What is distinction between personal bias and pecuniary bias?

The position in
law has been succinctly stated in
Halsbury’s Laws of England, Fourth Edition,
Volume 1, para 68, as follows:
Disqualification for financial interest.-
There is a presumption that any direct
financial interest, however small, in the
matter in dispute disqualifies a person
from adjudicating. Membership of a company,
association or other organisation which is
financially interested may operate as a bar

to adjudicating, as may a bare liability to
costs where the decision itself will
 involve no pecuniary loss.”
(Emphasis added)
18. Thus, what is held by the Apex Court in the aforesaid
decisions is that the presence of direct pecuniary interest
irrespective of its extent operates as a complete disqualification to
adjudicate a dispute. The complete disqualification operates
irrespective of the fact that the pecuniary interest may be very
small. In such a case, the issue of waiver of objection regarding
bias will not arise at all as the presence of pecuniary bias prevents
the Judge from taking up the case in which he has pecuniary
interest. Therefore, any direct financial interest operates as a
complete bar which prohibits a person exercising even quasi
judicial powers from participating in the process of adjudication.
Hence, the plea of waiver is not available in such cases. As stated
earlier, this is a case where the pecuniary and proximate interest inthe subject matter of the case is admitted by Shri Sodal. There is in
our view a distinction to be drawn between a personal bias, one
that may be waived, and a pecuniary bias which stands on a whollydifferent footing. In the first place, to be invoked waiver requires
that a disclosure be made of the possibly conflicting interest. It is
when that interest is made known that a party can waive it. But this
can only apply in the case of a personal bias such a relationship or
a friendship. A pecuniary bias stands on another footing altogether.
On the principles enunciated in Mohapatra’s case, a direct,
proximate and existing pecuniary bias can never be waived. It is to
be noted that in Mohapatra’s case, the Apex Court held that the

existence of a pecuniary interest was a disqualification and that this
disqualification did not depend on the amount of the pecuniary
interest. The Apex Court also rejected the invocation of the
doctrine of necessity in such a case by holding that nothing
prevented the government in that case from reconstituting the

committee in question.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 11426 OF 2015
Suresh Ramchandra Palande,

Versus
The Government of Maharashtra, 
CORAM: A. S. OKA & G.S. PATEL, JJ.
DATED: 3rd December 2015
Citation:2016(2) MHLJ918

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Principles of natural justice Vs Doctrine of necessity

 The second contention of
the learned senior counsel appearing for the 10th Respondent is
that the objection regarding personal bias cannot be entertained in
this Petition since the doctrine of necessity will immediately come
into play. He relied upon a decision of the Apex Court in the case
of State of Uttar Pradesh v. Sheo Shanker Lal Srivastava & Ors.(2006) 3 SCC 276
in support of this contention. He submitted that on the date on
which the cases were placed before the Regulatory Authority,
except Ms. Zutshi and Mr. Sodal, there was no one who could have
heard the cases and, therefore, the doctrine of necessity
automatically operates. His submission is that when the doctrine of
necessity is applicable, there is no requirement of the compliance
with the principles of natural justice.
Thus, what is held by the Apex Court in the aforesaid
decisions is that the presence of direct pecuniary interest
irrespective of its extent operates as a complete disqualification to
adjudicate a dispute. The complete disqualification operates
irrespective of the fact that the pecuniary interest may be very
small. In such a case, the issue of waiver of objection regarding
bias will not arise at all as the presence of pecuniary bias prevents
the Judge from taking up the case in which he has pecuniary
interest. Therefore, any direct financial interest operates as a
complete bar which prohibits a person exercising even quasi
judicial powers from participating in the process of adjudication.
Hence, the plea of waiver is not available in such cases. As stated
earlier, this is a case where the pecuniary and proximate interest in
the subject matter of the case is admitted by Shri Sodal. There is in
our view a distinction to be drawn between a personal bias, one
that may be waived, and a pecuniary bias which stands on a wholly
different footing. In the first place, to be invoked waiver requires
that a disclosure be made of the possibly conflicting interest. It is
when that interest is made known that a party can waive it. But this
can only apply in the case of a personal bias such a relationship or
a friendship. A pecuniary bias stands on another footing altogether.
On the principles enunciated in Mohapatra’s case, a direct,
proximate and existing pecuniary bias can never be waived. It is to
be noted that in Mohapatra’s case, the Apex Court held that the

existence of a pecuniary interest was a disqualification and that this
disqualification did not depend on the amount of the pecuniary
interest. The Apex Court also rejected the invocation of the
doctrine of necessity in such a case by holding that nothing
prevented the government in that case from reconstituting the
committee in question.
The second argument canvassed before the Court is that
principles of natural justice would not apply when there is a
necessity. The said submission is based on the decision of the Apex
Court in the case of State of Uttar Pradesh v. v. Sheo Shanker Lal
Srivastava & Ors. (supra). Paragraph 16 of the said decision deals
with doctrine of necessity.
“16. Referring to the doctrine of
necessity, Sir William Wade in his
Administrative Law stated:
‘ But there are many cases where no
substitution is possible, since no one else
is empowered to act. Natural justice then
has to give way to necessity; for otherwise
there is no means of deciding and them

machinery of justice or administration will
break down.’
It was further stated:
‘In administrative cases the same exigency
may arise. Where the statute empowers a
particular minister or official to act, he
will usually be the one and only person who
can do so. There is then no way of escaping
the responsibility, even if he is
personally interested. Transfer of
responsibility is, indeed, a recognised
type of ultra vires. In one case it was
unsuccessfully argued that the only
minister competent to confirm a compulsory
purchase order for land for an airport had
disqualified himself by showing bias and
that the local authority could only apply
for a local Act of Parliament.”
(Emphasis added)
22. In the present case, the specific stand of the State
Government is that two members out of the three could have
validly conducted the proceedings of the Regulatory Authority. We
may note here that though the Chairperson was not a part of the
adjudicatory procees while passing the impugned order dated 26th
October 2015, when the Review Petitions were heard, he was very
much a part of the adjudicatory process. The submission of the
learned Government Pleader is supported by the said Regulations
and in particular clause 3 of Regulation 9 which lays down that the
quorum of meetings of the Regulatory Authority shall be two-thirds
of the full strength of the Authority (the Chairperson and two
members). Therefore, even if Mr. S. V. Sodal had recused himself,
the cases could have been heard by the Chairperson and the other

member of the Regulatory Authority. Therefore, the doctrine of
necessity sought to be invoked will not apply in the present case.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 11426 OF 2015
Suresh Ramchandra Palande,

Versus
The Government of Maharashtra, 
CORAM: A. S. OKA & G.S. PATEL, JJ.
DATED: 3rd December 2015
Citation:2016(2) MHLJ918

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