Udit Narain Singh Malpaharia vs Board of Revenue

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 586 of 1962

Decision Date: 19 October 1962

Coram: Syed Jaffer Imam, N. Rajagopala Ayyangar, J.R. Mudholkar, Subba Rao

In the matter of Udit Narain Singh Malpaharia versus Additional Member, Board of Revenue, the Supreme Court of India delivered its judgment on 19 October 1962. The bench comprised Justice Syed Jaffer Imam, Justice N. Rajagopala Ayyangar and Justice J.R. Mudholkar. The case is reported in 1963 AIR 786 and 1963 SCR Supl. (1) 676. The petition arose under article 226 of the Constitution of India, seeking a writ of certiorari to set aside orders issued by the Board of Revenue, Bihar.

The controversy began with the settlement of a country liquor shop. After the licence of the earlier licence‑holder was cancelled, a lot was drawn in favour of an individual named Jadu Manjhi. The former licence‑holder filed an appeal before the Commissioner of Excise, which was dismissed, and then sought a revision before the Board of Revenue, Bihar. The Board granted a stay of the settlement of the order, but subsequently dismissed the revision petition. During these proceedings Jadu Manjhi died. A new lot was then drawn in favour of the petitioner, Udit Narain Singh Malpaharia. The previous licence‑holder again obtained a stay from the revenue court; however, his petition was dismissed and, after furnishing security on 11 September 1961, the shop was settled in favour of the petitioner and a licence was issued to him.

On 19 June 1961, Phudan Manjhi, the son of the deceased Jadu Manjhi, applied to the Deputy Commissioner requesting that his name be substituted for his father’s. The Deputy Commissioner rejected the application. Phudan Manjhi appealed this rejection before the Commissioner of Excise, who remanded the matter back to the Deputy Commissioner for an assessment of Phudan’s fitness to hold the licence. Subsequently, Bhagwan Rajak, who had not been a party before the Deputy Commissioner, filed an application before the Commissioner demanding a fresh advertisement for the settlement of the shop. The Commissioner allowed Bhagwan’s request and directed the Deputy Commissioner to proceed with a new settlement in accordance with the Excise Manual.

The petitioner then approached the Board of Revenue, challenging the order directing a fresh settlement. The Board dismissed the petition and directed the Deputy Commissioner that, unless he reached a definite conclusion that Phudan Manjhi was unfit to hold the licence, Phudan should be selected as the licencee pursuant to the applicable rules. Consequently, the petitioner’s licence was cancelled and the Deputy Commissioner was ordered to conduct a fresh settlement giving preferential treatment to Phudan Manjhi.

In response, the petitioner filed a writ petition under article 226 of the Constitution in the High Court, seeking to quash the orders of the Deputy Commissioner and the Board of Revenue. Neither Phudan Manjhi nor Bhagwan Rajak, whose favour formed the basis of the Board’s decision, were impleaded as parties to the writ petition. The High Court dismissed the petition in limine, holding that the absence of those parties rendered the petition untenable.

In the earlier stages of the proceedings, the High Court observed that the writ petition had failed to include parties who were indispensable to the adjudication of the dispute. Because those parties were necessary participants, the Court concluded that it was appropriate to dismiss the petition. The appellant contended that the tribunal or authority whose decision was being challenged should be the only indispensable party in the writ, and that even at a late stage the court retained the authority to order the inclusion of other parties whose interests were affected by the order. The Court clarified the distinction between a necessary party and a proper party. A necessary party, the Court explained, is one whose presence is essential for any order to be effective; without such a party, the order cannot be given. In contrast, a proper party is one whose absence does not prevent the issuance of an effective order, yet whose participation is required for a complete and final determination of the matters raised in the proceeding.

The Court further held that a writ of certiorari is available only against a judicial or quasi‑judicial act. Accordingly, a tribunal exercising judicial or quasi‑judicial functions may not decide adversely upon the rights of an individual without first affording that individual a hearing or an opportunity to present his case. Where the relevant statute or its subordinate rules do not expressly provide for a hearing, the principles of natural justice nonetheless compel the tribunal to grant one. Any order rendered without hearing the persons affected would be void. Because a writ of certiorari seeks to set aside the record of an inferior tribunal or authority performing such judicial or quasi‑judicial acts, it follows that the High Court, while exercising its jurisdiction, must also act in a judicial manner in disposing of the matters before it. In a proceeding for certiorari, not only is the tribunal or authority whose order is challenged a necessary party, but also any persons in whose favour that order was made are necessary parties. Nevertheless, the Court retained a discretionary power to add or implead proper parties, either on its own motion or upon application by a party to the writ, so as to resolve all questions that may arise in the controversy. The Court referred to the authorities of The King v. The Electricity Commissioner (1924 1 K.B. 171), The King v. London Country Council (1931 2 K.B. 215), Ahmedalli v. M.D. Lalkaka (A.I.R. 1954 Bom. 33) and Kanglu Baula v. Chief Executive Officer (A.I.R. 1955 Nag. 49) in support of these principles.

The judgment was delivered in the context of Civil Appeal No. 586 of 1962, arising by special leave from the order dated 3 July 1962 of the Patna High Court in Miscellaneous Judicial Case No. 460 of 1962. Counsel for the appellant included the Additional Solicitor‑General of India together with two other advocates, while counsel for the respondents comprised four advocates. The appeal was decided on 19 October 1962, and the opinion was authored by Justice Subba Rao. The appeal challenged the High Court’s in‑limine dismissal of an application for a writ of certiorari filed under Article 226 of the Constitution. The Court proceeded to set out the factual background that gave rise to the appeal, which involved a dispute over the settlement of a country‑liquor shop in Dumka Town and the cancellation and reallocation of its licence.

In Dumka Town there was a country‑liquor shop whose original licensee was Hari Prasad Sah; the Excise Authorities later cancelled his licence. After the cancellation a public notice was issued seeking applications for a new settlement of the shop. Jadu Manjhi, together with several other persons, applied for the licence. On 22 March 1961 the Deputy Commissioner of Santal Parganas conducted a draw of lots for the settlement of the shop, and the lot was awarded to Jadu Manjhi. Hari Prasad Sah contested the Deputy Commissioner’s order before the Commissioner of Santal Parganas, but his challenge was dismissed. Consequently, he approached the Board of Revenue, Bihar, and obtained a stay of the settlement. On 13 July 1961 the Board of Revenue dismissed the petition filed by Hari Prasad Sah.

Subsequently Jadu Manjhi died. When the Deputy Commissioner was informed of his death, he ordered a fresh draw of lots on 19 June 1961, and the lot was again given to the appellant (the present petitioner). Hari Prasad Sah again filed a petition in the revenue court and secured a stay of the settlement in favour of the appellant. In the meantime Basantilal Bhagat filed an application under Article 226 of the Constitution in the Patna High Court and obtained an interim stay; however, he withdrew his application on 8 September 1961. The Board of Revenue, having already dismissed Hari Prasad Sah’s petition on 13 July 1961, later on 11 September 1961 allowed the appellant to furnish security, after which the shop was settled in his favour and a licence was issued to him. After the licence period expired, it was renewed for the year 1962 in the appellant’s name.

On 19 June 1961 Phudan Manjhi, the son of the deceased Jadu Manjhi, filed a petition before the Deputy Commissioner seeking to have his name substituted for his father’s on the basis of the lot originally drawn in favour of his father. The Deputy Commissioner rejected this request. Phudan Manjhi appealed that decision to the Commissioner of Excise, who remanded the matter back to the Deputy Commissioner for consideration of Phudan Manjhi’s fitness to hold the licence and to determine whether the provisions of Rule 145 of the Excise Manual, Volume II, were applicable. Separately, Bhagwan Rajak, who had not been a party before the Deputy Commissioner, filed an application before the Commissioner alleging that a fresh advertisement for the settlement of the shop was required under clause (13) of Rule 101 of the Excise Manual, Volume III. On 13 March 1962 the Commissioner approved Bhagwan Rajak’s application and directed the Deputy Commissioner to conduct a fresh settlement of the shop in accordance with the relevant rules. The appellant contested these orders by filing petitions before the Board of Revenue. The Board, by an order dated 30 May 1962, dismissed the appellant’s petitions and gave further directions, the details of which continue beyond the present excerpt.

According to the record, the Deputy Commissioner was required to reach a definite conclusion on the fitness of Phudan Manjhi to hold a licence; if no such conclusion was reached, the Commissioner was to select Phudan Manjhi as a licencee under rule 145 of the Excise Manual, Volume II. As a result of the proceedings, the licence held by the appellant was cancelled, and the Deputy Commissioner was directed to conduct a fresh settlement that would give preferential treatment to Phudan Manjhi. In response, the appellant instituted a petition under article 226 of the Constitution before the Patna High Court, seeking to set aside the cancellation order and the direction for a fresh settlement. Neither Phudan Manjhi nor Bhagwan Rajak, whose interests were favoured by the Board of Revenue’s decision, were joined as parties to the petition. It was thereafter represented that, following the Board of Revenue’s orders, the Deputy Commissioner carried out an enquiry, concluded that Phudan Manjhi was unfit to be selected for a licence, and had not yet effected a fresh settlement because the present appeal remained pending. The counsel appearing for the appellant, the learned Additional Solicitor General, argued that the Board of Revenue acted without jurisdiction in directing a fresh settlement because neither rule 101 nor rule 145 of the Excise Manual applied to the facts. He maintained that rule 101 was inapplicable because no licence had been cancelled on the ground of malpractice, and that rule 145 was not attracted since Phudan Manjhi was not a licencee, no licence having been issued in his favour.

In contrast, the counsel for the respondents raised a preliminary objection, contending that Phudan Manjhi and Bhagwan Rajak were necessary parties to the writ petition and, having not been made parties, the High Court was fully justified in dismissing the petition in limine. Accepting this preliminary objection on behalf of the respondents, the judgment refrained from expressing any view on the merits of the case. The judgment also observed that the High Court’s order did not specify whether the dismissal was on the ground of the absence of the necessary parties or on the merits, but that this omission did not preclude the present Court from considering the issue now raised, since the respondents had not been given an opportunity to raise it in the High Court owing to the lack of notice. The question that emerged was whether, in a certiorari writ filed under article 226 of the Constitution, the party or parties in whose favour a tribunal or authority has made an order that is sought to be quashed constitute necessary parties. While the learned Additional Solicitor General submitted that, in such a writ, only the tribunal or authority itself is a necessary party and that the parties for whose favour the order was made are at most proper parties, he further argued that the Court could, even at this advanced stage, order the impleading of those parties to enable a final adjudication of the controversy.

The counsel for the respondents argued that even if the question of whether the authority itself must be joindered was unsettled, the parties who stood to be directly affected by the order were unquestionably required to be joined, because otherwise the High Court would be passing a decision behind the backs of those whose rights would be altered. To resolve the issue, the Court first clarified the distinction between a necessary party and a proper party in any proceeding. The settled principle was that a necessary party was one whose presence was indispensable for an order to be effectively made, whereas a proper party was one whose presence was not essential for the order’s effectiveness but whose inclusion was required for the Court to reach a complete and final determination of the matters before it. Having explained that distinction, the Court turned to the character of a writ of certiorari and the relief it could afford to a petitioner. Certiorari was described as a remedy that permitted a higher court to set aside the proceedings of a lower court of record or any other person or body exercising judicial or quasi‑judicial functions. The Court noted that, for the purposes of the present appeal, it was unnecessary to differentiate between a writ of certiorari and a writ “in the nature of” certiorari, because in either scenario the High Court ordered the inferior tribunal or authority to forward the record of the pending proceedings for examination and, if warranted, for annulment. The Court reiterated the well‑established rule that certiorari could be issued only against a judicial or quasi‑judicial act and not against a purely administrative act. To illustrate what constitutes a judicial act, the Court cited the classic test formulated by Lord Justice Atkin in The King v. The Electricity Commissioner (1), which was subsequently followed by this Court in several decisions. Atkin’s formulation stated that “wherever any body of persons having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially… act in excess of their legal authority they are subject to the controlling jurisdiction of the King’s Bench Division exercised in these writs.” Further, Lord Justice Slesser in The King v. London County Council (2) dissected Atkin’s test into four essential elements: (1) a body of persons, (2) possessing legal authority, (3) to determine questions affecting the rights of subjects, and (4) having the duty to act judicially; when such a body exceeds its legal authority, a writ of certiorari may be issued. From these ingredients the Court observed that a duty to act judicially was indispensable. Consequently, a tribunal exercising a judicial or quasi‑judicial function could not render a decision adverse to a party’s rights without first affording that party a hearing or an opportunity to present its case in accordance with the principles of natural justice. The Court therefore concluded that the presence of the affected parties was essential for any effective adjudication in a certiorari proceeding.

In this case, the Court noted that when a statute or the rules made under it do not expressly provide for a hearing, the principles of natural justice nevertheless require that a hearing be given. The Court held that any order issued without hearing the parties whose rights are affected would be void as a violation of natural justice. Because a writ of certiorari is intended to remove the record of proceedings of an inferior tribunal or authority that exercised judicial or quasi‑judicial functions, the High Court must itself act judicially when it entertains such a petition. The Court explained that the tribunal or authority from which the records are to be transmitted must be joined as a party in the writ proceedings, since without notice to it the records cannot be legally brought before the High Court. The Court rejected the argument that a tribunal need not be a party by analogy with an appeal against a decree of a subordinate court, emphasizing that an appeal is governed by the Code of Civil Procedure and the lower court is directly subordinate to the appellate court. In contrast, a writ of certiorari is issued to quash the order of a tribunal that is ordinarily outside the appellate or revisional jurisdiction of the court, and the order is set aside on the ground that the tribunal acted without jurisdiction or in excess of its jurisdiction. The Court warned that if the tribunal or authority is not made a party to the writ, it can ignore the High Court’s order quashing its decision because it would not be subject to contempt for non‑compliance. Accordingly, the Court held that the Board of Revenue and the Commissioner of Excise were correctly joined as parties in the writ petition. The next issue considered by the Court was whether the persons whose rights are directly affected by the tribunal’s order must also be joined as necessary parties to the writ. The Court observed that a tribunal or authority exercises its judicial or quasi‑judicial function after hearing the parties, and its order consequently impacts the rights of one or more of those parties. In a writ of certiorari, the party whose application seeks to have the tribunal’s order set aside is the defeated party, while the other party is the successful party whose rights the order protects. The Court stated that the High Court cannot vacate the tribunal’s order without the presence of the successful party, because it would be unable to pass a substantive order affecting that party’s rights. Any order issued in the absence of the successful party could be ignored by that party, leaving the tribunal’s original order effectively intact despite the writ.

An order that is issued behind the back of a party may be ignored by that party, and as a result the tribunal’s order could be set aside while the right that the tribunal incorrectly granted to that party would nevertheless remain in force. Consequently, that party is deemed a necessary party, and a petition seeking a writ of certiorari that does not name that party or subsequently bring that party into the proceedings, even if the court later allows such impleading, would be incompetent. A party whose interests are directly affected must therefore be treated as a necessary party. In addition, there may exist parties who can be described as proper parties; such parties are not essential for the court to make an effective order, but their presence may help resolve all the questions that could arise in the dispute. Whether a person should be made a party to a writ proceeding depends on the judicial discretion of the High Court in the specific circumstances of each case. Either one of the existing parties may apply for the impleading of such a person, or that person may approach the court on his own initiative (suo motu) for impleading. The long‑established English practice, which has been adopted by the High Courts in this country, recognises the distinction between necessary parties and proper parties in a writ of certiorari. This English practice is recorded in Halsbury’s Laws of England, Volume 11, third edition (Lord Simonds), paragraph 136, which states: “The notice of motion or summons must be served on all persons directly affected, and where it relates to any proceedings in or before a court, and the object is either to compel the court or an officer thereof to do any act in relation to the proceedings or to quack them or any order made therein, the notice of motion or summons must be served on the clerk or registrar of the court, the other parties to the proceedings, and (where any objection to the conduct of the judge is to be made) on the judge.........” Paragraph 140 further provides: “On the hearing of the summons or motion for an order of mandamus, prohibition or certiorari, counsel in support begins and has a right of reply. Any person who desires to be heard in opposition, and appears to the Court or judge to be a proper per‑son to be heard, is to be heard not withstanding that he has not been served with the notice or summons, and will be liable to costs in the discretion of the Court or judge if the order should be made.....................” The Rules made by the Patna High Court likewise require that a party against whom relief is sought be named in the petition. The relevant provisions read: Rule 3. An application under Article 226 of the Constitution shall be registered as Miscellaneous Judicial Cases or Criminal Miscellaneous Cases as the case may be.

Rule 4 stipulated that once an application was entered in the register, it had to be placed before a Division Bench for an order on whether notice should be issued to the respondents. The Division Bench could either direct that notice be issued and pass any necessary interim relief, or it could reject the application altogether. Rule 5 required that the notice of the application be served on every person who was directly affected by the matter, as well as on any other persons that the Court might direct. Both the English procedural rules and the Rules framed by the Patna High Court therefore required that all persons who were directly affected by the relief sought, or against whom relief was sought, be specifically named in the petition so that they would be impleaded and served with notice. In the treatise The Law of Extraordinary Legal Remedies by Ferris, the procedure for impleading parties is explained at page 201 as follows: “Those parties whose action is to be reviewed and who are interested therein and affected thereby, and in whose possession the record of such action remains, are not only proper, but necessary parties. It is to such parties that notice to show cause against the issuance of the writ must be given, and they are the only parties who may make return, or who may demur. The omission to make parties those officers whose proceedings it is sought to direct and control, goes to the very right of the relief sought. But in order that the court may do ample and complete justice, and render judgment which will be binding on all persons concerned, all persons who are parties to the record, or who are interested in maintaining the regularity of the proceedings of which a review is sought, should be made parties respondent.” This passage makes clear that both the authority whose order is being challenged and the persons who have an interest in preserving the regularity of the proceeding must be joined as parties in a writ proceeding.

A Division Bench of the Bombay High Court, in Ahmedalli v. M. D. Lalkaka (1), laid down the procedural rule that whenever a writ is filed challenging the order of a Tribunal, the Tribunal itself must invariably be made a necessary party to the petition. The Court observed that it is difficult to conceive any circumstance in which the Tribunal would not be a necessary party when the petitioner seeks to have the Tribunal’s order set aside or questioned, and that all parties affected by that order must also be treated as necessary parties to the petition. Likewise, a Full Bench of the Nagpur High Court, in Kanglu Baula v. Chief Executive Officer (2), held that although the elections to various electoral divisions were declared void, the petition had to be dismissed on the ground that the persons who had been declared elected from the different constituencies had not been joined as parties to the petition and therefore had not been given an opportunity to be heard before an adverse order was passed. Both decisions underscore the principle that proper parties must be impleaded to ensure that the Court can resolve all questions involved in the controversy, either on its own motion or on application of a party to the writ.

In this case the Court observed that the judgments cited earlier also support the principle that, in a writ of certiorari, it is not sufficient to name only the tribunal or authority whose order is being challenged. The Court explained that every party in whose favor the challenged order was made must also be joined as a necessary party. The Court further clarified that the trial court retains discretion to add or implead additional parties when doing so is required to resolve all issues that may arise in the controversy. Such addition of parties may be undertaken on the court’s own initiative (suo motu) or on the application of a party to the writ, or on an application filed by a party who is deemed to be proper for inclusion. The Court’s summary therefore emphasized that the presence of all interested parties is essential to ensure that the order can be properly examined and that the principles of natural justice are observed.

Applying this principle to the present matter, the Court noted that Phudan Manjhi and Bhagwan Rajak had been parties before the Commissioner, as reported in A.I.R. 1954 Bom. 33, 34 and A.I.R. 1955 Nag. 49, and they had also been parties before the Board of Revenue. Both of them had succeeded in the earlier proceedings, and the orders of the tribunal were in their favour. The Court held that it would violate the principles of natural justice to render any order adverse to them without giving them an opportunity to be heard, and that any such order would be ineffective. Consequently, the Court determined that they were necessary parties before the High Court. The record showed that the appellant initially impleaded these two individuals in his petition but removed them when the petition was presented, and that the appellant did not seek any further order from the High Court to bring them back as respondents. Because of this omission, the Court found the petition to be incompetent and affirmed its rejection on 3 July 1962. A special leave petition filed on 18 July 1962 also failed to implead the two parties. Although counsel for the appellant suggested that the Supreme Court could, even at this late stage, direct that they be made parties and remit the matter to the High Court, the Court declined, stating that the request was untimely. The Court therefore did not address the remaining questions raised, dismissed the appeal, and ordered costs against the appellant.