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Whether Violation of Rules Of Natural Justice By Itself Invalidates Proceedings?

Background of the case :-

(1) The SC dismissed state's appeal against an Allahabad High Court judgment which had set aside the cancellation of some tenders on the ground of breach of natural justice.

(2) Taking note of the facts of the matter, the bench said that the cancellation of the award of tender in favour of the applicant, the audi alteram partem rule were breached in its entirety.

Principles of Natural Justice (audi alteram partem) :-

The Supreme Court summarized the principles by referring to a some precedents. It observed:

(1) Natural justice is a flexible tool in the hands of the judiciary to reach out in fit cases to remedy injustice. The breach of the audi alteram partem rule cannot by itself, without more, lead to the conclusion that prejudice is thereby caused.

(2) Where procedural and/or substantive provisions of law embody the principles of natural justice, their infraction per se does not lead to invalidity of the orders passed. Here again, prejudice must be caused to the litigant, except in the case of a mandatory provision of law which is conceived not only in individual interest, but also in public interest.

(3) No prejudice is caused to the person complaining of the breach of natural justice where such person does not dispute the case against him or it. This can happen by reason of estoppel, acquiescence, waiver and by way of non-challenge or non-denial or admission of facts, in cases in which the Court finds on facts that no real prejudice can therefore be said to have been caused to the person complaining of the breach of natural justice.

(4) In cases where facts can be stated to be admitted or indisputable, and only one conclusion is possible, the Court does not pass futile orders of setting aside or remand when there is, in fact, no prejudice caused. This conclusion must be drawn by the Court on an appraisal of the facts of a case, and not by the authority who denies natural justice to a person.

(5) The “prejudice” exception must be more than a mere apprehension or even a reasonable suspicion of a litigant. It should exist as a matter of fact, or be based upon a definite inference of likelihood of prejudice flowing from the non-observance of natural justice.

Held :-

(1) “We, therefore, uphold the impugned judgment of the High Court on the ground that natural justice has indeed been breached in the facts of the present case, not being a case of admitted facts leading to the grant of a futile writ, and that prejudice has indeed been caused to Respondent No.1. In view of this finding, there is no need to examine the other contentions raised by the parties before us.”, the bench said while upholding the High Court.

(2) The bench also observed that writ petition under Article 226 of the Constitution is maintainable at the instance of an aggrieved party to enforce a contractual obligation of the State or its instrumentality when the State acts in an arbitrary manner.



[CIVIL APPEAL NO. 3498 OF 2020]

Coram: Justices RF Nariman, Navin Sinha and KM Joseph

Dated : 16-10-2020

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