SCN demarcates boundary within which officer exercise power

Show Cause Notice demarcate the Boundary within
which authority to exercise power, crossing such limit
would undermines the rule of law and public trust. No
action to be taken beyond SCN.

Hon’ble Allahabad High Court in case of M/s Associated Switch Gears
and Projects Ltd Versus State of U.P., Through Secretary, Institutional
Finance, U.P in Writ Tax No. – 276 of 2020 decided on January 25, 2024
7. One crucial limitation placed upon the exercise of authority is the concept of a “show cause
notice”. This administrative instrument serves as a vital checkpoint, delineating the boundaries
within which any authority can operate. At its core, a show cause notice represents the initial step
in an administrative or legal process, wherein an individual or entity is formally apprised of
allegations or discrepancies attributed to them. This notice serves as a mechanism to afford the
recipient an opportunity to present their side of the story, provide clarifications, or rectify any
perceived errors before any punitive action is taken. By issuing a show cause notice, an authority
acknowledges the principle of audi alteram partem, or “hear the other side”, ensuring fairness and
due process in its proceedings.
8. The significance of adhering to the confines of a show cause notice lies in upholding the rule
of law and preventing arbitrary exercises of power. Any action taken by an authority beyond the
scope defined in the notice risks transgressing the boundaries of legality and procedural fairness.
Such overreach not only undermines the legitimacy of the authority but also compromises the
rights of the individuals or entities involved, potentially leading to legal challenges and erosion of
public trust. Moreover, the issuance of a show cause notice imposes a duty on the part of the
authority to meticulously outline the specific allegations or concerns prompting its issuance. This
requirement fosters transparency and accountability, as the recipient is entitled to a clear
understanding of the charges against it, enabling it to formulate an informed response. Any
attempt by the authority to expand the scope of inquiry or introduce new allegations beyond those
articulated in the notice would violate this principle of specificity, depriving the recipient of a fair
opportunity to address the accusations leveled against it.
9. The issuance of a show cause notice represents a pivotal juncture in administrative
proceedings, demarcating the boundaries within which any authority can exercise its powers. By
adhering to the confines of the notice, authorities uphold principles of fairness, accountability,
procedural regularity, and legal certainty essential for the legitimacy and effectiveness of
governance systems. Any attempt to transcend these limits not only violates the rights of the
individuals or entities involved but also undermines the rule of law and public trust in the
institutions tasked with upholding it. Thus, this Court holds that, adhering to the show cause notice
is not merely a procedural formality, but a mandatory requirement, beyond the scope of which, no
action can be taken. Adherence to the show cause notice is a fundamental safeguard against
arbitrary exercises of power, ensuring that authority remains tethered to the principles of justice
and the rule of law.