Legal Updates

There are a wealth of precedents which clarify the law with regard to the question whether any Show Cause Notice would give rise to a cause of action that can be challenged before a court of law.

It is well settled that when an authority issues a Show Cause Notice, it is merely giving the individual an opportunity to make his case and show as to why an action should not be taken against him. At the stage of issuing a Show Cause Notice, there is no adverse action that has been taken against the recipient of the Notice and hence, no cause of action has actually arisen for it to be challenged. Such a challenge to a Show Cause Notice especially does not lie as a matter of routine under a writ jurisdiction since a Court exercising its powers under Article 226 of the Constitution of India is already limited to the extent of adjudicating upon the illegality or errors apparent on the very face of record and hence, has limited scope of interference in the impugned order or in this case, a Show Cause Notice. Therefore, challenging a Show Cause Notice invoking a court’s writ jurisdiction is not only premature but is also discouraged by the mandate of the law, as has been interpreted by the Hon’ble Supreme Court.

In Special Director vs. Mohd. Ghulam Ghouse 2004 3 SCC 440, the Supreme Court laid down the law in the following words:

“This Court in a large number of cases has deprecated the practice of the High Courts entertaining writ petitions questioning legality of the show-cause notices stalling enquiries as proposed and retarding investigative process to find actual facts with the participation and in the presence of the parties. Unless the High Court is satisfied that the show-cause notice was totally non est in the eye of the law for absolute want of jurisdiction of the authority to even investigate into facts, writ petitions should not be entertained for the mere asking and as a matter of routine, and the writ petitioner should invariably be directed to respond to the show-cause notice and take all stands highlighted in the writ petition. Whether the show-cause notice was founded on any legal premises, is a jurisdictional issue which can even be urged by the recipient of the notice and such issues also can be adjudicated by the authority issuing the very notice initially, before the aggrieved could approach the court…”

Similarly, in Union of India & Anr. vs. Kunisetty Satyanarayana (2006) 12 SCC 28, the Supreme Court has observed that it is well settled by a series of decisions of this Court that ordinarily no writ lies against a charge-sheet or show-cause notice vide Executive Engineer, Bihar State Housing Board v. Ramesh Kumar Singh [(1996) 1 SCC 327 : JT (1995) 8 SC 331] , Special Director v. Mohd. Ghulam Ghouse [(2004) 3 SCC 440 : 2004 SCC (Cri) 826 : AIR 2004 SC 1467] , Ulagappa v. Divisional Commr., Mysore [(2001) 10 SCC 639] , State of U.P. v. Brahm Datt Sharma [(1987) 2 SCC 179 : (1987) 3 ATC 319 : AIR 1987 SC 943] , etc.

The Court explained that the reason why ordinarily a writ petition should not be entertained against a mere show-cause notice or charge-sheet is that at that stage the writ petition may be held to be premature. A mere charge-sheet or show-cause notice does not give rise to any cause of action, because it does not amount to an adverse order which affects the rights of any party unless the same has been issued by a person having no jurisdiction to do so. It is quite possible that after considering the reply to the show-cause notice or after holding an enquiry the authority concerned may drop the proceedings and/or hold that the charges are not established. It is well settled that a writ petition lies when some right of any party is infringed. A mere show-cause notice or charge-sheet does not infringe the right of anyone. It is only when a final order imposing some punishment or otherwise adversely affecting a party is passed, that the said party can be said to have any grievance.

It was also emphasized that Writ jurisdiction is discretionary jurisdiction and hence such discretion under Article 226 should not ordinarily be exercised by quashing a show-cause notice or charge-sheet.

The Court did point out that there could be very rare and exceptional cases where the High Court can quash a charge-sheet or show-cause notice if it is found to be wholly without jurisdiction or for some other reason if it is wholly illegal. However, ordinarily the High Court should not interfere in such a matter, it was held.

The Calcutta High Court in Kishen Lall vs. Deputy Commissioner, 2012 SCC OnLine Cal 2803 followed the law laid down by the Supreme Court and held as follows:-

“It is settled by a catena of decision of the Hon’ble Supreme Court that a writ petition against a show cause notice issued by a statutory functionary shall not be entertained unless the High Court is satisfied of the nullity of such notice or want of jurisdiction of the authority concerned to even investigate the facts. The point of jurisdiction of the Estate Officer has been answered above, and therefore, every other point that the petitioner seeks to agitate in respect of validity of the show cause notice including the point that it does not contain the grounds must be raised by him after his appearance before the Estate Officer. Reference in this connection may be made to the decision of the Supreme Court reported in AIR 1961 SC 1615: Carl Still G.m.b.H v. The State of Bihar, (2004) 3 SCC 440: Special Director v. Mohd. Ghulam Ghouse and AIR 2007 SC 906: Union of India v. Kunisetty Satyanarayana.”

The Bombay High Court in JM Financial Asset Reconstruction Company Pvt Ltd vs. Board of Trustees of the Port of Mumbai & Ors. 2016 SCC OnLine Bom 5355 held in a similar manner:-

“14. On the other hand, the PP Act was brought into force to provide for eviction of unauthorized occupants from public premises and for certain other incidental matters. Originally, the Public Premises (Eviction of Unauthorized Occupants) Act, 1958 was enacted to provide for a speedy machinery for eviction of unauthorized occupants of public premises. Section 5 of the Act provided for taking possession of public premises which were in unauthorized occupation and section 7 provided for recovery of rent or damages in respect of public premises from persons who were in unauthorized occupation thereof. The vires of certain provisions of the 1958 Act were challenged in different Courts all over country as being unconstitutional, and which challenges were upheld. Since, these Court decisions had created serious difficulties for the Government and it had become impossible for the Government to take expeditious action, even in flagrant cases of unauthorized occupation of public premises, it was therefore considered imperative to restore a speedy machinery for eviction of persons who were in unauthorized occupation of public premises. Accordingly, it was proposed to reenact the Public Premises Eviction (Unauthorized Occupants) Act, 1958, as amended from time to time, after removing the vice which led to it having been declared as void. This is how the Public Premises (Eviction of Unauthorized Occupants) Act, 1971 (the PP Act) came on the Statute Book. There have been several amendments to the PP Act thereafter which are not really germane to decide the issues raised in this Writ Petition“.

The practice of challenging SCNs by way of a Writ Petition has been deprecated time and again as clearly spelt out by the Supreme Court in the case of Kunisetty Satyanarayana, (2006) 12 SCC 28 : AIR 2007 SC 906.

In The Mylapore Club vs. The Joint Commissioner, the Madras High Court held that no writ against a demand notice or show cause notice is maintainable in a routine manner. A writ against a show cause notice or demand notice can be entertained only on limited grounds viz., if the same has been issued by an incompetent authority having no jurisdiction or if an allegation of malafides are raised. Even in such case, the authority against whom such malafides is alleged, the authority has to be impleaded in his personal capacity.

The Court held that if the impugned demand notice has been issued by following the procedures contemplated in accordance with the provisions of the Act and Rules, the person against whom such notice is issued, may either comply with the demand made or raise objections before the competent authority or appellate authority in case of any objections to the demand so made. In the event of objections, an adjudication is certainly warranted and such an adjudication must be
done based on the documents and evidences available on record. However, such an elaborate adjudication cannot be done by the High Court under Article 226 of the Constitution of India.