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Over fifty years back Holmes J in Bain Peanut Company of Texas V Dave Pinson (1930) 75 Law Ed.482 at page 491 said that “we must remember that the machinery of the Government would not work, if it were not allowed a little play in its joints. We should not allow administrative or executive efficiency to flounder on the rock of avoidable technicality. It is well to remember that administrative and executive efficiency or exigency should not be too readily sacrificed. Such should be the result, if the instruction is given a mandatory force. State would be completely deprived of much needed play in its joints. Absolute enactments must be obeyed or fulfilled exactly, but it is sufficient if a directory enactment be obeyed or fulfilled substantially”[1].

 

In bigger form of administration, issuance of administrative direction is an essential element. Without such administrative directions, it would be impossible for the Government to run the administration effectively. Indian Constitution provides for the “Executive Function”. And the specified authority may issue directions, as it may deem fit and proper. Generally, the administrative officers have to deal with the matters, and they have to either face or to tackle the day to day problems. And, therefore, every time, it may not be possible to enact the 'legislative code'. The directions are issued by the government in the form of circulars, resolutions, bylaws, trade notices and similar other forms. These directions would bring desired flexibility in the administration coupled with certainty or uniformity in identical matters.

           

 

Once the Government has issued the directions, the subordinate executives have to discharge their responsibility consistently with the directions and those directions are administratively binding upon the State officers. The discretion has to be governed preliminary on the basis of the administrative policy contained in the circular, Resolution or such other similar form and instrument. Any attempt to disobey the direction of the department may expose the concerned officer for disciplinary actions and remedies for breach of direction is inter departmental.

 

ENFORCEABILITY & IDENTIFICATION:

           

It is not necessary that for issuing “administrative direction” source of statutory power is required. Ordinarily, field is covered under the “Executive Function” of the State. The State also derives powers under the “Rules of Business”. However, these directions have also confused the area that is taken care of by the principles propounded under administrative law. It is very common to all of us that the judiciary is always busy in interpreting various administrative instructions or directions from time to time, and from case to case. The administrative directions are normally not enforceable at law, but the judiciary drew certain exception.

 

The holding that the executive instructions are directory does not mean that they can be ignored with impunity. Even directory provisions are not meant to be violated. The Supreme Court of India in case of Pratap vs. Shri Krishna Gupta, AIR 1956 SC 140 held to the effect that some rules are vital and go to the root of the matter; they cannot be broken; others are only directory and a breach of them can be overlooked, provided there is substantial compliance with the rules read as a whole, and no prejudice ensues; and when legislature does not itself state which is which Judges must determine the matter and, exercising a nice discrimination, sort out one class from the other along broad based, commonsense lines.

 

Some administrative directions are held to have the statutory force granting reliefs to the person aggrieved, while other directions are held to have mere administrative force or character, thus non suiting the aggrieved party for a claim. The administrative domain is using the words like code, regulations, bylaws and the rules, but they may not be real “Delegated Legislation”. There is no compunction to say that the indiscriminate use of these substitutions has resulted in greater confusion and especially in the area of administrative law. At the same time, some Judgments of the Court have also created confusion. The lawyers in the administrative field are busy to seek identification of directions. They are keen to see how the courts interpret the particular directions. It is the interpretation of the direction upon which the ultimate right of the litigating party depends. If these directions have, statutory force, then there is hardly any scope for dispute. They are simply enforceable, and courts may, consequent upon such violation of the directions, grant appropriate relief. The situation would be converse, if they are held merely administrative directions having no statutory force.

 

G. J. Farnadez[2]

           

In case of G. J. Farnadez, the Mysore Public works Department Code was held to have contained mere administrative instructions though coached as “code”.

 

The Court observed that:

 

“Article 162 does not confer any power on the state government to frame rules and it only indicates the scope of the executive power of the state. Of course, under such executive power, the state can give administrative instructions to its serventies how to act in certain circumstances, but that will not make such instructions statutory rules that are justifiable in certain circumstances. In order that such executive instructions have the force of statutory rules, it must be shown that they have been issued either under the authority covered on the state Government by some statute or under some provision of the constitution providing therefore. There is no statute that[3] confers any authority on the state Government to issue rules in matters with which the Mysore Public Works Department Code is concerned. Thus, the instructions contained in the code are mere administrative instructions and not statutory rules. Therefore, even if there has been any breach of such executive instructions that does not confer any right on any member of the public to ask for a right against Government by a petition under Art. 226. It is a matter between the State Government and its servant.”

 

V. T. Khanzode’s Case[4]

           

This is an interesting matter decided by the supreme Court of India dealing with the questions firstly, whether the Reserve Bank of India (Staff) Regulations, 1948 are statutory in character, secondly, whether it is competent for the Bank to provide conditions of service of its staff by administrative circulars, and thirdly, whether the impugned circular and seniority list offend against the provision of Articles 14 and 16 of the Constitution. The contention of the petitioner was that the Regulations were framed under section 58 of the Reserve Bank of India Act, 1934, that they cannot be altered by administrative circulars, that conditions of service cannot be framed by administrative circulars, but must be made by Regulations framed under section 58 of the Act etc.

 

Section 58(1) provides that:

 

“The Central board may, with the previous sanction of the Central Government, make regulations consistent with this act to provide for all matters for which provision is necessary or convenient for the purpose of giving effect to the provisions of this Act.”

 

Sub-section 2 of the Act provided that without prejudice to the generality of the foregoing provision, such regulation may provide for all or any of the matters mentioned in various clauses of that sub section.

           

It was contended that the Central Board had no inherent power and they must seek and find their power and obligation under the Act (Charter of Creation). Therefore, the argument proceeded that it is imperative on the Bank to provide the conditions of service only by way of regulations duly framed under the relevant source, and cannot be framed by administrative circular that was issued in the exercise of non-statutory power or authority.

 

In this connection reliance was placed on Halsbury:

 

“Corporations may be either statutory or non statutory, and a fundamental distinction exists between the powers and liabilities of the two classes, statutory corporations have such rights and can do such acts only as are authorised directly or indirectly by the Statutes creating them, non statutory corporation, speaking generally can do everything that an ordinary individual can do unless restricted directly or indirectly by statute.’’

 

“The powers of a corporation created by statute are limited and circumscribed by the statute which regulate it, and extend no further that is expressly stated therein, or is necessarily and properly regard for carrying out into effect the purposes of its corporations incorporation’s, or may be fairly regarded as incidental to, or consequential upon, those things which the legislature has authorised, what the statute does not expressly or impliedly authorise is to be taken to be prohibited.”

 

The statement of law in Halsbury puts an emphasis on the limitation on powers of statutory corporations in light of the provisions of statutes under which they are constituted.

           

The language of the Regulation 58(1) is very clear. The Supreme court held that so long as the regulations governing conditions of service are not framed, the central Board had the authority under section 7(2) of the Act to issue administrative circulars and thus govern the conditions of service. The Court held that:

 

“It would therefore be wrong to deny to the Central Board the power to issue administrative directions of service of the Bank’s staff. To read into the provisions of 5.58(1) a prohibition against the issuance of such administrative directions or circulars is patently to ignore the scope of the wholesome powers conferred upon the Central Board of Directors by 2, 7(2) of the Act. Indeed. This section brings the impugned circular and seniority list within the rule mentioned in Halsbury: they have the authority of the statute.”  

 

(Para 19 of reports)

 

In Para 20 of the reports, the Court further held that:

 

“While issuing the administrative circular governing the staff’s conditions of service, the Central Board of Directors has neither violated any statutory injunction nor indeed has it exercised a power which is not conferred upon by the statute. The circulars are strictly within the confines of S, 7(2).”

 

K. P. Joseph’s Case[5]

 

In this case, the Union of India issued a memorandum fixing the salary of the re-employed Civil Servants. The Respondent contended to the effect that the memorandum is enforceable and his pay should be fixed accordingly. The Government took the contention that the memorandum is not enforceable, as the same does not confer any enforceable right in view of the fact that it has no statutory force. It was argued that the same was having a flavour of administrative character.

 

However, here the Supreme Court said:

           

“Generally speaking, an administrative order confer no justifiable right, but this rule, like all other general rules is subject to exception. To say that an administrative order can never confer any right would be too wide a proposition. There are administrative orders which confer rights and impose duties.”

           

The Supreme Court said that the Respondent had a right to claim his salary fixed in accordance with the memorandum issued by the government, but at the same time observed that the Court is not laying down a general proposition.

 

The aforesaid observations of the Supreme Court, therefore, convey on principle that it will depend upon the facts and circumstances of the case as also the nature, creation and purpose of directions. By not laying down a general principle, as observed by the Court, save and except, this case, allowed a little play for the Government at a joint. 

 

Anglo Afghan Agencies Case[6]

           

Anglo Afghan Agencies is remarkably a good decision of the Supreme Court safeguarding the interest of the subject. The Supreme Court enforced the administrative instructions holding that the Union of India was not justified in falling back on the promise held out to the Citizens.

 

Textile Commissioner published a Scheme called “Export Promotion Scheme” providing for incentives to exporters of woolen goods. Under the scheme, the Exporter was required to be registered and in that case, only the registered exporter could get the “entitlement certificate for 100% import of goods.” The Import Entitlement Certificate was given at a reduced rate under the direction of the executive wing. The petitioner instituted a petition challenging the legality and validity of the impugned action. The petitioner succeeded in the petition. The Union of India then filed an appeal before the Supreme Court and attempted to relieve itself from the solemn promise. The Court said:

           

“Granting that it was executive in character, the Courts have the powers in appropriate cases to compel performance of the obligation imposed by the schemes upon the departmental authorities. It could not be said that the executive necessity releases promises relying upon which citizens have acted to their detriment. Under the constitutional set up, no person may be deprived of his right or liberty except in due course of and by authority of law, if a member of the executive seeks to deprive a citizen of his right or liberty otherwise than in exercise of power derived from the law common or statute the courts will be competent to, and indeed would be bound to protect the rights of the aggrieved citizen”.

 

In the present case the scheme was published under the Imports and Exports (Control) Act, 1947, but it was held to be administrative in character. Court also took into consideration that there is no pattern of order or logical sequence in the policy statement. It is a jumper of executive instructions and matters that impose several restrictions and restrictions upon the rights of the citizens. Some of the provisions that impose restrictions upon citizens in the exercise of their right to carry on trade without statutory limits may be open to serious objections. Supreme Court, however, did not answer the question on this count, but held the government bound on the basis of the representation made by the union of India under the Scheme.

 

Sukhdev Singh v.  Bhagatram[7]

 

The contention of the employees in this case was that “Regulations” are made under the statute. The origin and source of power to make Regulation is statutory. Regulations are self-binding in character. The Regulations have the force of law, in as much as; the statutory authorities have no right to make any departure from the regulations. As against this, the contention of the State was that regulations framed under powers given by the statute affecting matters of internal management, regulations do not have the statutory binding character. Terms and conditions laid down in the regulations are not matters of statutory obligations. Regulations are not binding as law but as contract. Regulations provide for the terms and conditions of employment and thereafter the employment of each person is contractual. If the regulations are held to be administrative in character, the contention should have prevailed. But the Supreme Court took it otherwise. Rules, Regulations, bylaws, orders made under the statutory powers are all comprised in delegated legislation. The need for delegated legislation is that statutory rules are framed with care and minuteness when the statutory authority making the rules after the coming into force of the act in a better position to adapt the act to special circumstances. Delegated legislation permits utilization of experience and consultation with interests affected by the practical operations of statutes. A person or body by virtue of the powers conferred by a statute makes subordinate legislation. Bylaws are made in the main by local authorities or similar bodies or by statutory or other undertakings for regulating the conduct of persons within their area or resorting to their undertakings. Regulations may determine the class of cases in which the exercise of the statutory power by any such authority constitutes the making of statutory rule. The word “rules” and “regulations” are used to limit the power of the statutory bodies. They are controlled and restricted by their statutes that create them and the rules and regulations framed thereunder. Any action of such bodies in excess of their power of or in violation of the restrictions placed in their powers is ultra vires. The reason is that it goes to the root of the power of such corporations and the declaration of nullity is the only relief that is granted to the aggrieved party. In England subordinate legislation has, if validly made, the full force and effect of a statute, but it differs from a statute in that its validity whether as respects form or substance is normally open to challenge in the courts. The subordinate legislation has full force as if enacted like statute. The Supreme Court observed that:

           

“The noticeable feature is that there statutory bodies have no free hand in framing the conditions and terms of service of their employees. These statutory bodies are bound to apply the terms and conditions as laid down in the regulations. The statutory bodies are not free to make such terms, as they think fit and proper. Regulations prescribe the terms of appointment, conditions of service and procedure for dismissal.”

 

The Court further said:

 

“Broadly stated, the distinction between rules and regulations on the one hand and administrative instructions on the other hand is that rules and regulations can be made only after reciting the source of power whereas administrative instructions are not issued after reciting source of power, second the executive power of a state is not authorised to frame rules under Article 162. This court held that the public works department code was not a subordinate legislation’s (See G. J. Fernandes v. State of Mysore, 1967 3 SCR 636=(AIR 1967 SC 1753. The rules under Article 309 on the other hand constitute not only the constitutional rights of relationship between the state and the Government Servants but also establish that there must be specific power to frame rules and regulations.”                                                                                                  

(Para 24)

 

The Supreme Court held that the regulations so framed assumed statutory force, and therefore, enforceable at law.  The employees of the corporation were thus held entitled for relief of reinstatement.

 

Sant Ram’s Case[8]

           

The Petitioner before the Supreme Court challenged the legality and validity of the Impugned action superseding him from the post of Inspector General of Police. Indian Police Service (Regulation of Seniority) Rules, 1954 came into force and accordingly the gradation list of all officers concerned had to be prepared in order to ascertain the chances of promotion. The Petitioner complained that he was discriminated and that he has a right to be promoted to the post. The Government, according to its administrative practice, issued letters and or directions saying:

 

“If a person, though senior in the gradation list, is appointed to the selection post later than his junior, this is presumable because he is superseded as a matter of selection. If this is so, it would certainly not be justified to regard the officer so selected earlier, though junior in the gradation list, as senior to the other officers, as far as the selection posts are concerned”.

           

Another communication runs like this:

 

“All super-time scale posts are selection posts and appointment thereto need not follow the order of seniority.”

           

It was contended on behalf of the petitioner that in the absence of statutory provision in the rule, the Government cannot issued the administrative instructions and also cannot impose restrictions by making administrative directions not found in the rules.

 

The Court held that:

 

“It is true that there is no specific provision in the rules laying down the principle of promotion of junior or senior grade officers to selection posts. But that does not mean that till statutory rules are framed in this behalf the Government cannot issue administrative instructions regarding the principle to be followed in promotions of the officers concerned to selection grade posts. It is true that Government cannot amend or supersede statutory Rules by administrative instructions, but if the rules are silent on any particular point Government can fill up the gaps and supplement the rules and issue instructions not inconsistent with the rules already framed.”

 

Court held that the State has power to issue such administrative instructions in the absence of statutory rules framed in regard to principle to be followed, and simultaneously, observed that the administrative instructions should be so issued, which should not supersede the vigor of the rule, or say such instructions should not be inconsistent with statutory rules already framed. Thus Government can issue the instructions under its administrative powers to fill up the gap where the rules are silent, or the rules are not framed.

 

Hemang D. Rana

Senior Advocate, Sanad G|693 of 1985

Email: corporatearmour@gmail.com 

[1] Punjab Co-Operative Bank Limited V Income Tax Officer AIR 1940 PC 230 at page 235.

[2] G. J. Fernandez v.  State of Mysore,  AIR 1967 SC  1753

[3] passive form

[4] V.T.Khandoze V/s Reserve bank of India, AIR 1982 SC 917.

[5] Union of India V/s K.P.Josheph AIR 1973 SC 303

[6] Union of India V/s Angle Afghan Agencies AIR 1968 SC 718

[7] AIR 1975 SC 1331

[8]  AIR 1967 SC 1910

 

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