SHELL GAS LANKA LTD ., vs. CONSUMER AFFAIRS AUTHORITY AND ANOTHER

045-SLLR-SLLR-2005-V-3-SHELL-GAS-LANKA-LTD-.-vs.-CONSUMER-AFFAIRS-AUTHORITY-AND-ANOTHER.pdf


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SHELL GAS LANKA LTD., VS. CONSUMERAFFAIRS AUTHORITY AND ANOTHER
COURT OF APPEAL.
SRIPAVAN., J.
SISIRADE ABREW. J.
CA 505/2005.
OCTOBER 16, 2005.
Consumer Affairs Authority Act, No. 9 of 2003, sections 18, 18(1), 18(3) and18(4) – Specified goods – Application to increase the retail or wholesale price -Prior written approval of the Consumer Affairs Authority to be obtained – Refused
Natural justice – Should reasons be given – Violation ?-Unreasonabie decision
Ground for quashing ?
The Minister of Commerce and Consumer Affairs acting under section 18 ofthe Consumer Affairs Authority Act published a gazette notification specifyingLP Gas as one of the specified goods under section 18. Thus, it becamenecessary for the petitioner to obtain the prior written approval of the 1strespondent to increase the retail/ wholesale price of LP domestic gas. Theapplication as well as the appeal were rejected. The petitioner contended that(1) the respondent failed to give any reason for the refusal (2) No opportunitywas given to place facts as to why the application should not be rejected.(3) The decision is unreasonable.
HELD:
Per Sisira de Abrew :
“Natural justice demands the administrative tribunals to give reason for thedecisions; failure to give reasons can be construed as “no reasons".
(1) The 1st respondent before taking the impugned decisions did notgive an opportunity to the petitioner to place the facts as to why itsapplication should not be rejected ; on this ground alone the impugneddecisions could be quashed.
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(2) Unreasonable decision of a public officer or Administrative Tribunalcan be quashed by the Court of Appeal.
APPLICATION for a Writ of Certiorari.
Cases referred to:R vs. Secretary of State for the Home Department ex-parte Frayedand Others 1997 1 ALL ER 229
Regina vs. Secretary of State for the Home Department ex-parte Doody1994 1 AC 531
R vs. Civil Service Appeal Board ex-parte Cunningham – Law Reportsof the Common Wealth Constitutional and Administrative Law 1999page 941
In Regina vs. Secretary of State for Trade and Industry – ex-parteLonrho pla 1989 1 WLR 525 at 540 (HL)
Ceylon Printers Ltd. vs. Weerakoon – Commissioner of Labour andOthers 1998 2 Sri LR 29 (SC)
Karunadasa vs. Unique Gem Stone Ltd and Others 1997 1 Sri LR 256(SC)
Unique Gem Stones Ltd. vs. Karunadasa and Others 1995 2 Sri LR357 (CA)
Kegalle Plantations Ltd. vs. Silva and Others 1996 2 Sri (1) LR
Samalanka Ltd. vs. Weerakone Commissioner of Labour and Others1994 1 Sri LR 405
R vs. Higher Education Funding Council – ex parte Institute of DentalSurgery (1994) 1 ALL ER 651
Wheeler vs. Leicester City Council 1985 AL 1054 (112)
Rex. Vs. Tynemouth District Council 1896 2 QB 219
Regina vs. Birmingham Licensing Planning Committee 1972 1QB 140
D. S. Wijesinghe, PC with Chanaka de Silva for Petitioner.
P. A. Perera, State Counsel for Respondent.
Cur. adv. vult.
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November 11,2005.
SISIRADE ABREW J.This is an application for writs of certiorari and mandamus. The facts ofthis case may be summarized as follows :
The petitioner is a body corporate incorporated in Sri Lanka under theCompanies Act, No. 17 of 1982 and carries on business of purchasing,supplying, selling and distributing liquid petroleum gas (hereinafter referredto as LP gas) in Sri Lanka for domestic and industrial application. Thepetitioner sells gas cylinders for domestic consumption in Sri Lanka intwo categories, namely 12.5kg and 2.3 kg. The Minister of Commerce andConsumers Affairs, acting under-section 18 of the Consumer Affairs AuthorityAct, No. 9 of 2003 (hereinafter referred to as the Act), published a gazettenotification marked P2 dated 20.08.2003 specifying LP gas as one of thespecified goods under-section 18 of the said Act. Therefore it becamenecessary for the petitioner to obtain the prior written approval of the 1 strespondent to increase the retail or wholesale price of domestic LP gas.
The petitioner made an application dated 30.07.2004 marked P29 tothe 1st respondent seeking to raise the price of LP gas with effect from
Although the 1 st respondent was obliged to give a decisionon the application of the petitioner for revision of prices within 30 days ofthe receipt of such application, the 1 st respondent failed to do so. Thereforethe petitoner, acting under-section 18 (4) of the Act gave effect to theincrease of prices as set out in its application made to the 1 st respondentdated 30.07.2004.
Thereafter again on 30.09.2004 the petitioner made an application (P34A)for revision of prices which application was rejected by the 1 st respondentby letter dated 26.10.2004 marked P35. The petitioner, by letter dated
marked P38, again made an application to the 1st respondentfor revision of prices of 12.5kg and 2.3kg cylinders and after severalcorrespondence the petitioner withdrew the application dated 10.11.2004(P38).
On 30.11.2004, the petitioner, by letter marked P47, made an applicationto the 1st respondent for revision of prices of the said two cylinders.The petitioner, by letter dated 31.01.2005 marked P55, again made anapplication to the 1st respondent for an increase of prices of the two
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cylinders aforementioned. The 1 st respondent, by letter dated 24.02.2005marked P56, rejected the application of the petitioner. The 1st respondent,by letter dated 03.03.2005 marked P58, informed the petitioner that theappeal submitted by the petitioner was under consideration. The 1strespondent, by letter dated 16.03.2005 marked P61, informed the petitionerthat the appeal submitted by the petitioner had been rejected.
The petitioner states that prior to arriving at the aforementioned decisionscontained in letters marked P56 and P61, the 1 st respondent failed to givethe petitioner any opportunity of being heard in support of its application.Further, the 1st respondent failed to give any reason in support of orjustifying the aforementioned decisions, and acted in breach of and totaldisregard of the principles of natural justice in arriving at the aforementioneddecisions contained in letters marked P56 and P61 ; and that the saiddecisions are bad in law and/or null and void and/or of no force or avail inlaw. The petitioner, by this petition, seeks to quash, by way of writ ofcertiorari, the decisions contained in letters marked P56 and P61 andfurther by way of writ of mandamus seeks a direction on the 1 st respondentto determine the application of the petitioner dated 31.01.2005 markedP55 according to law. The respondents contend that the petition of thepetitioner is futile since the petitioner, subsequent to the filing of this petition,sought an increase of prices of the said 12.5kg and 2.3kg cylinders to Rs.800 and Rs. 162 respectively. It has to be noted that the contention of thepetitioner is that the 1 st respondent acted in breach and total disregard ofthe principles of natural justice in arriving at its decisions contained inletters marked P56 and P61. Therefore the petitioner’s subsequentapplication for revision of prices does not make the petition of the petitionerfutile. I am unable to agree with the contention of the respondents.
In view of the facts alleged by the petitioner it is necessary to considersection 18 of the Act which reads as follows :
Section 18(1)- "Where the Minister is of opinion that any goods or anyservice is essential to the life of the community or part thereof, the Ministerin consultation with the Authority may by Order published in the Gazette
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prescribe such goods or such service as specified goods or specifiedservice as the case may be."
Section 18 (2) – “No manufacturer or trader shall increase the retail orwholesale price of any goods or any service specified under-subsection
, except with the prior written approval of the Authority."
Section 18 (3) – “A manufacturer or trader who seeks to obtain theapproval of the Authority under-subsection (2), shall make an applicationin that behalf to the Authority, and the Authority shall, after holding suchinquiry as it may consider appropriate –
approve such increase where it is satisfied that the increase isreasonable; or
approve any other increase as the Authority may considerreasonable,
and inform the manufacturer or trader of its decision within 30 days ofthe receipt of such application.”
Section 18 (4) – “Where the Authority fails to give a decision within 30days of the receipt of an application as required under-subsection (3), themanufacturer or trader who made the application shall be entitled to, notwithstanding the provisions of subsection (1), increase the price:
Provided however, where the delay in giving its decision within thestipulated period was due to the failure of the manufacturer or trader togive any assistance required by the Authority in carrying out its inquiryinto the application, the Authority shall have the power to make an interimorder preventing the said manufacturer or trader from increasing the price,until the Authority makes its decision on the application."
According to section 18 (3) of the Act, when an application is made tothe 1 st respondent by a manufacturer or a trader to obtain the approval toincrease the retail or wholesale price of any goods specified under section18 of the Act, the 1 st respondent has to hold an inquiry as it may consider
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appropriate and the Consumer Affairs Authority, the 1 st respondent, hasthe power to do one of the two things stated below after holding an inquiry:
Approve such increase where the Authority is satisfied that theincrease is reasonable; or
Approve any other increase as the Authority may considerreasonable.
In the present case, did the 1st respondent, before arriving at thedecisions contained in letters marked P56 and P61, hold an inquiry asstipulated in section 18(3) of the Act ? Having considered the documentsfiled by both parties, I have to conclude that the 1 st respondent has failedto hold such an inquiry. I, therefore, hold that the 1st respondent has notacted under section 18 (3) of the Act and that its decisions contained inP56 and P61 have to be quashed by way of a writ of certiorari.
The Petitioner alleges that the 1 st respondent did not give any reasonfor rejection of its application for revision of prices stated in the lettermarked P55. The petitioner further alleges that the 1 st respondent failedto hear the petitioner before rejecting its application P55. The firstrespondent before rejecting the said application of the petitioner, did notask for any material from the petitioner in order to decide the application.Therefore it cannot be said that the petitioner was guilty under the provisoto section 18 (4) of the Act. The petitioner, by letters dated 01.03.2005(P57), 07.03.2005 (P59) and 18.03.2005 (P62) requested to provide reasonsfor the decision of the 1 st respondent but the 1 st respondent failed to giveits reasons for its decision contained in P56 and P61. In my view, failure togive reasons can be construed as ‘no reasons’. In view of the failure on thepart of the respondents to give reasons for the said decisions, it is safe toconclude that the 1 st respondent did not have reasons for its decisions.
It is necessary to consider whether administrative tribunals should givereasons for their decisions. In this connection, I would like to consider thefollowing passage from Administrative Law by Wade & Forsyth 8th editionpage 516 dealing with the subject of ‘reasons for decisions’ ;
“The Principles of Natural Justice do not, as yet, include any generalrule that reasons should be given for decisions. Nevertheless there is astrong case to be made for the giving of reasons as an essential element
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of administrative justice. The need for it has been sharply exposed by theexpanding law of judicial review, now that so many decisions are liable tobe quashed or appealed against on grounds of improper purpose, irrelevantconsiderations and errors of law of various kinds. Unless the citizen candiscover the reasoning behind the decision, he may be unable to tell whetherit is reviewable or not, and so he may be deprived of the protection of thelaw. A right to reasons is therefore an indispensable part of a sound systemof judicial review. Natural justice may provide the best rubric for it, sincethe giving of reasons is required by the ordinary man’s sense of justice. Itis also a healthy discipline for all who exercise power over others." At page517, dealing with this subject, it states as follows: “Where the decisionmaker departs from a previously adopted policy (even if not published)fairness will require that departure to be explained. Thus a health authority’srefusal without giving reasons, to follow the policy of the National HealthService Executive to introduce a new (and expensive drug) was quashed.
On this question, I would like to cite a judgment of the Court of Appealof England. R Vs Secretary of State for the Home Department, ex parteFayed and another: “The applicants were two brothers who were born inEgypt but had lived and worked in the United Kingdom for many yearswhere they had substantial business interests and a high public profile.Both had been granted leave to remain indefinitely. One brother was marriedto a British citizen, the other to a citizen of Finland, and both had childrenwho were British citizens. Eventually the brothers applied for naturalizationas British citizens under section 6 (1) and (2) respectively of the BritishNationality Act 1981, and although they satisfied the requirements of theAct, their applications were refused without any reasons being given.
Held:“Although the Home Secretary was not required to give reasons forrefusing an application for British citizenship, by virtue of section 44 (2) ofthe 1981 Act, where the decision involved the exercise of discretion, hewas required to exercise that discretion reasonably and accordingly wasnot relieved of the obligation to be fair in arriving at his decision.” Duringthe process of reaching a decision, the Home Secretary was thereforerequired to give the applicant sufficient information as to the subject matterof his concern in such terms as to enable him to make such representationsas he could and, where that would involve disclosing matters not in the
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public interest, to indicate that was the position so that the applicantcould challenge the justification for the refusal before the courts. It followedthat since the applicants had not enjoyed the fairness to which they wereentitled, justice had not been seen to be done. The appeal would thereforebe allowed and the Home Secretary’s decision would be quashed so thatthey could be retaken in a fair manner.”
House of Lords in the case of Regina Vs Secretary of State for theHome Department Ex parte Doodyl2) held that a life prisoner was entitledto be told the Home Secretary's reasons for rejecting the advice of the trialJugde as to the penal element in the sentence.
R. Vs Civil Service Appeal Board, ex parte Cunningham “The applicant,a 45-year old prison officer, was dismissed from the prison service after heallegedly assaulted a prisoner. He appealed against his dismissal to theCivil Service Appeal Board which held that his dismissal was unfair andrecommended that he be reinstated. The Home Office, as it was entitledto do, refused to reinstate him and the Board then assessed thecompensation for unfair dismissal at Pounds 6500. Since the applicant’semployment was regarded as Police service he was prevented by section146 of Employment Protection (Consolidation) Act 1978 from appealing toan industrial tribunal, which would have assessed compensation of betweenPounds 14240 and Pounds 16374 in comparable circumstances. The Boardrefused to give reasons for its award on the ground that it employed simpleand informal procedures and that to ensure a non-legalistic approach tothe merits of each individual case it had adopted a policy of not givingreasons for any award. The applicant applied for judicial review of the Board’sdecision on the grounds that the award was prima facie irrational and theBoard's refusal to give reasons was a breach of natural justice
Court of Appeal of England held (per Lord Donaldson MR): “A partyappearing before a tribunal such as the Board was entitled to know eitherexpressly or by inference to what the tribunal was addressing its mind andthat it had acted lawfully. Having regard to the facts that the Civil ServiceAppeal Board carried out a judicial function and that in similar circumstancesan industrial tribunal would be required to give reasons, natural justicerequired that the Board should have given reasons when deciding the amount
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of the applicant’s compensation for unfair dismissal. Accordingly, the Boardwas required to give reasons for the way in which it had reached the awardmade to the applicant and in the absence of such reasons the award,when compared to awards made by industrial tribunals in comparablecircumstances, was so low as to be prime facie irrational.”
In Regina. /s Secretary of State for Trade and Industry Ex parte Lonrhoplc.<4> Lord Keith observed thus: “The only significance of the absence ofreasons is that if all other known facts and circumstances appear to pointoverwhelmingly in favour of a different decision, the decision maker, whohas given no reasons, cannot complain if the court draws the inferencethat he had no rational reason for his decision.”
In the case of Ceylon Printers Ltd Vs Weerakoon Commissioner ofLabour and Others<5), Justice Gunasekere held : “It is apparent from theorder of the Commissioner that he had failed to duly consider the materialproduced at the inquiry before the Assistant Commissioner or therecommendation made by the Assistant Commissioner and the DeputyCommissioner. In view of the failure by the Commissioner to give theappellants an opportunity of challenging the new material on which heacted, the Commissioner was under a duty to give reasons for his decision,particularly in view of the fact that it was not he who held the inquiry andrecorded the evidence. In the result, the order of the Commissioner was inbreach of the principles of natural justice.”
In the case of Karunadasa Vs Unique Gem Stones Ltd and Others161“the Commissioner of Labour (2nd respondent) acting on therecommendation of an Assistant Commissioner (3rd respondent) to whomhe had delegated the power to hold an inquiry as permitted by section 11of the Termination of Employment of Workmen (Special Provisions) ActNo.45 of 1971, held that the termination of services of the appellant workmanwas contrary to section 2(1) of the Act and ordered his reinstatement withback wages. The 2nd respondent failed to give reasons for his decision,though requested by the 1 st respondent employer.” Justice Fernando heldas follows: “Natural justice also means that a party is entitled to a reasonedconsideration of his case; and whether or not the parties are also entitledto be told the reasons for the decision, if they are withheld, once judicial
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reveiw commences, the decision may be condemned as arbitrary andunreasonable. The mere fact that the 3rd respondent held the inquiry doesnot vitiate the 2nd respondent’s order but the facts, in particular the 2ndrespondents failure to produce the 3rd respondent’s recommendation,justified the conclusion that there were no valid reasons, and that naturaljustice had not been observed."
In Unique Gemstone Ltd i/s Karunadasa and Others<V Senanayake Jobserved thus: “I am of the view that the Commissioner should give reasonsfor his decision. The action of Public officers should be transparent andthey cannot make blank orders. In my view, it is implicit in the requirementof a fair hearing to give reasons for a decision. I am of the view that it isonly in special cases the reasons should be withheld, where the securityof the State is affected, otherwise a Statutory Body or Domestic Tribunalshould give reasons for its decisions. Though the Termination of EmploymentAct is silent on this matter the Commissioner being a creature of thestatute is performing a Public function. It is not only desirable but necessaryto give reasons for its decision. The common law as understood by us hasnow been battered down. Reasoned orders are the ‘sine qua non’ ofadministrative justice even if the Statute is silent. In my view the law cannotbe static ; it must be dynamic and progress with social changes insociety.There is continuing momentum in administrative law towardstransparency on decision making. The failure to give reasons is a breachof section 17 of the Termination of Employment Act, because it isinconsistent with the principles of natural justice.”
In the case of Kegalle Plantations Ltd Vs Silva and Others181Senanayake J remarked as follows : The present trend which is rubricrunning throughout public law is that those who give administrativedecisions where it involves the public whose rights are affected shouldgive reasons for its decision. The actions of the Public Officer should betransparent and they cannot make blank orders. In my view it is implicit inthe requirement of a fair hearing to give reasons for its decisions, thefailure to do so amounts to a failure to be manifestly seen to be doingjustice.”
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The view taken in the above judicial decisions is that AdministrativeTribunals should give reasons for their decisions. However a contrary viewhas been expressed in certain judicial decisions. In the case of SamalankaLtd Vs. Weerakoon, Commissioner of Labour and Others Kulatunga Jheld as follows : In the absence of a statutory requirement there is nogeneral principle of Administrative Law that natural justice requires theauthority making the decision to adduce reasons, provided that the decisionis made after holding a fair inquiry.”
I n the case of R. Vs Higher Education Funding Council, ex parte Instituteof Dental Surgery’01, Sedley J held as follows : “There was no duty onadministrative bodies to give reasons for their decisions either on generalgrounds of fairness or simply to enable any grounds for judicial review of adecision to be exposed.”
I have earlier discussed the facts of this case. Having regard to thefacts of this case, I would like to follow the view that natural justice demandsthe Administrative Tribunals to give reasons for their decisions. I haveearlier pointed out that the 1st respondent failed to give reasons for itsdecisions contained in P56 and P61. Applying the principles set out in theabove judicial decisions which held the view that Administrative Tribunalsshould give reasons for their decisions, I hold that the 1st respondent’sdecisions contained in P56 and P56 and P61 should be quashed.
The 1 st respondent before taking the decisions in P56 and P61 did notgive an opportunity to the petitioner to place the facts as to why itsapplication should not be rejected. This failure on the part of the respondentsamounts to violation of rules of natural justice. On this ground alone thedecisions contained in P56 and P61 should be quashed and the respondentmust be directed to determine the application of the petitioner P55 accordingto law. I have earlier pointed out that the respondents had failed to givereasons for their decisions contained in P56 and P61 ; the respondents,before rejecting the application P55, have not given an opportunity to thepetitioner to place the facts before them as to why the application should
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not be rejected ; and the respondents had not acted under section 18 (3)of the Act. I therefore hold that the decisions of the 1 st respondent containedin P56 and P61 are unreasonable. It is pertinent to consider whether theunreasonable decisions of Administrative Tribunals could be quashed bythe Court of Appeal in the exercise of its writ jurisdiction. In this regard Iwould like to consider certain judicial decisions. In the case of WheelerVs Leicester City Council<11) a city Council had refused, contrary to itsprevious practice, to allow a local rugby football club to use the city’ssports ground because three of its members had played in South Africa.”The House of Lords held that it was unreasonable to punish the club fornot conforming to the Council’s political attitudes. The Council’s decisionwas quashed. Lord Templeman in the above case remarked thus : “ Aprivate individual or a private organization cannot be obliged to displayzeal in the pursuit of an object sought by a public authority and cannot be
obliged to publish views dictated by a public authorityThe council
could not properly seek to use its statutory powers of management or anyother statutory powers for the purposes of punishing the club when theclub had done no wrong.”
In the case of Rex Vs Tynemouth District Council Lord Russel cJmheld as follows. “A Local Authority was not entitled, as a condition ofapproving building plants, to stipulate that the applicant should provideand pay for sewers outside his own property.” Issuing the writ of mandamusagainst the Council, Lord Russel CJ further held that this decision of theCouncil was utterly unreasonable.
(13)
In the case of Regina Vs Birmingham Licensing Planning Committee“An elaborate system had been set up by the statutory licensing planningcommittee in Birmingham to deal with the licences relating to the manypublic houses destroyed in the Second World War. With Home Officeapproval and for some twenty years they had refused to approve applicationsunless the applicant purchased outstanding licences sufficient to coverhis estimated sales. The main object of the policy was to relieve the city ofthe cost of compensating the holders of the outstanding licences. At the
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current market price of these Licenses the proprietors of a large new hotelwould have had to pay over 14000 Pounds. At their instance the Court ofAppeal condemned the whole system as unreasonable.” Lord DenningMR said : “I think it is unreasonable for a licensing planning committee totell an applicant: ‘we know that your hotel is needed in Birmingham and itis well placed to have an on-licence, but we will not allow you to have alicence unless you buy out the brewers.’ They are taking into account apayment to the brewers which is a thing they ought not to take intoaccount.”
Considering the above judicial decisions, I hold that an unreasonabledecision of a Public Officer or Administrative Tribunal can be quashed bythe Court of Appeal in the exercise of its writ jurisdiction. I have earlier heldthat the decisions of the 1 st respondent contained in P56 and P61 wereunreasonable. Therefore the said decisions of the 1st respondent can bequashed on the ground that they are unreasonable.
For the reasons set out in my judgment, I issue a writ of certiorariquashing the decisions contained in P56 and P61. Further I issue a writ ofmandamus directing the 1 st respondent to determine the application ofthe petitioner marked P55 according to law.
This Court in CA Application No. 252/2005 (decided on 11.05.2005), CAApplication No. 2146/2004 (decided on 18.07.2005), and CA ApplicationNo. 274/2005 (decided on 01.08.2005) issued writs of certiorari againstthe 1st respondent on identical issues alleged in this petition. The 1strespondent does not seem to follow the said decisions in the aforesaidapplications. Considering the facts and the circumstances set out above,the 1st respondent is directed to pay a sum of Rs. 25,000/- as costs tothe petitioner.
SRIPAVAN J.-/ agree.
Application allowed.