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Judgment
Sinha, J.—The petitioner in this case is the East India Electric Supply and Traction Co., Ltd., a company incorporated in 1920 under the Indian Companies Act for supplying electrical energy in the Hooghly-Chinsurah area. The company has from time to time supplied and is still now supplying electrical energy to other areas but we are not concerned with that in this application. The company is a ''licensee'' under the Indian Electricity Act, 1910 (hereinafter referred to as the ''Electricity Act''). Section 3 of the Electricity Act confers powers on the State Government to grant to any person a licence to supply electrical energy in a specified area and also to lay down or place electric lines for the convenience and transmission of energy. The section also lays down certain special provisions to be followed in the granting of such licence.
By virtue of section 3(2)(f) of the Electricity Act, the provisions contained in the schedule to that Act are deemed to be incorporated with and to form part of every licence granted under it. The schedule appended to the Act consists of a number of conditions covering all possible aspects of an electrical undertaking meant to supply electrical energy to the public.
Section 11 of the Electricity Act requires every licensee to make an annual statement of account in such form, and containing such particulars, as may be prescribed. According to the Schedule, the accounts, unless they be of a licensee which is a local authority, are to be audited by approved auditors.
u/s 36A of the Electricity Act, a Board has to be established called the "Central Electricity Board", which is to exercise the powers conferred by section 37.
Section 37 confers upon the "Central Electricity Board", the power to make rules for regulation, generation, transmission, supply and use of electrical energy, and generally to carry out the purposes and objects of the Act.
Section 36A was introduced by the Indian Electricity Amendment Act, 1937 (X of 1937). Previous to such amendment, the rule-making power vested in the Governor-General-in-Council, and such rules had been framed, e.g., the Indian Electricity Rules, 1937. The rules are exhaustive and deal with every aspect of an electrical undertaking for the supply of electrical energy, and have annexed thereto prescribed forms in which the accounts must be submitted.
The next statute to be considered is the Electricity (Supply) Act, 1948 (LIV of 1948), (hereinafter referred to as the ''Act'') which is an Act to provide for the rationalisation of the production and supply of electricity, and generally for taking measures conducive to electrical development. Sections 1, 3, 4, 57, 58, 77 and 83 and the Sixth Schedule together with the Table appended to the Seventh Schedule, came into force at once. The remaining provisions of the Act were to come into force in a State, on such date as the State Government may appoint. In point of fact, the other provisions have not been applied yet to the State of West Bengal. u/s 3 of this Act, the Central Government is to constitute a body called the "Central Electricity Authority" generally to exercise such functions and perform such duties under the Act and in such manner as the Central Government may prescribe or direct, and in particular to:
(i) develop a sound, adequate and uniform national power policy and particularly to co-ordinate the activities of the planning agencies in relation to the control and utilisation of national power resources;
(ii) act as arbitrators in matters arising between the State Government or the Board and a licensee or other person as provided by this Act.
u/s 4, licensees are required to furnish to the authorities, such accounts, statistics and returns relating to the generation, supply and use of electricity as may be required.
u/s 5, the State Government is empowered to constitute a State Electricity Board.
The provisions of section 57 of this Act are extremely important and the relevant portions must be set out:
Licensees'' charges to consumers--(1) The provisions of the Sixth Schedule and the Table appended to the Seventh Schedule shall be deemed to be incorporated in the license of every licensee, not being a local authority, from the date of the commencement of the licensee''s next succeeding year of account and from such date the licensee shall comply therewith accordingly and any provisions of such licence or of the Indian Electricity Act, 1910 (IX of 1910), or any other law, agreement or instrument applicable to the licensee shall, in relation to the licensee, be void and of no effect in so far as they are inconsistent with the provisions of this section and the said Schedule and Table.
(2) Where the provisions of the Sixth Schedule and the Table appended to the Seventh Schedule are under sub-section (1), deemed to be incorporated in the licence of any licensee, the following provisions shall have effect in relation to the said licensee, namely
(a) The Board or where no Board is constituted under this Act the State Government, may if it is satisfied that the licensee has failed to comply with any provision of the Sixth Schedule, and shall when requested so to do by the licensee, constitute a rating committee to examine the licensee''s charges for the supply of electricity and to recommend thereon to the State Government:
Provided that no rating committee shall be constituted in respect of a licensee within three years from the date on which such a committee has reported in respect of that licensee, unless the State Government declares that in its opinion circumstances have arisen rendering the orders passed on the recommendations of the previous rating committee unfair to the licensee or any of his consumers.
(b) The rating committee shall, after giving the licensee a reasonable opportunity of being heard and after taking into consideration the efficiency of operation and management and the potentialities of his undertaking, report to the State Government making recommendations (and giving reasons therefore) regarding the charges for electricity which the licensee may make to any class or classes of consumers so however that the recommendations are not likely to prevent the licensee from earning clear profits sufficient when taken with the sums available in the Tariffs and Dividends Control Reserve to afford him a reasonable return during his next succeeding three years of account if the potentialities of the undertaking of the licensee with efficient operation and management, so permit.
(4) Where no Board is constituted under this Act, a rating committee shall consist of 5 members of whom the Chairman and two other members shall be nominated by the State Government, one member shall be nominated by the licensees and one member shall be nominated by the local electric licenses'' association, or if there is no such association, by such Chamber of Commerce or similar body as the State Government may direct.
(5) Of the three members to be nominated by the State Government under sub-section 4, one shall be a person who is or has been a judicial officer not below the rank of a District Judge, one shall be a registered accountant having at least ten years'' experience and one shall be a person with administrative experience.
The Sixth Schedule to this Act, the provisions whereof are to be deemed as incorporated in the licence of every licensee not being a local authority, contain the financial principles to be applied to such undertakings and their application. For example, clause 1 requires a licensee so to adjust his rates for the sale of electricity that his clear profit in any year shall not as far as possible exceed the amount of reasonable return.
Clause XVI of the Sixth Schedule runs as follows:
Any dispute or difference as to the interpretation or any matter arising out of the provisions of this Schedule shall be referred to the arbitration of the Authority.
Section 76 of the Act lays down that all questions arising between the State Government or the Board and a licensee or other person shall be determined by arbitration, such arbitration to be by the Authority in cases where the Act so provides. It will be remembered that section 76 has not yet come into force so far as the State of West Bengal is concerned.
It appears that the statement of accounts filed by the petitioner came under the scrutiny of Government. The correspondence passing between the Government of West Bengal in its department of Commerce and Industries, Mines and Power Branch and the petitioner, shows that Mr. A.K. Bhowmick the Chief Electrical Engineer of the Government of West Bengal (respondent No. 5) was dealing with the matter. By letter dated December 21, 1950, he called upon the company to furnish certain particulars. In a letter dated December 28-29, 1950, further explanations were asked for and I find the following statement:
Moreover, to find out the amount of your previous losses, it is necessary to examine your audited accounts year by year since the inception of your company. We have in our records accounts for the year ended 31.12.47 and 31.12.48. We would therefore request you to send copies of your audited accounts for each year commencing from the year of inception to year 1946.
This letter was signed "for A.K. Bhowmick. Chief Electrical Engineer". Mr. Bhowmick''s responsibility for this statement is not denied before me.
On November 5, 1952, there was a further letter written by Mr. A.K. Bhowmick (or on his behalf) containing the following statement:
The office allowances drawn by a managing agent shall include the salaries and wages of all persons employed in the office by the managing agent, but not the salaries of engineering staff employed for the purposes of the undertaking.
The managing agent while claiming the office allowances must submit a statement showing the actual expenditure incurred in this connection so as to see that this amount so incurred does not exceed the limit permitted in the Electricity (Supply) Act, 1948.
It should be borne in mind that no office allowance will be allowed unless actual expenses are involved.
Managing Agent''s office allowances will therefore be the actual expenses subject to the limit permitted by the Electricity (Supply) Act, 1948, vide clause XIII (3) of the Sixth Schedule.
It appears that by a communication, dated September 7, 1951, the Deputy Secretary to the Government of West Bengal wrote to the Managing Agents of the petitioner company to the effect that upon an examination of the audited accounts for the period ending December 31, 1949, it was found that the figures for "capital base", "reasonable return" and "clear profit" should be:
Capital base
Rs. 2,55,238-0-0
Reasonable return
Rs. 12,762-0-0
Clear profit
Rs. 41,392-0-0
computation by the petitioner were Rs. 2, 89, 700 as capital base and Rs. 207 as clear profit, but these figures were not accepted. It was further intimated to the petitioner that in order to absorb the excess of clear profit over reasonable return, Government had decided that the petitioner company should lower the rates for supply of different categories of loads. The proposed rates were then specified.
September 29, 1951, the petitioners replied as follows:
With reference to Messrs. Bengal Government Commerce Department, Mines and Power Branch. Letter No. 2698 and 2699|M.P., dated 7th September, 1951 we beg to submit that we have carefully gone through our accounts for 29 years commencing from 1921 and convinced ourselves that the statements of capital base, deprecation and clear profit, as well as accumulated profit and loss of the undertaking up to the year 1949 are all incorrect. The conclusions arrived at by the Government on the basis of such incorrect figures are therefore also incorrect.
This is of course an extraordinary statement and has been strongly commented upon by the respondents. It appears that the petitioners were trying to go back on their own audited accounts without stating how and to what extent they were incorrect. I am informed that the authorities contacted the auditors, who in their turn took up the attitude (which I think is a correct one), that, as Chartered Accountants they were not at liberty to discuss the audit reports with any one but their own constituent.
Be that as it may, I am not called upon in this application to determine the merits of the dispute which arose between the petitioner and the Government. It appears that some time in March, 1952, the authorities wrote to the petitioner company that the points raised could only appropriately be considered by a rating committee, to be appointed by Government, u/s 57(2) (A) of the Electricity (Supply) Act, 1948, and that the petitioner should approach Government for the constitution of such a committee for the examination of the petitioner''s accounts from 1924 to 1949. Subsequently, such a rating committee has been appointed by a notification No. 2184, dated September 5, 1953, of which, the respondents Nos. 1-5 are the members. The respondent No. 1 is the Chairman of the committee; respondents 2 and 5 (together with the Chairman) are the nominees of the State of West Bengal; respondent No. 3 is the nominee of the petitioner, and respondent No. 4, has been nominated by the Association of Electricity undertakings in West Bengal.
Before the rating committee, the petitioner took up the position that the disputes were such as could not be referred to the rating committee and in any event, the disputes involved the interpretation of the provisions of the Sixth Schedule to the Act (LIV of 1948), and as such they could only be referred to the arbitration of the Central Electricity Authority constituted u/s 3 of the Act. The respondents, however, did not accept this contention, but called upon the petitioner to file a written statement without prejudice to their contention. The petitioners have filed their written statement without prejudice and issues have been raised therein. 15 issues have been framed. It is not denied that the State of West Bengal (respondent No. 6) is taking an active part in the proceedings before the rating committee. The fact is that it is conducting itself as if it were a party, and lawyers have been appearing on behalf of the said respondent, before the rating committee, and it is the intention of the said respondent to oppose the contentions of the petitioners before the committee. It is further not denied that the issues do involve the interpretation of the provisions of the Sixth Schedule of the Electricity (Supply) Act, 1948.
This Rule was issued on January 11, 1954, upon the respondents to show cause why there should not be made an order in the nature of a Writ of Mandamus directing the respondents to forbear from proceeding any further with the proceedings, from proceeding with the enquiry mentioned hereinbefore, and to refer the disputes to the Central Electricity Authority and|or to act in accordance with the Electricity (Supply) Act, 1948.
Mr. Chaudhuri appearing on behalf of the petitioner has raised the following points:
That the disputes or differences that have been referred to the rating committee, relate to matters and involve the interpretation of the Sixth Schedule annexed to the Act According to clause XVI of the Sixth Schedule, the Central Electrical Authority constituted u/s 3 of the Act, is the only body which has jurisdiction to decide such disputes or to interpret the provisions of the Sixth Schedule; and as such, the rating committee is acting without jurisdiction.
That the constitution of the rating committee is invalid inasmuch as Mr. A.K. Bhowmick, the Chief Electrical Engineer and Adviser to the Government of West Bengal, has been appointed a member of the rating committee. This Mr. Bhowmick initiated the disputes and differences, made requisitions on behalf of the Government and actually pre-judged many of the issues which are to be decided by the rating committee. The petitioner apprehends that as a result of his presence in the rating committee, justice will not be done.
That the petitioner apprehends that justice will not be done by reason of the following further facts and circumstances.
(i) The appointment of A.K. Banerji as Secretary of the rating committee. He is the Assistant Secretary of the Commerce and Industries (Commerce) Department of the State of West Bengal.
(ii) The rating committee is required by law to make its report to the State Government, containing its recommendations regarding the charges for electricity which the licensee may charge. The State Government is the final authority, yet the State Government is being allowed by the rating committee to appear before it as a party to the disputes and to actively oppose the petitioner''s case. The petitioner reasonably apprehends that if the point of view of Government is not accepted by the rating committee, its recommendations are not likely to be accepted.
The first point raised appears plausible upon a superficial reading of clause XVI of the Sixth Schedule. A closer examination however shows that it is of no substance. u/s 3 of the Act, the Central Electricity Authority is constituted, and one of its functions is to act as arbitrators in matters arising between the State Government or the Board and a licensee or other person as provided in the Act. u/s 76 of the Act, all questions arising between the State Government or the Board and a licensee or other person shall be determined by arbitration. It is further provided that where any question or matter was by the Act required to be referred to arbitration, it was to be so referred, in cases where the Act so provides, to the authority, and in other cases, to two arbitrators, one to be appointed by each party to the dispute. In such cases the provisions of the Arbitration Act, 1940 (X of 1940), would apply, subject to the provisions of section 76 of the Act.
As I have mentioned already, section 76 has not yet been applied to the State of West Bengal.
Coming now to clause XVI of Sixth Schedule, we find that any dispute or difference as to interpretation or any matter arising out of the provisions of the Schedule shall be referred to the arbitration of the authority. The purpose for which such disputes or differences as to interpretation or any matter arising out of the provisions of the Sixth Schedule are to be referred to the Central Electricity Authority is that the authority should adjudicate and finally decide such disputes or differences. While it may be argued that in the absence of section 76 there is no provision for the reference of disputes to arbitration, nevertheless, the Sixth Schedule forms a part of the licence and it would be difficult to contend that adjudication of the matters mentioned in clause XVI of Sixth Schedule could he effected except by arbitration. Assuming therefore that there does exist provisions for reference to arbitration in the case of disputes or differences as to interpretation or any matter arising out of the provisions of Sixth Schedule, the question is whether it can be said that such disputes and differences have arisen and that the rating committee was going to adjudicate upon them, thus usurping the functions of the Central Electricity Authority. In my opinion, it is doing nothing of the kind. u/s 57 of the Act, the provisions of the Sixth Schedule and the table appended to the Seventh Schedule are deemed to be incorporated in the licence of the licensee. Under sub-section 2(a) of section 57 the State Government, if it is satisfied that the licensee has failed to comply with any provision of the Sixth Schedule, shall constitute a rating committee. The purpose, however, for which a rating committee is constituted is a restricted one, namely, to examine the licensee''s charges for the supply of electricity to find out whether it is in accordance with the provisions of the Sixth Schedule read with section 57 of the Act and to recommend to the State Government as to what such charges should be.
Under sub-section 2(b), the rating committee has to give the licensee a reasonable opportunity of being heard and has to take into consideration certain things. The rating committee makes a report, but it is only a recommendation. The Government is compelled to publish the report in the official gazette within one month after the receipt thereof, but it is not bound to accept the findings. It may or may not make an order in accordance therewith. For example, suppose the rating committee recommended that the licensee should be permitted to enhance its rates. The Government may not accept such recommendation.
The only duty which the rating committee is entrusted, is to examine the charges and to find out whether the charges were in accordance with the provisions of the Sixth Schedule, and if not, what they should be. In order to find out whether the charges were in accordance with the provisions of the Sixth Schedule, it is only natural that the rating committee would have to find out what the provisions of the Sixth Schedule mean or signify. Upon this, there might be differences between the point of view of the licensee and that of Government. It is, however, not the business of the rating committee to adjudicate or decide finally any disputes or differences between the licensee or the Government in respect of the provisions of the Sixth Schedule, whether it be interpretation or otherwise. If it has to interpret the provisions, it is only doing so incidentally or collaterally. The rating committee has no jurisdiction to act as arbitrators in respect of such disputes or differences and its findings cannot be considered as an award which finally adjudicates upon such disputes or differences. The incidences of arbitration are well-known. The position of an arbitrator is like that of a Judge and his findings constitute a final adjudication of the disputes or differences referred to him and not a mere recommendation, depending for its effectiveness upon the will of others. Much confusion has arisen in this case as a result of the procedure followed. The rating committee in order to facilitate matters have proceeded to frame a large number of issues and raised them in such a form so as to give the impression that it was going to interpret the provisions of the Sixth Schedule or adjudicate upon the disputes and differences relating thereto. In fact, it is doing nothing of the sort, and has no jurisdiction to adjudicate upon any disputes and differences between the parties with regard to the provisions of the Sixth Schedule or the interpretation thereof. All that it has jurisdiction to do is to examine whether the licensee has complied with the provisions of the Sixth Schedule in fixing the rate of charge. It could come to no finding which would be binding on either the Government or the licensees regarding their disputes or regarding the interpretation of the Sixth Schedule. It will merely recommend to the State Government as to what the licensee should charge its constituents, consistent with the provisions of the Sixth Schedule and the other considerations as indicated in section 57 of the Act. Such recommendations may or may not be accepted by the Government. The only result of its report would be that the State Government must either accept the recommendations contained therein or leave the licensee to continue to charge at the rate that it was charging.
In view of my finding on the first point, it is scarcely necessary to deal with a line of argument advanced by the learned Advocate-General. He argued that if clause XVI of the Sixth Schedule called for arbitration of any dispute, it was for the petitioner to refer the dispute for arbitration by the Central Electrical authority. Not only has it not made any such reference, but, according to the learned Advocate-General it has submitted to the jurisdiction of the Rating Committee by filing a written statement and raising issues. Mr. Chaudhuri on the other hand argues that this was an instance of a statutory arbitration, where the Statute itself laid down that a particular kind of dispute should be decided by a specified arbitral tribunal. In such a case, it is argued, there can be no question of any party referring such a dispute to arbitration, because the specified arbitral tribunal alone has jurisdiction and the jurisdiction of every one else was excluded. (Halsbury, Vol. II, 3rd Edn., p. 62, art. 132, Russell on arbitration, 15th Edn., Ch. VII, p. 83.) Crisp v. Henry Edward, 131 E.R. 446, 448; London and N.W.R. Co. v. Donellan, (1898) 2 Q.B. 7; L. & N.W. G.W. Joint Railway Companies v. J.H. Billington, (1899) A.C. 79; London and North Western Railway Co v. Jones, (1915) 2 K.B. 35, 39; and Selby v. Whitebread & Co., (1917) 1 K.B. 736.
It is unnecessary however to consider this point any further. The present case is not one of arbitration of any dispute relating to matters in the Sixth Schedule or as to interpretation thereof. As I have pointed out above, the Rating Committee is only entrusted with the task of scrutinising the charges levied by the licensee and to recommend what the charges should be, consistent with the provisions of the Sixth Schedule read with section 57 of the Act. In doing so, it may have to make up its mind as to what the provisions of the Sixth Schedule mean, but it does not decide any dispute and its interpretation is not final or binding on the parties. Its report is in the nature of a recommendation and is not an adjudication or an award. The result is that the first point has failed. I now come to the second point. In deciding the second point, it would be necessary to decide as to the nature of the Rating Committee. Is it a judicial, quasi-judicial or merely an administrative body? If it is either a judicial or quasi-judicial body the question of bias is important, but not if it is a purely administrative body.
The leading case on the subject is Franklin v. Minister of Town and Country Planning (1) [(1948) A.C. 87]. Under the New Towns Act, 1947, it was provided as follows:
If the Minister is satisfied, after consultation with any local authorities who appeared to him to be concerned, that it is expedient in the national interest that any area of land should be developed as a new town by a corporation established under this Act, he may make an order designating that area as the site of the proposed new town.
The Minister attended public meetings and heard objections. But notwithstanding objections to the proposed course, passed an order designating certain area for a new town.
Lord Thankerton said as follows (p. 102):
In my opinion, no judicial, or quasi-judicial, duty was imposed on the respondent, and any reference to judicial duty, or bias, is irrelevant in the present case. The respondent''s duties u/s 1 of the Act and Sch. I thereto are, in my opinion, purely administrative, but the Act prescribes certain methods of or steps in, discharge of that duty. It is obvious that, before making the draft order, which must contain a definite proposal to designate the area concerned as the site of a new town, the respondent must have made elaborate enquiry into the matter and have consulted any local authorities who appear to him to be concerned.............. It seems clear also, that the purpose of inviting objections, and, where they are not withdrawn, of having a public inquiry, to be held by someone other than the respondent, to whom that person reports, was for the further information of the respondent, in order to the final consideration of the soundness of the scheme of the designation;........................ I am of opinion that no judicial duty is laid on the respondent in discharge of these statutory duties, and that the only question is whether he has complied with the statutory directions to appoint a person to hold the public inquiry, and to consider that person''s report.
While holding that on the facts of that particular case, the question of bias did not arise, Lord Thankerton laid down certain tests regarding the question of bias which are important for our purpose:
My Lords, I could wish that the use of the word ''bias'' should be confined to its proper sphere. Its proper significance, in my opinion, is to denote a departure from the standard of even-handed justice which the law requires from those who occupy judicial office, or those who are commonly regarded as holding a quasi-judicial office, such as an arbitrator. The reason for this clearly is that, having to adjudicate as between two or more parties, he must come to his adjudication with an independent mind, without any inclination or bias towards one side or other in the dispute.
In my opinion, there is a clear distinction between the facts of the present case and the case cited above. In Franklin''s case (1) (supra) the minister had to be personally satisfied about something. His conduct was to be shaped according to his own subjective satisfaction and the law merely enjoined that in making up his mind, he should consult local authorities or any one, who appeared to him to be concerned, so that his mind may be well informed. The duties of the rating committee are completely different.
It has to come to an objective finding regarding the rates which a licensee can charge, consistent with the provisions of the sixth schedule (read with section 57 of the Act). According to section 57, the rating committee is bound to give the licensee a reasonable opportunity of being heard and also is bound to take into consideration the efficiency of operation and management and the potentialities of the undertaking of the licensee. In making the recommendations, the rating committee must give reasons, and the recommendations must not be such as are likely to prevent the licensee from earning clear profits sufficient when taken with the sums available in the tariffs and dividends control reserve to afford him ft reasonable return during his next succeeding 3 years of account, if the potentialities of the undertaking of the licensee, with efficient operation and management, so permit.
In order to decide as to whether a body like this is a quasi-judicial body or a purely administrative one, and how far the question of bias was important, it will be necessary to consider a number of authorities. In Cooper v. Wilson (2) [(1937) 2 K.B. 309 at 340-41], Scott, L.J., laid down the difference between a judicial and quasi-judicial proceeding. In a judicial proceeding the following points are involved:
(1) The presentation (not necessarily orally) of their case by the parties to the dispute; (2) if the dispute between them is a question of fact, the ascertainment of the fact by means of evidence adduced by the parties to the dispute and often with the assistance of argument by or on behalf of the parties on the evidence; (3) if the dispute between them is a question of law, the submission of legal argument by the parties; and (4) a decision which disposed of the whole matter by a finding upon the facts in dispute and an application of the law of the land to the effect so found, including, where required, the ruling upon any disputed question of law. A quasi-judicial decision equally presupposes an existing dispute between two or more parties and involves (1) and (2) but does not necessarily involve (3) and never involves (4). The place of (4) is in fact taken by administrative action.
In that case, the appellant, a sergeant in the Liverpool Police Force, was being proceeded against on several charges for breach of discipline and the Chief Constable after inquiry purported to dismiss him. From this order of dismissal an appeal was taken to the Watch Committee. At the hearing before the Watch Committee, the Chief Constable was present and after the hearing was over the Committee asked the appellant to withdraw and were closeted with the Chief Constable. The Watch Committee dismissed the appeal. It was held that the presence of the Chief Constable invalidated the proceedings Scott, L.J., said as follows:
In my view, this again is open to the same objections as the Committee''s conduct in allowing the Chief Constable, really the prosecutor, on the re-hearing and respondent on the appeal, to sit on the Bench with them, but in a more acute degree as there was from the appellant''s point of view secrecy and the risk of bias through the Tribunal seeing one party without the other being present. Some relevant aspects of such procedure were discussed by Eve, J., in his judgment in Law v. Chartered Institute of Patent Agents, (1919) 2 Ch. 276, although others did not arise in that case, but I agree with the general views of the learned Judge in that case and in particular with this passage:--
A person who has a judicial duty to perform is disqualified from performing it if he has a bias which renders him otherwise than an impartial Judge, or if he has so conducted himself in relation to the matters to be investigated as to create in the minds of a reasonable man a suspicion that he may have such a bias.
Every one of the Committee by ordering the appellant to withdraw and allowing the Chief Constable to remain closeted with them must inevitably have given rise in the appellant''s mind to the suspicion that they already were or might under the influence of the Chief Constable quickly become biased against him. The rule of justice that the Court must not listen to one side behind the back of the other is fundamental--one of those matters of substance and not mere matters of form.
It was further held that the Watch Committee constituted a quasi-judicial body.
In Rex v. The Inhabitants of Glamorganshire (3) [1 Ld. R. Aym. 580], Justices authorising a rate for the repair of a bridge were held to be acting judicially. The Tithe Commissioners, in In re. Crosby Tithes (4) (13 Q.B. 761), in certifying that a proposed enclosure of common land would be expedient, were held to be acting judicially, as also Licensing Justices in Rex v. Woodhouse (5) [(1906) 2 K.B. 501].
The case of Rex v. Electricity Commissioners (6) [(1924) 1 K.B. 171], comes very near the facts of the present case. The Electricity Commissioners was a body established by section 1 of the Electricity (Supply) Act, 1919, by which they were empowered to constitute provisionally separate electricity districts, and in certain events, to formulate schemes for effecting improvements in the existing organisation for the supply of electricity in any electricity district so constituted, and were directed to hold local enquiries upon the scheme. The scheme when framed was to be presented to the Minister of Transport for confirmation and after confirmation was to be laid before each House of Parliament and was not to come into operation until approved, with or without modification, by a resolution passed by each House. Banks. L.J., said as follows:
The conclusion which I have come to in reference to the whole matter is that there is abundant precedent for the Court taking action at the present stage of the proceedings of the electricity commissioners, provided it is satisfied that the Commissioners, are proceeding judicially in making their report, even though that report needs the confirmation of the Minister of Transport and of both Houses of Parliament before it becomes effective. In coming to a conclusion on this latter point it is necessary to deal with this case on its own particular circumstances. The Electricity Act of 1919 imposes upon the Electricity Commissioners very wide and very responsible duties and powers in reference to the approval or formulation of schemes. Ac every stage they are required to hold local enquiries for the purpose of giving interested parties an opportunity of being heard...... On principle and on authority, it is in my opinion, open to this Court to hold and I consider that it should hold, that powers so far-reaching affecting as they do individuals as well as property, are powers to be exercised judicially and not ministerially.
It was argued there, as it has been argued in the present case, that if the findings of a body do not become effective unless confirmed or approved by others, then its function cannot be quasi-judicial. On this point Atkin, L.J., said as follows:
In the provision that the final decision of the Commissioners is not to be operative until it has been approved by the two Houses of Parliament. I find nothing inconsistent with the view that in arriving at that decision the Commissioners themselves are to act judicially and within the limits prescribed by Act of Parliament and that the Courts have power to keep them within those limits. It is to be noted that it is the order of the Commissioners that eventually takes effect; neither the Minister of Transport who confirms, nor the House of Parliament who approve, can under the statute make an order which in respect of the matter in question has any operation. I know of no authority which compels me to hold that a proceeding cannot be judicial proceeding, subject to prohibition or certiorari, because it is subject to confirmation or approval, even where the approval has to be that of the Houses of Parliament.
Where the law requires that an enquiry is to be held and objections heard from parties interested, such enquiries have been held to be quasi-judicial. In Errington v. Minister of Health (7) [(1935) 1 K.B. 249], Greer, L.J., said as follows:
In so far as the Minister deals with a matter of a confirmation of a closing order in the absence of objection by the owner, it is clear to me and I think to my Brethren, that he would be acting in the ministerial or administrative capacity and would be entitled to make such enquiries as he thinks necessary to enable him to make up his mind whether it was in the public interest that the order should be made. But the position, in my judgment, is different where objections are taken by those interested in the property which will be affected by the order if confirmed and carried out. It seems to me that in deciding whether a closing order be made in spite of objections which have been raised by the owners, it seems to me reasonable that the Minister should be regarded as exercising quasi-judicial functions.
This was followed in Frost v. Minister of Health (8) [(1935) 1 K. B. 286].
A writ of certiorari can only issue in respect of a judicial or quasi-judicial act. A writ of certiorari was issued in the following cases:
In R. v. Postmaster-General, (9) [(1928) 1 K.B. 291], the certificate of the Chief Medical Officer of the Post Office certifying that one Carmichael, a clerk, was not suffering from telegraphist''s cramp, was quashed.
In R. v. Boycott (10) [(1939) 2 K.B. 651], a decision of the Board of Education under the Mental Deficiency Act, 1913, whether a boy was or was not capable of receiving benefit from instructions, was quashed.
In R. v. Manchester Legal Aid Committee (11) [(1952) 1 All Eng. R. 480, at 489], Parker, J., said as follows:
The true view, as it seems to us, is that the duty to act judicially may arise in widely different circumstances which it would be impossible and inadvisable to attempt to define exhaustively. Where the decision is that of a Court, as in the case, then, unless, as in the case, for instance, of Justices granting excise licence, it is acting in a purely ministerial capacity, it is clearly under a duty to act judicially. When, on the other hand, the decision is that of an administrative body and is actuated in whole or in part by questions of policy, the duty to act judicially may arise in the case of arriving at that decision. Thus, if, in order to arrive at the decision, the body concerned has to consider proposals and objections and consider evidence, then there is a duty to act judicially in the course of that enquiry.
In Queen v. Dublin Corporation (12) [(1872) 2 L.R. Ir. 371], it was held that if there be a body empowered by law to enquire into facts, make estimates to impose a rate on a district, the acts of such a body would be judicial acts.
In Province of Bombay Vs. Kusaldas S. Advani and Others, , Das, J., after an exhaustive consideration of all the cases held that if a statutory authority had power to do any act which would prejudicially affect the subject, then, although there were not two parties apart from the authority, and the contest was between the authority proposing to do the act and the subject opposing it, the final determination of the authority will yet be a quasi-judicial act provided the authority was required by the statute to act judicially.
Applying all the tests mentioned above, in my opinion, the rating committee is a quasi-judicial body. The law requires that it must hear the parties (which involves the hearing of evidence adduced by the party) and give reasons for its recommendations. It has to examine the licensee''s charges and to report as to whether the licensee has failed to comply with the provisions of the Sixth Schedule, and what the charges should be in accordance with the Sixth Schedule and the other considerations mentioned in section 57 of the Act. The finding therefore is an objective one. It is not dependent on the subjective satisfaction of the members of the rating committee. Although the report is in the nature of recommendation, Government must either accept that recommendation or not. The Government has no power to substitute its own views in the place of that of the rating committee. All it can do is not to give effect to it. It is quite clear that the law lays down a judicial approach, because the rating committee has to hear the licensee and give reasons for its views, which reasons have to be published in the Gazette. It is quite evident that the findings affect he property and other rights of the licensee. The findings of the rating committee end in an administrative order and not a judicial decree.
Since the rating committee is a quasi-judicial body, it follows that the question of bias is very important. It is said that Mr. A.K. Bhaumik, who is a member of the rating committee, is the Chief Electrical Engineer and Adviser to the State Government of West Bengal. It is he who started the correspondence raising the disputes which culminated in the appointment of the rating committee. But the most cogent argument of all is that he has prejudged many of the issues. In my opinion, if it can be established that Mr. Bhaumik has prejudged some or any of the issues that have been raised before the rating committee, he would not be a fit person to be associated with the rating committee and to sit therein.
On the question of bias the following further authorities may be considered:
In The King v. Sussex Justices ex-party McCarthy (14) [(1924) 1 K.B. 256], there was a collision between a motor vehicle belonging to the applicant and one belonging to W.A. summons was taken out by the police against the applicant. At the hearing of the summons, the Acting Clerk to the Justices was a member of the firm of solicitors who were acting for W., in a claim for damages against the applicant for injuries received in the collision. It was stated in affidavit that the Justices did not consult the Acting Clerk in coming to their decision. Lord Hewart, C.J., stated as follows:--
It is said, and no doubt true, that when that gentleman (the Deputy Clerk) retired in the usual way with the Justices taking with him the notes of the evidence, in case the Justices might desire to consult him, the Justices came to a conclusion without consulting him, and that he scrupulously abstained from referring to the case in any way. But while that is so, the long line of cases shows that it is not merely of some importance, but is of a fundamental importance that justice should not only be done, but should manifestly and undoubtedly be seen to be done. The question therefore is not whether in this case the Deputy Clerk made any observation or offered any criticism which he might not properly have made or offered; the question is whether he was so related to the case in its civil aspect as to be unfit to act as clerk to the Justices in the criminal matter. The answer to that question depends not upon what actually was done but upon what might appear to be done.
In King v. Essex Justices (15) [(1927) 2 K.B. 475], the facts were as follows: A solicitor was Clerk to the Justices. He left his business at a branch office almost entirely to his own clerk there. A lady consulted the solicitor''s clerk at the branch office about the preparation of a deed of separation. No mention of the matter was made to the solicitor himself. At the hearing of a summons for maintenance by the lady against her husband, the solicitor acted as the clerk to the Justices. The solicitor affirmed an affidavit that he had no knowledge that his firm had acted for the lady. Notwithstanding this, it was held that the appointment of the solicitor as Clerk to the Justices invalidated the proceedings.
The case of Cooper v. Wilson (2) (supra) where the presence of the Chief Constable vitiated the proceedings has already been referred to above.
In R. v. London County Council (16) (66 Law Times, 168), the London County Council delegated to a committee of that body the hearing of applications for music and dancing licence. The Committee after hearing evidence recommended to the Council the granting or refusal of such applications Two applications for renewal of music and dancing licence were made to the Committee, who by a majority recommended that the applications should not be granted. The applicants thereupon appealed to the Council for the grant of the licences. Four of the Committee, who had voted in the majority against the renewal, instructed counsel to appear on their behalf at the hearing before the Council and to oppose the application. Three of the said four members of the Committee were also present at the hearing and were sitting amongst those adjudicating. They subsequently retired and did not vote. Held that the proceedings were vitiated.
It is necessary now to see whether Mr. Bhaumik had taken part in raising the disputes or had prejudged any of the issues. The correspondence that is set out in the Brief of correspondence, part 2, clearly shows that Mr. Bhaumik is responsible for initiating the correspondence in the course of which the disputed points were developed. It is true that most of the letters are concerned with asking for informations to which the Government was clearly entitled to, and that they were doing no more than relying on the audited accounts which had been submitted by the licensee itself. Nevertheless, in course of the correspondence, disputes inevitably arose and after giving the matter my most anxious consideration, I am compelled to come to the conclusion that Mr. Bhaumik has expressed opinions which would be decisive on some or at least one of the issues that had been raised before the rating committee. I will now proceed to give some instances of it. According to the provisions of clause XIII (3) of the Sixth Schedule, an office allowance drawn by the Managing Committee shall include salaries and charges of all persons employed in the office of the Managing Agent, but not the salaries of the engineering staff, according to a percentage of the operating expenditure, and the expenditure during the year of account on capital works. A list of rates of percentages which should not be exceeded are then set out. Before the rating committee the following issue was raised:
Should Managing Agent''s office allowance be permissible without giving a statement of actual expenditure?
I have set out above the letter written by Mr. A.K. Bhaumik (or on his behalf) dated November 5, 1952, in which he has categorically laid down that no office allowance will be allowed unless actual expenses were incurred. According to the petitioner, the office allowance as shown in the books of the company must be allowed in so far as they did not exceed the limits specified in clause XIII (3) whereas, according to Mr. Bhaumik, nothing more than what had actually been incurred (although it is within the range of the permissible limits as laid down in the Sixth Schedule, clause XIII) can be allowed. Both these points of view require serious consideration and the issue has been properly raised. Unfortunately, however, Mr. Bhaumik has already made up his mind on the point.
In issue Nos. 14 and 15, the question is as to whether the accounts previous to 1948, (when the Act came into operation) could be considered and whether any loss up to 1948, could be included in the special appropriation. Upon this point, Mr. Bhaumik in his letter, dated 28th|29th December, 1950, proposed to look into the accounts of the previous years. It is somewhat doubtful whether there has been any actual prejudging upon this point. It is argued that all that Mr. Bhaumik had asked for was to look into the audited accounts of the previous years and that there was no proposal to reopen those audited accounts.
It is sufficient, however, if even one issue has been prejudged, because it is impossible to say how the decision upon that one issue will affect the ultimate determination of the charges that may be found chargeable by the licensee. I therefore find that Mr. A.K. Bhaumik, who has been made a member of the rating committee, has prejudged at least one of the issues that have been raised before the rating committee and as such his inclusion as a member makes the present rating committee and its functioning contrary to law. The apprehension of the petitioner that justice will not be done is well-founded and must be given effect to.
Coming now to point No. 3. I think that the appointment of Mr. A.K. Banerjee, who is the Assistant Secretary of the Commerce and Industries (Commerce) Department of the State of West Bengal, was ill-advised. It must be borne in mind, however, that the position of a Clerk to the Justices as appears from the English decisions quoted above, and that of a Secretary to the rating committee is completely different. The clerks to the Justices is a lawyer who is often consulted by the Justices, and it affects their decision. The Secretary, of course, is not expected to be a lawyer and is, in fact, not a lawyer. On the other hand, the fact that he is a person under the employment of the Government and will be in constant association with the rating committee might give rise in the minds of the petitioner to an apprehension that the course of justice will be deflected. If this had been the only point. I might not have interfered, but while constituting a new rating committee it would be as well not to appoint a Secretary who is closely associated with that branch of the Government which is so actively participating in the proceedings before the Rating Committee.
With regard to the complaint that the State Government being the approving body, ought not to take part in the proceedings before the rating committee, I cannot say that it is well-founded. I have already stated above that the rating committee was not adjudicating on any dispute. It is desirable however that in investigating the rate structure the other side of the picture is placed before the committee without which it would scarcely be in a position to decide as to the commissions and omissions of the licensee in respect of the Sixth Schedule. It is compulsory for the rating committee to hear the licensee, but I think it would be open to the rating committee to hear any other person which may be necessary for the purpose of carrying out its functions, and the proceedings are not vitiated by the Government assisting the rating committee to perform its functions. As has been observed above, the Government cannot substitute its finding for that of the rating committee. It will have either to accept the findings or not to give effect to it. In the circumstances, I do not see that the proceedings are vitiated by the Government appearing before the rating committee and taking part in their deliberations.
The result of my findings is that the rating committee is a body which has jurisdiction to go into the questions that have been raised before it, and that the provisions of clause XVI of the Sixth Schedule do not constitute a bar to its functioning. I however find that this particular rating committee consisting of the respondents Nos. 1 to 15, has not been validly constituted, because of the inclusion of Mr. A.K. Bhaumik, as one of its members. I might mention here that one of the respondents, namely, Narendra Chandra Bhattacharyya, has made a complaint that the Chairman of the Committee was doing everything by ignoring the other members. That, of course, is not permissible and will vitiate the proceedings and should be borne in mind in the future conduct of the proceedings before the rating committee. For the reasons aforesaid, this application succeeds in part. The rule is made absolute. There will be a writ of certiorari and prohibition directing the respondents not to function as a rating committee and not to proceed with its deliberations. There will also be a writ of mandamus asking them to forbear from doing so. This, however, is entirely without prejudice to the appointment of a proper rating committee according to the provisions of the Electricity (Supply) Act, 1948. There will be no order as to costs.