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Smart Summary

Factual and Procedural Background

The petitioners filed a writ petition under Article 226/227 of the Constitution of India challenging orders annexures “I” and “J” passed by the respondents. Petitioner No. 1 was a registered trade union under Section 8 of the Trade Unions Act, 1926. On July 29, 1986, the Registrar of Trade Unions (respondent No. 2) issued a show cause notice under Section 10-B of the Trade Unions Act proposing cancellation of the union's registration on the ground that the union was not legally constituted. The union replied denying the charges and sought inspection of documents. The Registrar granted a seven-day inspection period on September 3, 1986, but passed the cancellation order the very next day, September 4, 1986, without waiting for the inspection period to expire or hearing the petitioners. The petitioners appealed under Section 11 of the Trade Unions Act, but the appeal was dismissed on March 19, 1987. The writ petition challenges both the cancellation order and the dismissal of the appeal, and the operation of these orders was stayed on March 31, 1987.

Legal Issues Presented

  1. Whether the order of cancellation of the trade union's registration passed without affording the petitioners a reasonable opportunity of hearing violates the principles of natural justice?
  2. Whether the appellate authority erred in dismissing the appeal without addressing the procedural infirmity in the cancellation order?

Arguments of the Parties

Petitioners' Arguments

  • The petitioners were granted an opportunity to inspect documents and file affidavits, with a seven-day period allowed starting September 3, 1986.
  • The Registrar passed the cancellation order on September 4, 1986, before the inspection period expired and without hearing the petitioners, violating the principles of natural justice.
  • The appellate authority's dismissal of the appeal did not cure the initial invalidity of the cancellation order.

Respondents' and Intervener's Arguments

  • The opinion notes that counsel for the respondents and the intervener were unable to justify the premature passing of the cancellation order on September 4, 1986, in light of the letter dated September 3, 1986.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
National Central Co-operative Bank Ltd. v. Ajay Kumar It is well-settled that no adverse orders can be passed against a party without giving it opportunity to place its case. The court relied on this precedent to emphasize the requirement of audi alteram partem and held that the cancellation order passed without hearing the petitioners was invalid.

Court's Reasoning and Analysis

The court analyzed the facts that the Registrar of Trade Unions issued a cancellation order prematurely on September 4, 1986, despite granting a seven-day period for inspection and hearing starting September 3, 1986. This act was found to violate the fundamental principle of natural justice, specifically the audi alteram partem rule, which requires that no adverse order be passed without giving the affected party an opportunity to be heard. The court cited authoritative commentary indicating that statutory powers are to be exercised in compliance with natural justice unless expressly excluded. The respondents and intervener failed to justify the premature order. The court concluded that the cancellation order was manifestly illegal and that the appellate order dismissing the appeal failed to address this illegality. Therefore, both orders deserved to be quashed. The court further directed that the Registrar may grant a reasonable opportunity of hearing and pass an order consistent with natural justice, and any aggrieved party may thereafter seek appropriate remedies.

Holding and Implications

DISPOSED OF.

The court quashed the cancellation order dated September 4, 1986, and the appellate order dismissing the appeal, on the ground of violation of natural justice principles. The Registrar of Trade Unions was granted liberty to provide a reasonable hearing opportunity and pass a fresh order accordingly. The decision restores procedural fairness in the cancellation process but does not set a new precedent beyond reaffirming established principles. The petition was allowed without costs, and any security deposit made by the petitioners was ordered to be refunded after verification.

    Nagda Rashtra Sevak Karmachari Congress And Another v. Industrial Court And Another

    A.R Tiwari, J.:— The petitioners have filed this writ petition under Article 226/227 of the Constitution of India for the undernoted relief:

    “It is, therefore, prayed that orders, annexures “I” and “J”, passed by the respondents be quashed by raising a writ of certiorari and a writ of mandamus be issued against respondent No. 2 that he should not act upon the order of cancellation and any other appropriate writ, direction or order be passed and the petition be allowed with costs.”

    2. Briefly stated, the facts of the case are that petitioner No. 1 claimed to be a trade union to represent all the members in employment. Petitioner No. 2 is the Pradhan Mantri of petitioner No. 1. Petitioner No. 1 was registered under Section 8 of the Trade Unions Act, 1926, as a trade union, vide order dated July 3, 1986 (annexure “A”). On July 29, 1986, respondent No. 2, Registrar of Trade Unions, issued a notice under Section 10-B of the Trade Unions Act to the Petitioners union to show cause why the registration be not cancelled (annexure “B”). The ground was that the union was not legally constituted. On September 1, 1986, the union filed the reply denying the charges and moved application for inspection of the documents (annexures “C” and “D”). Affidavits of some of the members were filed (annexures “E”, “F” and “G”). Respondent No. 2 granted seven days' time for inspection of the documents on September 3, 1986 (annexure “H”). Respondent No. 2 without hearing the petitioners and without waiting till the period, as allowed, passed the order on September 4, 1986 (annexure “I”). The petitioners union filed the appeal under Section 11 of the Trade Unions Act against this order dated September 4, 1986, which was registered as Appeal No. 9.ITU of 1996. The appeal was dismissed on March 19, 1987 (annexure- “J”). Annexures “I” and “J” are challenged in this writ petition. By order dated March 31, 1987, the operation of annexures “I” and “J” were stayed.

    3. I have heard Shri S.S Samvatsar, learned counsel for the petitioners, Shri Surjeet Singh, learned Government Advocate for the respondents, and Shri S.R Kochatta, learned counsel for the intervener.

    4. Shri Samvatsar submitted before me that opportunity of inspection was granted, vide order dated September 3, 1986 (annexure “H”). The authority had also directed to file the affidavit. While the period of seven days' was not over, the authority chose to pass an adverse order on the next date itself, i.e, on September 4, 1986 (annexure “I”). The appeal also failed (annexure “J”). Counsel submitted that the order dated September 4, 1986, is passed in violation of the principles of natural justice and that the upholding of the order by the appellate authority has not the effect of validating the initial invalidity.

    5. In National Central Co-operative Bank Ltd. v. Ajay Kumar,1 it is held that “It is well-settled that no adverse orders can be passed against a party without giving it opportunity to place its case.”

    6. The rule of audi alteram partem is required to be followed. This principle indicates that the other side should be heard. Lord Russell has said that:

    “It is to be implied unless the contrary appears that Parliament does not authorise by the Act the exercise of the powers in breach of the principles of natural justice, and that Parliament does by the Act require, in the particular procedures, compliance with those principles.”

    7. Counsel for the respondents and the intervener are unable to explain as to how the order was passed on September 4, 1986, in the face of the letter dated September 3, 1986. This is a case of manifest infirmity and illegality which makes the order worthy of being demolished by the writ court.

    8. The impugnment in a writ court relates not to the decision but to the decisionmaking process. Here, the decision-making process is violative of the principles of natural justice. There is, thus, no escape from the conclusion that the order dated September 4, 1986 (annexure “I”) deserves to be demolished on the ground of this infirmity. Consequently, the appellate order (annexure “J”) also deserves to be demolished as it failed to take into account the aforesaid evident illegality. In the result, I allow this petition and direct as under:

    (a) The order cancelling registration (annexure “I”) passed by the Registrar of Trade Unions as also the appellate order (annexure “J”) passed by the appellate authority are quashed.

    (b) The Registrar of Trade Unions is granted liberty to grant reasonable opportunity of hearing to the petitioners and pass appropriate order consonant with the principles of natural justice without unnecessary delay.

    (c) Any party suffering adverse order at the hands of the Registrar shall be at liberty to resort to appropriate remedy thereafter.

    9. The petition is, thus, allowed in terms indicated above but with no order as to costs. Security cost, if deposited, shall be refunded to the petitioners after due verification.

    10. Petition Allowed.

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    Nagda Rashtra Sevak Karmachari Congress And Another v. Industrial Court And Another
    (Sep 27, 1996)