Supreme Court Reiterates Basic Principles Of Judicial Review Of Administrative Decisions

“Judicial review under Article 226 is directed, not against the decision, but the decision making process.” The Supreme Court, in a judgment delivered on Thursday, reiterated some basic principles of judicial review of administrative decisions. The bench comprising Justice R. Banumathi and Justice Indira Banerjee were considering an appeal (Sarvepalli Ramaiah vs. The District Collector, Chittoor District) against an order of High court of Andhra Pradesh declining to interfere with the order of the District Collector in refusing to grant ryotwari patta in favour of the appellants. The Apex court upheld the High Court finding that, since the land is classified as “Peddacheruvu Tank” vested with the government and thus there could not be issuance of ryotwari patta in view of the bar contained in Section 2-A of the Andhra Pradesh Inams (Abolition & Conversion into Ryotwari) Act, 1956.
Justice Indira Banerjee, in her concurring opinion also added that no patta can be granted in respect of tanks and water bodies including those that might have dried up or fallen into disuse. Referring to some judgments, the judge added: “This Court has time and again emphasized the need to retain and restore water bodies and held that water bodies are inalienable. Land comprised in water bodies cannot be alienated to any person even if it is dry.”

Justice Banerjee, also delineated some fundamental principles of Judicial review of administrative decisions. Administrative decisions are subject to judicial review under Article 226 of the Constitution, only on grounds of perversity, patent illegality, irrationality, want of power to take the decision and procedural irregularity.

Except on these grounds administrative decisions are not interfered with, in exercise of the extra ordinary power of judicial review A decision is vitiated by irrationality if the decision is so outrageous, that it is in defiance of all logic; when no person acting reasonably could possibly have taken the decision, having regard to the materials on record. A decision may sometimes be set aside and quashed under Article 226 on the ground of illegality.

This is when there is an apparent error of law on the face of the decision, which goes to the root of the decision and/or in other words an apparent error, but for which the decision would have been otherwise. Judicial review under Article 226 is directed, not against the decision, but the decision making process.

Of course, a patent illegality and/or error apparent on the face of the decision, which goes to the root of the decision, may vitiate the decision making process. In exercise of power under Article 226, the Court does not sit in appeal over the decision impugned, nor does it adjudicate hotly disputed questions of fact.

When Can A ‘Cheque Bounce’ Complaint Against Director Of Company Be Quashed?

“The law requires that the complaint must contain a specific averment that the Director was in charge of, and responsible for, the conduct of the company’s business at the time when the offence was committed.” The Supreme Court has reiterated that, a ‘cheque bounce’ complaint against a Company and its Director, must contain a specific averment that the Director was in charge of, and responsible for, the conduct of the company’s business at the time when the offence under Section 138/141 of Negotiable Instruments Act was committed.

A three judge bench comprising of Justice NV Ramana, Justice Mohan M. Shantanagoudar and Justice Indira Banerjee were considering an appeal against an order of the High Court of Telangana and the State of Andhra Pradesh which quashed a cheque complaint against directors of the Company, accused of dishonouring the cheque. It observed that High court could quash the complaint only if some unimpeachable evidence has been brought on record which leads to the conclusion that the Director could never have been in charge of and responsible for the conduct of the business of the company at the relevant time.

The High Court had quashed a complaint filed by one AR Radha Krishna against the directors of the company. The complaint was filed after six cheques for Rs.25,00,000 each and one cheque for Rs.30,00,000 were drawn on different dates by the authorised signatory, i.e., M.D. of M/s Dhruti Infra Projects Limited, were returned dishonored.

In the appeal filed by the complainant, the Apex court bench observed that the High Court was not justified in allowing the quashing petitions by invoking its power under S.482, Cr.P.C. “In a case pertaining to an offence under S. 138 and S. 141 of the Act, the law requires that the complaint must contain a specific averment that the Director was in charge of, and responsible for, the conduct of the company’s business at the time when the offence was committed. The High Court, in deciding a quashing petition under S. 482, Cr.P.C., must consider whether the averment made in the complaint is sufficient or if some unimpeachable evidence has been brought on record which leads to the conclusion that the Director could never have been in charge of and responsible for the conduct of the business of the company at the relevant time.

” The court further observed that, while the role of a Director in a company is ultimately a question of fact, and no fixed formula can be fixed for the same, the High Court must exercise its power under S. 482, Cr.P.C. only when it is convinced, from the material on record, that allowing the proceedings to continue would be an abuse of process of the Court. Allowing the appeal, the court said: “A perusal of the record in the present case indicates that the appellant has specifically averred in his complaint that the respondent nos. 1 and 2 were actively participating in the day-today affairs of the accused no.1 – company. Further, the accused nos. 2 to 4 (including the respondent nos. 1 and 2 herein) are alleged to be from the same family and running the accused no.1 – company together. The complaint also specificies that all the accused, in active connivance, mischievously and intentionally issued the cheques in favor of the appellant and later issued instructions to the Bank to “Stop Payment”. No evidence of unimpeachable quality has been brought on record by the respondent nos. 1 and 2 to indicate that allowing the proceedings to continue would be an abuse of process of the court.”