The issue that a procedure must meet the need for natural justice has recently gained some prominence. The main controversy started with what procedure was to be adopted in the case where a woman complained about certain behaviour allegedly by a judicial dignitary. I am here writing only about the theoretical issue relating to the procedure and not about the basic case.
The issue has two aspects. The first part is where there is no procedure laid down. The second part is where a procedure is laid down already.
The first part is the most important. It is not practicable that procedure is laid down everywhere. Taking all the statutes which have been passed by Parliament, we find that many sections have laid down that the action will be as per rule. In most cases rules have been framed but there are many cases where rules have not been framed even now. So the principle that is followed in those cases is that what is most reasonable is to be followed. While deciding what is reasonable it is necessary to take the other side into confidence. And it is to be disclosed to them what is going to be adopted as the procedure. Let us take an example from a fiscal case which generated litigation.
The goods imported were reels of paper nicely packed in packing paper to avoid damage. A sample had to be taken as the importer had claimed that the goods were waste paper which attracted no customs duty and did not require a licence. There was no procedure laid down in the manual for such cases. So the procedure that was followed was that a photograph was taken of the goods in the presence of the importers and copy of photos was given to them. So this was a case of a reasonable procedure. I am giving another example to make the point that where there was no predetermined rule given in the manual, the procedure followed was what satisfied the importers. There is requirement about some goods imported to pay less duty if they goods are denatured by mixing chemicals or other things so that the goods cannot be diverted for producing goods which are not the declared purpose. Ethyl alcohol is denatured for making industrial products. There is no comprehensive rule in the customs to mix chemicals in all circumstances. So the customs department consults the importers to determine which chemical will be mixed to denature the alcohol to make it fit for industrial production only. Thus the golden rule in such cases is to follow a procedure with the concurrence of the importer which satisfies natural justice as the importer cannot find any other relatively reasonable alternative keeping the purpose in view. Where there is no importer or taxpayer, the requirement is that it should be reasonable to the people of the country at large, as in the case of purchase of Rafale planes. The procedure should not compromise with price or quality or integrity. If that is ensured, there should be no pettifogging with the compliance of the procedure.
The second type of issue is where the procedure is already laid down. This sort of rule is usually approved by the concerned minister, say, finance minister. So it is binding on the department as well as on the party. But the party can always challenge it in the court of law since no rule can be divergent from the statute itself. If there is no challenge, there is still the most-important requirement that all procedural rules must be interpreted liberally and not strictly. The procedural rules are called machinery section in legal language. There are many judgements of the Supreme Court which lay down this principle. Some important judgments are the following: Fertilizer Corporation of India vs State of Bihar AIR 1988 SC 361 and C.I.T vs Kulu Valley Transport Co AIR 1970SC 1734. Judgments in this respect are unanimous.
Conclusion: Whether a procedure is already prescribed or not, the principles to be followed are that (a) the interest of the stakeholders is to be accommodated reasonably well and (b) the procedure is to be liberally and not strictly interpreted.
The writer is member, Central Board of Excise & Customs (retired)