Governments.

NEED FOR ADMINISTRATIVE LAW

The modern state typically has three organs- legislative, executive and judiciary.

Traditionally, the legislature was tasked with the making of laws, the executive with the implementation of
the laws and judiciary with the administration of justice and settlement of disputes.
However, this traditional demarcation of role has been found wanting in meeting the challenges of present
era. The legislature is unable to come up with the required quality and quantity of legislations because
of limitations of time, the technical nature of legislation and the rigidity of their enactments. The traditional
administration of justice through judiciary is technical, expensive and dilatory.
The states have empowered their executive (administrative) branch to fill in the gaps of legislature
and judiciary. This has led to an all pervasive presence of administration in the life of a modern citizen.
The ambit of administration is wide and embraces following elements within its ambit:-
1. It makes policies,
2. It executes, administers and adjudicates the law
3. It exercises legislative powers and issues rules, bye- laws and orders of a general nature.
The ever-increasing administrative functions have created a vast new complex of relations between the
administration and the citizen. The modern administration is present everywhere in the daily life of an
individual and it has assumed a tremendous capacity to affect their rights and liberties.

SOURCES OF ADMINISTRATIVE LAW

There are four principal sources of administrative law in India:-

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1. CONSTITUTION OF INDIA:
It is the primary source of administrative law.
Article 73 of the Constitution provides that the executive power of the Union shall extend to matters
with respect to which the Parliament has power to make laws.
Similar powers are provided to States under Article 62.
The Constitution also envisages tribunals, public sector and government liability which are
important aspects of administrative law.

2. ACTS/ STATUTES:
Acts passed by the central and state governments for the maintenance of peace and order, tax
collection, economic and social growth empower the administrative organs to carry on various
tasks necessary for it. These Acts list the responsibilities of the administration, limit their power in
certain respects and provide for grievance redressal mechanism for the people affected by the
administrative action.
3. ORDINANCES, ADMINISTRATIVE DIRECTIONS, NOTIFICATIONS AND
CIRCULARS:
Ordinances are issued when there are unforeseen developments and the legislature is not in session
and therefore cannot make laws. The ordinances allow the administration to take necessary steps
to deal with such developments. Administrative directions, notifications and circulars are issued by
the executive in the exercise of power granted under various Acts.
4. JUDICIAL DECISIONS:
Judiciary is the final arbiter in case of any dispute between various wings of government or
between the citizen and the administration. In India, we have the supremacy of Constitution and the
Supreme Court is vested with the authority to interpret it. The courts through their various decisions
on the exercise of power by the administration, the liability of the government in case of breach of
contract or tortuous acts of Governments servants lay down administrative law which guide their
future conduct.
NKJ–CLASSROOM PRACTICE

Q. 1. What are the four principal sources of administrative law in India?

ADMINISTRATIVE DISCRETION
It means the freedom of an administrative authority to choose from amongst various alternatives but
with reference to rules of reason and justice and not according to personal whims. The exercise of
discretion should not be arbitrary, vague (confusing) and fanciful (unrealistic), but legal and regular.
Administration has become a highly complicated job needing a good deal of flexibility apart from
technical knowledge, expertise and know-how. Freedom to choose from various alternatives allows the
administration to fashion its best response to various situations.

JUDICIAL CONTROL OVER ADMINISTRATIVE ACTIONS

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Any country which claims to have a rule of law cannot have a government authority which has no
checks on its power. Administrative organs have wide powers and their exercise of discretion can be
vitiated by a number of factors. Therefore, the government must also provide for proper redressed
mechanism. For India, it is of special significance because of the proclaimed objectives of Indian polity to
build a socialistic pattern of society that has led to huge proliferation of administrative agencies and
processes.
In India the modes of judicial control of administrative action can be conveniently grouped into three
heads:

1. CONSTITUTIONAL
The Constitution of India is supreme and all the organs of state derive their existence from it.
Indian Constitution expressly provides for judicial review. Consequently, an Act passed by the
legislature is required to be in conformity with the requirements of the Constitution and it is for
the judiciary to decide whether or not that Act is in conformity with the Constitutional requirements. If
it is found in violation of the Constitutional provisions the Court has to declare it
unconstitutional and therefore, void.
Judicial Review
The biggest check over administrative action is the power of judicial review. Judicial review is the
authority of Courts to declare void the acts of the legislature and executive, if they are found in
violation of provisions of the Constitution. Judicial Review is the power of the highest Court of a
jurisdiction to invalidate on Constitutional grounds, the acts of other Government agency within that
jurisdiction.
The power of judicial review controls not only the legislative but also the executive or
administrative act.
In Mansukhlal Vithaldas Chauhan v State of Gujarat, the Supreme Court held that while exercising
the power of judicial review the court is to confine itself to the question of legality. Its concern should be:
1. whether a decision making authority exceeding its power?
2. committed an error of law?
3. committed a breach of rules of natural justice?
4. reached a decision which no reasonable tribunal would have reached, or
5. abused its power?
Judicial review is exercised at two stages:
(i) at the stage of delegation of discretion, and
(ii) at the stage of exercise of administrative discretion.

1. Judicial review at the stage of delegation of discretion

Any law can be challenged on the ground that it is violative of the Constitution and therefore laws
conferring administrative discretion can thus also be challenged under the Constitution. In
the case of delegated legislation the Constitutional courts have often been satisfied with vague or
broad statements of policy, but usually it has not been so in the cases where administrative
discretion has been conferred in matters relating to fundamental rights.
The court exercise control over delegation of discretionary powers to the administration by
adjudicating upon the constitutionality of the law under which such powers are delegated with
reference to the fundamental rights enunciated in Part III of the Indian Constitution.

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 Therefore, if the law confers vague and wide discretionary power on any administrative authority,
it may be declared ultra vires Article 14, Article 19 and other provisions of the Constitution.
Administrative Discretion and Article 14
Article14 of the Constitution of India provides for equality before law. It prevents arbitrary
discretion being vested in the executive. Article 14 strikes at arbitrariness in state action and
ensures fairness and equality of treatment. Right to equality affords protection not only against
discretionary laws passed by legislature but also prevents arbitrary discretion being vested in
the executive.
Administrative Discretion and Article 19
Article 19 guarantees certain freedoms to the citizens of India, but they are not absolute.
Reasonable restrictions can be imposed on these freedoms under the authority of law. The
reasonableness of the restrictions is open to judicial review. These freedoms can also be afflicted
by administrative discretion.
In a large number of cases, the question as to how much discretion can be conferred on the
executive to control and regulate trade and business has been raised. The general principle
laid down is that the power conferred on the executive should not be arbitrary, and that it
should not be left entirely to the discretion of any authority to do anything it likes without any
check or control by any higher authority.

2. Judicial review at the stage of exercise of discretion

No law can clothe administrative action with a complete finality even if the law says so, for
the courts always examine the ambit and even the mode of its exercise to check its conformity
with fundamental rights. The courts in India have developed various formulations to control the
exercise of administrative discretion, which can be grouped under two broad heads, as under:
(i) Authority has not exercised its discretion properly- ‘abuse of discretion’.
(ii) Authority is deemed not to have exercised its discretion at all- ‘non-application of mind.

(a) Abuse of discretion

(i) Mala fides: If the discretionary power is exercised by the authority with bad faith or
dishonest intention, the action is quashed by the court.
(ii) Irrelevant considerations: If a statute confers power for one purpose, its use for a
different purpose is not regarded as a valid exercise of power and is likely to be
quashed by the courts.
(iii) Leaving out relevant considerations: The administrative authority exercising the
discretionary power is required to take into account all the relevant facts. If it leaves
out relevant consideration, its action will be invalid.
(iv) Arbitrary orders: The order made should be based on facts and cogent (concrete)
reasoning and not on the whims and fancies of the adjudicatory authority.
(v) Improper purpose: The discretionary power is required to be used for the purpose for
which it has been given. If it is given for one purpose and used for another purpose it
will amount to abuse of power.
(vi) Colourable exercise of power: Where the discretionary power is exercised by the
authority on which it has been conferred ostensibly for the purpose for which it has been
given but in reality for some other purpose, it is taken as colourable exercise of the
discretionary power and it is declared invalid.

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 (vii) Non-compliance with procedural requirements and principles of natural justice: If the
procedural requirement laid down in the statute is mandatory and it is not complied,
the exercise of power will be bad.
(viii) Exceeding jurisdiction: The authority is required to exercise the power within the limits
or the statute. Consequently, if the authority exceeds this limit, its action will be held to
be ultra vires and, therefore, void.

(b) Non-application of mind

(i) Acting under dictation: Where the authority exercises its discretionary power under the
instructions or dictation from superior authority it is taken as non-exercise of power by
the authority and its decision or action is bad. In such condition the authority purports to
act on its own but in substance the power is not exercised by it but by the other
authority. The authority entrusted with the powers does not take action on its own
judgment and does not apply its mind.
(ii) Self restriction: The authority entrusted with the discretionary power is required to
exercise it after considering the individual cases and the authority should not imposes
fetters (hinderance) on its discretion by adopting fixed rule of policy to be applied
rigidly to all cases coming before it.
(iii) Acting mechanically and without due care: Non-application of mind to an issue that
requires an exercise of discretion on the part of the authority will render the decision bad
in law.

NKJ–CLASSROOM PRACTICE
Q. 1. Write a short note on:
(i) Judicial relief at the stage of delegation of discretion
(ii) Judicial relief at the stage of exercise of administrative discretion.

2 STATUTORY
The method of statutory review can be divided into two parts:
(i) Statutory appeals: There are some Acts, which provide for an appeal from statutory tribunal
to the High Court on point of law. e.g. Section 30 Workmen’s Compensation Act, 1923.
(ii) Reference to the High Court or statement of case: There are several statutes, which provide for
a reference or statement of case by an administrative tribunal to the High Court.

3. ORDINARY OR EQUITABLE
Apart from the remedies as discuss above there are certain ordinary remedies, which are available
to person against the administration. These remedies are also called equitable remedies and
include:
1. Injunction
An injunction is a preventive remedy. It is a judicial process by which one who has invaded or is
threatening to invade the rights of another is restrained from continuing or commencing such
wrongful act. In India, the law with regard to injunctions has been laid down in the Specific Relief
Act, 1963.

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 (a) Prohibitory Injunction: Prohibitory injunction forbids the defendant to do a wrongful act,
which would infringe the right of the plaintiff. A prohibitory injunction may be interlocutory
or temporary injunction or perpetual injunction.
(i) Interlocutory or temporary injunction: Temporary injunctions are such as to continue
until a specified time or until the further order of the court. (Section 37 for the
Specific Relief Act). It is granted as an interim measure to preserve status quo until the
case is heard and decided.
(ii) Perpetual injunction: A perpetual injunction is granted at the conclusion of the
proceedings and is definitive of the rights of the parties.
(b) Mandatory injunction: When to prevent the breach of an obligation it is necessary to
compel the performance of certain acts which the court is capable of enforcing, the court
may in its discretion grant an injunction to prevent the breach complained of and also to
compel performance of the requisite acts.

2. Declaratory Action
In some cases where wrong has been done to a person by an administrative act, declaratory
judgments may be the appropriate remedy. Declaration may be taken as a judicial order issued by
the court declaring rights of the parties without giving any further relief. Thus a declaratory
decree declares the rights of the parties.
3. Action for damages
If any injury is caused to an individual by wrongful or negligent acts of the Government servant,
the aggrieved person can file suit for the recovery of damages from the Government
concerned.
NKJ–CLASSROOM PRACTICE
Q. 1. Briefly enumerate the various modes of judicial control of administrative
action in India.

PRINCIPLES OF NATURAL JUSTICE

One of the most important principles in the administration of justice is that justice must not only be done
but also seen to be done. This is necessary to inspire confidence in the people in the judicial system.
Natural justice is a concept of Common Law and represents procedural principles developed by judges.
Principles of natural justice are not precise rules of unchanging content; their scope varies according to
the context. In India, the principles of natural justice are derived from Article 14 and 21 of the
Constitution.
The concept of natural justice has undergone a tremendous change over a period of time. In the past, it was
thought that it included just two rules: rule against bias and rule of fair hearing. In the course of time
many sub-rules were added.
1. Rule against bias (nemojudex in causa sua):
According to this rule no person should be made a judge in his own cause. The rule against bias has
two main aspects- one, that the judge must not have any direct personal stake in the matter at hand and
two, there must not be any real likelihood of bias.

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 Bias can be of the following three types:
(a) Pecuniary bias: The judicial approach is unanimous on the point that any financial interest of the
adjudicatory authority in the matter, howsoever small, would vitiate the adjudication.
(b) Personal bias: There are number of situations which may create a personal bias in the Judge’s
mind against one party in dispute before him. He may be friend of the party, or related to him
through family, professional or business ties. The judge might also be hostile to one of the
parties to a case.
(c) Subject matter bias: A judge may have a bias in the subject matter, which means that he himself
is a party, or has some direct connection with the litigation. To disqualify on the ground of bias
there must be intimate and direct connection between adjudicator and the issues in dispute.

2. Rule of fair hearing (audi alteram partem):

The second principle of natural justice is audi alteram partem (hear the other side) i.e. no one should
be condemned unheard. It requires that both sides should be heard before passing the order. This
rule implies that a person against whom an order to his prejudice is passed should be given information
as to the charges against him and should be given opportunity to submit his explanation thereto.
Following are the ingredients of the rule of fair hearing:
(a) Right to notice: Hearing starts with the notice by the authority concerned to the affected
person. Consequently, notice may be taken as the starting point of hearing. Unless a person
knows the case against him, he cannot defend himself. The notice must give sufficient time to
the person concerned to prepare his case. The notice must be adequate and reasonable. The
notice is required to be clear and unambiguous.
(b) Right to present case and evidence: The party against whom proceedings have been initiated
must be given full opportunity to present his or her case and the evidence in support of it.
(c) Right to rebut adverse evidence: For the hearing to be fair the adjudicating authority is not only
required to disclose to the person concerned the evidence or material to be taken against him but
also to provide an opportunity to rebut the evidence or material.
(i) Cross-examination: Examination of a witness by the adverse party is called cross
examination. The main aim of cross-examination is the detection of falsehood in the
testimony of the witness.
(ii) Legal Representation: where the case involves a question of law or matter which is
complicated and technical or where the person is illiterate or expert evidence is on record,
the denial of legal representation will amount to violation of natural justice.
(d) Disclosure of evidence: A party must be given full opportunity to explain every material that
is sought to be relied upon against him.
(e) Speaking orders: Reasoned decision may be taken to mean a decision which contains reason
in its support. When the adjudicatory bodies give reasons in support of their decisions, the
decisions are treated as reasoned decision. It is also called speaking order. In such condition
the order speaks for itself or it tells its own story. Reason based judgments and orders allow
the party affected by it to go into the merits of the decision and if not satisfied, exercise his
right to appeal against the judgment/ order.

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EXCEPTIONS TO NATURAL JUSTICE
Though the normal rule is that a person who is affected by administrative action is entitled to claim natural
justice, that requirement may be excluded under certain exceptional circumstances.

(a) Statutory Exclusion: The principle of natural justice may be excluded by the statutory provision.
However, the principles of natural justice are not incapable of exclusion. The statute may exclude
them. When the statute expressly or by necessary implication excludes the application of the principles
of natural justice the courts do not ignore the statutory mandate. But one thing may be noted that in
India, Parliament is not supreme and therefore statutory exclusion is not final.

(b) Emergency: In exceptional cases of urgency or emergency where prompt and preventive action is
required the principles of natural justice need not be observed.
(c) Interim disciplinary action: The rules of natural justice are not attracted in the case of interim
disciplinary action. For example, the order of suspension of an employee pending an inquiry against
him is not final but interim order and the application of the rules of natural justice is not attracted in the
case of such order.
(d) Academic evaluation: Where a student is removed from an educational institution on the grounds of
unsatisfactory academic performance, the requirement of pre-decisional hearing is excluded.
(e) Impracticability: Where the authority deals with a large number of person it is not practicable to give
all of them opportunity of being heard and therefore in such condition the court does not insist on the
observance of the rules of natural justice.

EFFECT OF FAILURE OF NATURAL JUSTICE

When an authority required observing natural justice in making an order fails to do so, should the order
made by it be regarded as void or voidable?
Generally speaking, a voidable order means that the order was legally valid at its inception, and it
remains valid until it is set aside or quashed by the courts, that is, it has legal effect up to the time it is
quashed.
On the other hand, a void order is no order at all from its inception; it is a nullity and void ab initio.
In most cases a person affected by such an order cannot be sure whether the order is really valid or not
until the court decided the matter. Therefore, the affected person cannot just ignore the order treating it as
a nullity. He has to go to a Court for an authoritative determination as to the nature of the order is
void.

LIABILITY
The liability of the government can
either be contractual or

tortious.

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 1. LIABILITY OF STATE OR GOVERNMENT IN CONTRACT

The Constitution of India allows the central and the state governments to enter into contracts.
According to its provisions a contract with the Government of the Union or state will be valid and binding
only if the following conditions are followed:
(a) The contract with the Government must be made in the name of the President or the Governor, as
the case may be.
(b) The contract must be executed on behalf of the President or the Governor of the State as the case
may be. The word executed indicates that a contract with the Government will be valid only when it is
in writing.
(c) A person duly authorized by the President or the Governor of the State, as the case may be, must
execute the contract.

Article 299 (2) of the Constitution makes it clear that neither the President nor the Governor shall be
personally liable in respect of any contract or assurance made or executed for the purposes of the
Constitution or for the purposes of any enactment relating to the Government of India. Subject to the
provisions of Article 299 (1), the other provisions of the general law of contract apply even to the
Government contract.

Effect of a valid contract with Government

As soon as a contract is executed with the Government in accordance with Article 299, the whole law of
contract as contained in the Indian Contract Act, 1872 comes into operation. In India the remedy for
the breach of a contract with Government is simply a suit for damages.
NKJ–CLASSROOM PRACTICE

Q. 1. The liability of the government can either be contractual or tortious. Discuss..

QUASI-CONTRACTUAL LIABILITY
According to section 70 of the Indian Contracts Act, 1872, where a person lawfully does anything for
another person or delivers anything to him such other person enjoys the benefit thereof, the latter is
bound to make compensation to the former in respect of or to restore, the thing so done or delivered. If
the requirements of section 70 of the Indian Contract Act are fulfilled, even the Government will be
liable to pay compensation for the work actually done or services rendered by the State.

2. SUIT AGAINST STATE IN TORTS

A tort is a civil wrong arising out of breach of a civil duty or breach of non-contractual obligation and the
only remedy for which is damages. The essential requirement for the tort is beach of duty towards
people in general.
When the responsibility of the act of one person falls on another person, it is called vicarious liability.
sometimes the state is held vicariously liable for the torts committed by its servants in the exercise of
their duty. The State would of course not be liable if the acts done were necessary for protection life or
property. Acts such as judicial or quasi judicial decisions done in good faith would not invite any
liability.

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In India Article 300 of the Constitution declares that the Government of India or of a State may be sued
for the tortious acts of its servants. rule is, however, subject to any such law made by the Parliament
or the State Legislature.
In Kasturi Lal v. State of U. P, the Government was not held liable for the tort committed by its servant
because the tort was said to have been committed by him in the course of the discharge of statutory
duties.
NKJ–CLASSROOM PRACTICE

Q. 1. The liability of the State is vicarious for the wrongful acts of its servants. Comment.

DAMAGES
It may happen that a public servant may be negligent in exercise of his duty. It may, however, be
difficult to recover compensation from him. From the point of view of the aggrieved person,
compensation is more important than punishment. Therefore, like all other employers the State must
be made vicariously liable for the wrongful acts of its servants

LIABILITY OF THE PUBLIC SERVANT

Liability of the State must be distinguished from the liability of individual officers of the State.
So far as the liability of individual officers is concerned, if they have acted outside the scope of their
powers or have acted illegally, they are liable to same extent as any other private citizen would be.

LIABILITY OF PUBLIC CORPORATION

The term ‘Statutory Corporation’ (or Public Corporation) refers to such organisations which are
incorporated under the special Acts of the Parliament/State Legislative Assemblies. Its management
pattern, its powers and functions, the area of activity, rules and regulations for its employees and its
relationship with government departments, etc. are specified in the concerned Act.
The public corporation (statutory corporation) is a body having an entity separate and independent
from the Government.
It is not a department or organ of the Government. Consequently, its employees are not regarded as
Government servants and therefore they are not entitled to the protection of Article 311 of the
Constitution.
On principles of vicarious liability, corporation is liable to pay damages for wrong done by their
officers or servants.

EXAMPLES OF PUBLIC CORPORATION

Life Insurance Corporation, Food Corporation of India (FCI), Oil and Natural Gas Corporation (ONGC),
Air India, State Bank of India, Reserve Bank of India, Employees State Insurance Corporation, Central
Warehousing Corporation, Damodar Valley Corporation, National Textile Corporation, Industrial Finance
Corporation of India (IFCI), Tourism Corporation of India, Minerals and Metals Trading Corporation
(MMTC) etc are some of the examples of Public Corporations.

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THE MAIN FEATURES OF STATUTORY CORPORATIONS ARE AS FOLLOWS:

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 SELF TEST QUESTIONS

(These are meant for re-capitulation only.

Answers to these questions are not to be
submitted for evaluation)
1. What are the four principal sources of
administrative law in India?
2. Briefly enumerate the various modes of
judicial control of administrative action in
India.
3. Write a short note on:
(a) Judicial relief at the stage of delegation
of discretion
(b) Judicial relief at the stage of exercise of
administrative discretion.
4. The liability of the government can either be
contractual or tortious. Discuss.
5. The liability of the State is vicarious for the
wrongful acts of its servants. Comment.

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Q. 1.

Answer to Question No. 1:-

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Q. 2.

Answer to Question No. 1:-

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