The Abuse of Administrative Discretion

Administrative Law has undergone a rapid expansion in the past six decades since its inception in Independent India. After India became free of British control, India has been witness to a huge leap in the number of administrative activities and functions in order for its smooth functioning. The Legislature and the Executive have been the pillars set up by the mandate of the Constitution and in the best interests of the nation both must work in tandem.

This is best seen from the fact that the Parliament cannot legislate on all aspects of a certain matter and simply vest authority in the executive to implement the same. In certain instances, it is necessary to leave certain gaps in laws and allow the same to be filled as per the discretion of the executive authorities on a case to case basis.

The Executive uses this discretion in order to act upon the authority vested in them statutorily. By exercising discretion, it is ordinarily meant that there are various alternatives that the executive authority can choose to take in a situation. This confers a wide power to choose a course of action and smells of arbitrary power being given in this case. However, the law has imposed a check such that this discretionary power is subject to fetters in the sense that the authority must exercise power as per the directions of the statute. It can exercise discretion but only to fulfil the spirit of the statute creating it. [1]

Now, the power of discretion in functioning is vested in the administrative authorities. This ensures that it has sufficient autonomy and freedom in performing its activities. The exercise of this discretion can be violated in two ways by authorities: firstly, the administrative authority might fail to exercise the authority vested in it. Secondly, the authorities might exercise this discretion incorrectly that is, with improper motives, bias or under the influence of another body. The latter case amounts to abuse of administrative discretion and shall be the focus of this project. [2]

I shall look into the various grounds on the basis of which abuse of administrative discretion has been held by the courts. This project shall also delineate the origins of the jurisprudence of abuse of administrative discretion in India gleaned from English case laws. I will look into a multitude of Supreme Court case laws which have expounded the various actions that amount to ‘abuse’ such as mala fides, improper purpose, taking irrelevant considerations, colourable exercise of power and unreasonableness among others. Finally, I will look into the tools devised by the courts to check the discretion vested in administrative authorities.

Chapter I: English Rules Regarding Abuse of Administrative Discretion

English Law expounded upon the theory of judicial review of administrative discretion. It was believed that the rule of law was sacrosanct and vesting unfettered power of discretion in the administrative authority amounted to an affront against it. [3] However, scholars began to recognise that smooth governance required that discretion be not eliminated completely, but checked against improper exercise by the courts. [4]

In order to exercise this check, the court sought to establish a balance between the authority exercised by the executive as well as the protection meted out to citizens. [5]

The courts in England were the first to establish that no discretion could be unfettered and devoid of controls. The matter of Padfield v. Minister of Agriculture, Fisheries and Food [6] dealt with the exercise of discretion by a Minister pertaining to the Milk Marketing Board [MMB]. The MMB was to hear and decide on different disputes which were referred to it by the Minister. Thus, the Minister had the discretion to forward the complaints or not. In the instant case, the milk producers near London complained to the board that the price fixed for its milk was too low especially for post-war conditions and there was differential pricing across the country. However, the MMB refused to hear the matter as the Minister declined from referring the matter to the Board stating that the complainants could not interfere with the ‘democratic machinery’ of the board which had several other producers on it. The complainants filed a suit stating that the Minister had violated and abused the discretion that was vested in him. [7]

The court held vehemently that discretion cannot be eliminated completely from the hands of the executive and similarly, neither can unfettered discretion be granted. It held that the Minister had used his discretion on the basis of extraneous political motives. The valid use of discretion must be aimed at promoting the policy and objective of the statute with which the authority itself is created. Any interpretation which runs counter to this meaning would violate the statute itself and the exercise of discretion would be unlawful. [8] This view was upheld in the future as well and was cemented by subsequent decisions. [9]

Another instance where the court insisted on fetters being placed on the exercise of discretion was in the matter of R v. Oxford ex p. Levey. [10] In the instant case, a complaint was made against the police that it had formed a policy of not prosecuting illegal gaming clubs in London. The justification provided was that there was tremendous cost involved in doing so and the law pertaining to it was vague as well. Despite instructions being issued in the interim which cleared up the issue, the court clarified its position stating that even though the Commissioner had discretion to pursue prosecution; this was checked by the fetter that he had to mandatorily comply with public policy by enforcing the law.

A landmark judgment in the UK came to define the standard by which administrative discretion was set to be violated. Getting its name from the judgment, it came to be known as the Wednesbury principle. The Wednesbury matter [11] expounded upon the element of unreasonableness in exercise of administrative discretion by introducing the concept of ‘reasonable man.’ The English jurisprudence was veering towards greater controls over the nature of discretion vested in administrative authorities. It was believed that an authority had maximum discretion provided that its action fell within the realm of reasonableness. Any interference by courts would be justified only if the action exceeded this realm. [12]

In this regard, the Wednesbury matter is particularly remarkable. In the instant case, the claimants were awarded a license to run a cinema theatre with the condition that entry to children below the age of fifteen would be barred. The claimants challenged the attaching of this condition stating that the Wednesbury Corporation had exceeded the discretion vested in them to award licenses in the area. The court held that interference was possible if in the exercise of discretion, irrelevant considerations were taken up, relevant considerations were ignored and most importantly, the action was so unreasonable that no reasonable man would employ the same action. [13]

The last element of unreasonableness is known famously as the rule of Wednesbury unreasonableness which covers within its ambit a host of actions that abuse administrative discretion. The court created a wide umbrella of ‘unreasonableness’ within which fell numerous elements such as acting against the spirit of the act, relying on irrelevant consideration, caprice in decision-making, mistakes and misunderstanding. The court came to a consensus that the standard of reasonableness is quite high and would be infringed only by an action that no man would dream of carrying out. [14] This seemingly high standard however, was not applied by the courts as they lowered this standard while actually applying the principle to tailor it to its idea of what constituted an abuse of administrative discretion.

The courts in India have adopted the test of Wednesbury reasonableness in order to review the discretionary actions of administrative authorities. The matter of U.P. Financial Corporation v. Gem Cap (India) Pvt. Ltd. [15] stated that the courts cannot interfere in an area where the administrative authority has discretion to decide upon a matter. In this case, the Appellant loaned a certain amount to the Respondents who failed to pay it back and were ceased operations within three months. The Appellant sought to recover the money by taking over the management of the Respondent which was challenged as unreasonable by the Respondent and this was allowed by the High Court via a writ petition. In appeal, the Supreme Court held that this would amount to replacing the decision of the authority with its own. However, the Supreme Court held that it can only interfere if the decision is so unreasonable that no reasonable person could be expected of taking the same course of action. [16] In the instant case, acting under the statute to recover the debt was held to be a reasonable action on the part of the Appellant.

The Supreme Court reiterated this position in the matter of Tata Cellular v. Union of India [17] looked into the grounds on which an administrative decision could be interfered with, by the court. It was held that irrationality is a feature of the Wednesbury principle and one of the said grounds of judicial review. This irrationality was defined as any action which was outrageous in its defiance of logic that no reasonable man would come to the same decision. [18]

Thus, the Indian jurisprudence has gleaned wisdom from English courts and not placed Administrative Discretion on too high a pedestal. It has ensured that administrative authorities comply with fairness and equity even when exercising discretion and choosing between alternative approaches.

Chapter II: Indian Approach to Abuse of Discretion

Indian Law has delineated a myriad of ways in administrative discretion can be accosted. One such way is regarding a discretionary act as mala fide.

Mala Fides

Mala fides by definition implies something done in bad faith, with a deliberate and fraudulent motive and dishonest intention. [19] Indian Law had interpreted it both widely as well as narrowly. Earlier it was believed that there was no element of moral turpitude involved in mala fide action and all that was required was the deviation from the spirit of the statute and acting in a way, foreign to its purpose. [20] I will deal with this interpretation as a separate head later. Mala fide can be understood in a narrower sense and be given its tradition meaning of referring to bad faith, dishonest and corrupt motives. It stems from personal animosity and vindictiveness. [21]

Mala fide should not be confused with bias as the latter is a wider concept and mostly used in administrative concept. No element on turpitude is attached to it as in the case of mala fide. [22] Further, mala fide is not similar to the concept of ultra vires as in the latter, the making of the decision itself is precluded by Law. On the other hand, while decision-making in mala fides is allowed, the nature of the decision can be challenged owing to be in bad faith. [23] Malice may be on fact or on law. In the former, there is room for personal animosity whereas in the latter, action is taken without a just or reasonable cause. To check whether an action is mala fide, the courts must look into the manner of decision-making and the circumstances in which it is made. [24]

Instances of mala fide action being struck down are numerous. In the case of Pritpal Singh v. State of Haryana, [25] the appointment of 62 sub-inspectors was struck down owing to numerous discrepancies in the selection process. Discrepancies such as examination sheets being destroyed, prior to a policy for the same being passed as well as non-presentation of the selection panel’s scores confirmed the court’s view.

Proving mala fides is quite a task as the court mandates that conclusive proof must be given of the same. The onus to do so falls on the person alleging mala fides. Further, the court has held that broad allegations of mala fide will not be taken to establish the same. Since there is a presumption that the administrative authority acted in good faith, the person alleging mala fides must give conclusive proof of the same. [26]

The matter of E.P. Royappa v. State of Tamil Nadu [27] dealt with mala fide as a ground for quashing administrative action. An IAS officer who was Chief Secretary in the State Government challenged his transfer to a post of equal grade as being motivated by mala fide intentions. The court ruled that even if suspicion is created of male fide actions in the exercise of administrative discretion, only conclusive proof of the same can establish mala fide action. This may be inferred from the course of events, utterances of the authority, pleadings and affidavits among other sources. [28]

G. Sadanandan v. State of Kerela [29] is the best instance of administrative action being checked on the grounds of it being mala fide in nature. The DSP (Civil Supplies Cell) passed a detention order against a kerosene dealer on the grounds of operating without a license and dealing in Kerosene illegally. It was alleged that the DSP was acting malafidely to drive the appellant out of this trade as the DSP’s brother was a competitor in the same business. The DSP did not even file a counter-affidavit in court to counter the charges of mala fide action against the Appellant. Due to these considerations, the court quashed the action.

Improper Purpose

A statute may confer discretionary powers upon an administrative authority in order to arrive at a particular decision. However, this discretion is not unlimited and is restricted to the purpose for which the statute is enacted and the ultimate aim it aims to achieve. The courts can construe a purpose from the provisions of the statute where no aim is mentioned expressly. In the modern period of time, there has been a huge growth in the activities that fall under administrative action. Some authorities are granted a discretion in their functioning which increased the scope of functioning. However, courts can limit this seemingly unfettered power by checking the original intent of the statute in vesting the discretionary power. The motive behind an administrative action should be in line with the statutory objective. [30]

This check is different from mala fides as here, there is no underlying element of malice, caprice or animosity. This has been elucidated in S.R. Venkatraman v. Union of India [31] wherein under a statute; a public servant could be retired in public interest by taking assent from the President. In the instant case, the Appellant was compulsorily retired on her attaining the age of 50 years. She alleged that there was non-application of mind and that her retirement was carried out for extraneous reasons, outside the scope of the statute. This was established from the fact that there was nothing in her service record to justify premature retirement. The court further held that in such a case where discretionary power is used for an unauthorised purpose, the element of good faith or bad faith is irrelevant. [32]

This was also seen in R.L. Arora v. State of Uttar Pradesh. [33] In this case, the Land Acquisition Act, 1894 allowed to the State Government to give consent to acquisition of property for industrial purpose if it proved useful to the public. The government here assented to acquisition of property by textile factory. This was challenged on the grounds that the government could not interpret the words of the statute and exercise discretion on the same as well. The court held that the purpose of the statute was to allow acquisition when construction of work after acquisition would lead to benefit of people. In this case, the benefit would arise only after the industry is functioning and not during construction. Hence, the order of the government was struck down on the grounds that it violated the mandate of the legislation.

Irrelevant/Relevant Considerations

It is clear that discretion allows an authority to choose between alternative actions. However, this discretion can only be exercise on relevant grounds. All discretionary actions must be in conformance to the considerations laid down in the statute that granted discretion in the first place. Placing reliance on extraneous grounds will vitiate the administrative action. [34] The court has some freedom in reviewing administrative action in this regard. When considerations are laid down in the statute, the court can check for conformance. In case no considerations are delineated, the court can look into the purposes and aim of the statute to fix consideration and place fetters on the discretion allowed. [35]

These considerations may be exhaustive depending on the language of the statute. In case they are not, the court can add its own considerations. [36]

This was laid down authoritatively in Barium Chemicals Ltd. v. Company Law Board. [37] Under S.236 of the Companies Act, the CLB can order investigations into the affairs of the company if the company is being conducted with the intention to defraud creditors or the persons involved in management are guilty of fraud among other things or full information regarding the firm has not been given. Investigation was ordered in the instant case on the ground that there were continuous running losses owing to faulty planning and various directors had left the board. This order was challenged and the court quashed the order stating that these grounds were irrelevant and extraneous to the purpose enshrined in the statute. They did not conform to the mandate of S.236.

The same position was reiterated in Rohtas Industries v. S.D. Agarwal [38] wherein investigation into the affairs of a firm was ordered on the grounds of one of its directors being involved in several claims of misconduct as a member of other companies and also shares of another company were being sold at an inadequate rate. These grounds were held to be flimsy in order to seek investigation under S.237 of the Companies Act, 1956.

No material

All discretionary action that is taken must be based on sound material and facts. There should be application of mind even when discretion is vested in the authorities. This was held in the Rohtas matter [39] and the Venkatraman case [40] where the orders of the authorities were vitiated owing to be based on lack of material.

This is so as arriving at a decision on negligible grounds is an abuse of the discretion vested. It stinks of arbitrariness and misuse of the authority given to an administrative body. This was seen in the case of Raala Corp. v. Director of Enforcement [41] which dealt with the discretion vested in the Directorate of Enforcement to refer cases to Supreme Court where he felt the punishment to be imposed was beyond his powers. This discretion was to be exercised on the basis of sufficient material. However, in this case, the reference was made even without holding any hearing and without reading any information. Hence, the Supreme Court quashed the order.

Misdirection of Law and Fact

Sometimes an authority may act beyond the scope of the powers given by the law. It may make such mistakes owing to a misinterpretation of the law or a fact and thus, go beyond the scope of the power vested in them. If such a mistake concerning the fetters placed by law is made, it would vitiate the exercise of discretion.

The matter of M.A. Rasheed v. State of Kerela [42] has laid this down most lucidly. The state government came out with a notification in which consumption of coir by industries was curtailed in favour of traditional sector. This use of discretion was challenged on the grounds of reasonableness. The court established that as discretion gave room for subjective satisfaction, the court could not blindly follow the authority’s reliance on facts and law to arrive at a decision. Review was possible on the grounds of whether the authority had construed these elements correctly.

Chapter III: Judicial Control and Conclusion

Proportionality

Judicial controls have been formulated in order to keep a check on the exercise of administrative discretion. This ensures that unfettered power is not given to authorities to allow arbitrary decision-making. One of the major tools formulated has been the Wednesbury rule upon which I have elucidated in Chapter I. The rule of proportionality is another such tool which tool which ensures that there is a nexus between the aim to be attained and the means undertaken in order to do so. [43] An application of this rule is in departmental hearings where the punishment meted out to employees is grossly out of proportion considering the wrong committed. In England, the Proportionality tests have evolved to the control of Strict Scrutiny in order to protect the rights and freedoms of citizens from infringement. [44]

This tool was applied in the case of Ranjit Thakur v. Union of India [45] where an army official was court-martialled in response to a minor indiscretion committed by him. He challenged the order in the Supreme Court who quashed it stating that the rule of proportionality demanded that the punishment given has a nexus with the act committed and is proportional to the same. The court justified its interference on the ground that the decision in question was grossly disproportionate.

This stance was softened in Om Kumar v. Union of India [46] wherein the court held that the court can go use both tools, Wednesbury Principle as well as the Proportionality rule. The court took cognizance of a report in which it was stated that certain land had been given to M/s Skipper Ltd. by the DDA before the auction having taken place. The report established the wrongdoing of four IAS officers against whom punishment was suggested. However, it was believed that stricter action could have been taken as the punishment meted out was disproportionate to the scale of the offence. The court created a distinction in the use of both tools. It held that in cases where orders were challenged on the grounds of arbitrariness as under A.14, the Wednesbury principles could be used to check discretionary powers. In case the order prejudiced fundamental freedoms or was discriminatory, the rule of proportionality needed to be employed to see if the infringement was necessary in light of the offence committed. In such an event, the court had the right of primary review to replace the holding of the administrative authority with its own. This would be an exceptional case. [47]

Conclusion

As we proceed further into the 21st century, the gamuts of activities that are being left to administrative control are ever increasing. More and more discretion is being given to administrative authorities to arrive at decisions without interference from other bodies. It has the freedom to decide between alternate approaches as per its best judgment.

Despite this seemingly wide freedom, courts in India have taken a leaf from English courts in that they have curtailed this discretionary power by ensuring that it is within the limits prescribed by statute, is fair, just and based on relevant grounds and good faith. The courts, in a gamut of aforementioned cases have made it clear that even when discretion is granted, its abuse by authorities is not without redressal.

The abuse of administrative discretion takes a number of forms for instance, acting on mala fide grounds, ignoring relevant considerations and acting on irrelevant ones, making decisions without cogent material and misconstruing the power granted by law. Even though the courts have established that interference in these decisions is permitted on certain grounds, it still respects the process of decision making that the authorities indulge in. The only check courts impose is that manner of making the decision be fair. [48]

Finally, the court has developed various controls over discretionary action. Firstly, it ensures that the action taken by the authority is not irrational and patently unreasonable such that no reasonable person could be expected to arrive at the same decision. It ensures that the authority acts within the limits of the statute and works in order to give the most effective and just decision based on sound and irrefutable grounds. Secondly, the courts have employed the English rule of Proportionality to ensure that the response of the authority to actions by individuals is proportional and not grossly unjust.

The freedom given to administrative authorities to decide matters, using their best judgment countered with the overarching judicial control is a sign of the balance maintained in Indian jurisprudence. This balance makes all the difference: on the one side lies unfettered power and on the other, judicial supremacy. Middle ground is perhaps the best place to be.