APPROVAL GRANTED BY MISTAKE: CONSEQUENCES

Introduction

An approval granted by a competent authority may sometimes be issued due to a clerical mistake, factual misunderstanding, procedural irregularity, misapplication of law, or inadvertence. The legal consequences depend upon the nature of the mistake, the authority that granted the approval, whether the approval was lawful when issued, and whether the affected person has already acted upon it.

A mistaken approval is therefore not automatically treated as void in every situation. An administrative authority may have power to correct or withdraw an erroneous decision, but such power must generally be exercised according to law, through the competent authority, and consistently with principles of natural justice.

The Supreme Court of Pakistan has recognized that administrative decisions can be reviewed where there is illegality, procedural unfairness, abuse of power, or other recognized grounds of judicial review.

1. Meaning of Approval Granted by Mistake

“Approval granted by mistake” means an authorization, permission, appointment, benefit, licence, sanction, or administrative decision issued by an authority when the decision was based upon an error.

The mistake may involve:

Clerical or typographical error

Mistake of fact

Mistake of law

Failure to consider a mandatory statutory requirement

Approval by an incompetent authority

Approval based on incomplete information

Administrative misunderstanding

Incorrect interpretation of rules

Approval obtained through misrepresentation or fraud

The legal effect varies according to the type and seriousness of the mistake.

2. Approval Issued Without Fraud or Misrepresentation

Where the beneficiary has not committed fraud, concealment or misrepresentation, the authority cannot necessarily treat the approval as though it never existed.

The authority must examine:

whether it possessed jurisdiction;

whether the approval was contrary to a mandatory provision;

whether the beneficiary relied upon the approval;

whether vested or accrued rights were created;

whether the approval has already been acted upon; and

whether withdrawal would cause prejudice.

This distinction is important because an administrative error by the authority should not automatically be converted into misconduct of the person who relied upon the approval.

3. Approval Obtained Through Fraud or Misrepresentation

The position becomes substantially different where the approval was secured through fraud, concealment of material facts, forged documents or deliberate misrepresentation.

In such circumstances, the beneficiary normally cannot claim that an unlawful benefit must continue merely because formal approval was issued.

However, even where an authority alleges fraud, procedural fairness may require notice and an opportunity to respond before a prejudicial administrative action is taken.

In Muhammad Yaseen and others v. Province of Sindh and others, 2023 SCMR 1703, the Supreme Court held that where appointments were withdrawn on the allegation that they had been obtained through fraud, the affected persons were entitled to show cause and an opportunity of hearing under Article 10-A before termination.

4. Withdrawal or Cancellation of the Mistaken Approval

An authority may possess power to withdraw an approval where:

the approval was contrary to law;

the authority lacked jurisdiction;

mandatory requirements were ignored;

material facts were concealed;

the approval was obtained through fraud;

the governing statute expressly permits cancellation; or

the approval was clearly erroneous and had not yet produced protected rights.

However, cancellation must ordinarily be undertaken by the competent authority and in accordance with the applicable statutory procedure.

5. Natural Justice and Right of Hearing

One of the most important consequences of withdrawing a mistaken approval is the requirement of procedural fairness.

If cancellation adversely affects a person's rights, employment, financial benefits, licence, appointment or other legal interests, the affected person may be entitled to:

notice of the proposed cancellation;

disclosure of the basis of the proposed action;

reasonable opportunity to submit an explanation;

consideration of the explanation by the competent authority; and

a reasoned decision where required by law.

The Supreme Court has emphasized that a person should not ordinarily be subjected to material disadvantage without an opportunity of being heard. Chief Commissioner v. Dina Sohrab, PLD 1959 SC 45 is among the authorities recognizing this principle.

6. Legitimate Expectation

A mistaken approval may sometimes create a legitimate expectation, particularly where the person reasonably relied upon an official representation or established administrative practice.

The doctrine does not automatically transform an administrative approval into an absolute vested right. Nevertheless, public authorities are expected to act fairly when departing from a representation or established practice.

In President, National Bank of Pakistan v. Waqas Ahmed Khan, 2023 PLC (C.S.) 1019, the Supreme Court explained that legitimate expectation may arise from an express promise, assurance, practice or policy of a public authority and that the doctrine operates as a safeguard against unfair administrative action.

Similarly, in Uzma Manzoor v. Vice-Chancellor, Khushal Khan Khattak University, Karak, 2022 SCMR 694, the Supreme Court recognized legitimate expectation as a basis through which administrative action may be judicially reviewed where the circumstances justify protection of that expectation.

7. Reliance and Vested Rights

The consequences become more serious when the beneficiary has already acted upon the approval.

For example, if an authority approves an appointment and the employee:

accepts the appointment;

joins service;

completes required training;

changes his position in reliance upon the approval; or

acquires legally protected benefits,

the authority may face greater legal difficulty in simply cancelling the approval without following the applicable law.

The courts distinguish between a mere erroneous administrative decision and a decision that has already resulted in accrued or vested rights.

8. Approval Corrected Before It Is Acted Upon

Where an authority discovers the mistake immediately and the approval has not yet been acted upon, correction or withdrawal is generally easier to justify.

In Raja Zahoor Ahmed v. Capital Development Authority, PLD 2022 Islamabad 22, the court considered a decision that had been rescinded after the authority realized that it was inconsistent with the governing law. The court noted the significance of the fact that the decision was recalled before it had been acted upon.

Thus, timing is an important factor in determining the consequences of an erroneous approval.

9. Approval Granted by an Incompetent Authority

If an approval is issued by an authority that legally has no power to grant it, the defect may be jurisdictional.

A person generally cannot acquire a permanent legal right merely because an authority exercised a power that the law did not confer upon it.

The court may therefore invalidate such an approval, particularly where:

the statutory scheme clearly identifies another approving authority;

the approval violates mandatory legislation; or

the decision is beyond the authority's jurisdiction.

10. Clerical or Typographical Mistake

A simple clerical or typographical mistake does not necessarily invalidate the entire approval.

The authority may be permitted to correct the error where the real decision is otherwise clear and the correction does not unlawfully alter substantive rights.

However, an authority cannot disguise a substantive change in policy or decision as a mere “clerical correction.”

In Inayatullah and others v. Principal, Balochistan Agriculture College, PLD 1991 Quetta 63, cancellation of an admission on the basis of an alleged typographical mistake was challenged. The court found that the relevant authority lacked the power, under the applicable prospectus, to cancel the admission on that ground and held the cancellation unlawful in the circumstances.

11. Judicial Review of a Mistaken Approval

Courts exercising judicial review generally examine the legality of the administrative process rather than simply substituting their own decision for that of the authority.

Relevant grounds include:

illegality;

lack or excess of jurisdiction;

breach of natural justice;

procedural impropriety;

arbitrariness;

abuse of discretion; and

failure to consider relevant legal requirements.

In Tata Cellular v. Union of India, (1994) 6 SCC 651, principles concerning judicial review of administrative decisions were summarized around legality, procedural fairness and rational exercise of administrative power. These principles have also been referred to in Pakistani judicial reasoning.

IMPORTANT CASE LAWS

1. Muhammad Yaseen and others v. Province of Sindh and others

2023 SCMR 1703

The Supreme Court held that where appointments were withdrawn because they were allegedly obtained through fraud, the affected persons should be given notice and an opportunity of hearing under Article 10-A. This demonstrates that even an allegedly erroneous or fraudulent approval may require procedural safeguards before adverse action.

2. President, National Bank of Pakistan v. Waqas Ahmed Khan

2023 PLC (C.S.) 1019

The Supreme Court discussed legitimate expectation arising from promises, assurances, practices or policies of public authorities. Administrative authorities must act fairly when dealing with such expectations.

3. Uzma Manzoor v. Vice-Chancellor, Khushal Khan Khattak University, Karak

2022 SCMR 694

The Supreme Court explained the doctrine of legitimate expectation and recognized its relevance in judicial review of administrative action.

4. Raja Zahoor Ahmed v. Capital Development Authority

PLD 2022 Islamabad 22

The court considered an administrative decision that was later rescinded after the authority realized that it was inconsistent with the governing legal framework. The fact that the decision had not been acted upon was significant.

5. Chief Commissioner v. Dina Sohrab

PLD 1959 SC 45

The case is an important Pakistani authority concerning natural justice and the principle that a person should not ordinarily be deprived of a right or subjected to material disadvantage without an opportunity of hearing.

6. Inayatullah and others v. Principal, Balochistan Agriculture College

PLD 1991 Quetta 63

The court dealt with cancellation based upon an alleged typographical mistake and emphasized that cancellation must have legal authority and comply with the applicable rules and principles of natural justice.

7. Pakistan through Secretary, Ministry of Finance v. Muhammad Himayatullah Faruqhi

PLD 1969 SC 407

The case is relevant to the distinction between administrative rescission and rights that may become vested after an order has taken effect and been acted upon.

8. Messrs Army Welfare Sugar Mills Ltd. v. Federation of Pakistan

1992 SCMR 1652

The case is relevant to the principle that once an administrative order has become operative and valuable rights have accrued, withdrawal of the order may raise issues concerning vested rights and lawful exercise of administrative power.

Legal Consequences of Approval Granted by Mistake

The principal consequences may therefore be summarized as follows:

Conclusion

An approval granted by mistake does not automatically produce one fixed legal consequence. The decisive considerations are the nature of the mistake, legality of the original approval, competence of the authority, presence or absence of fraud, reliance by the beneficiary, creation of vested rights, and compliance with natural justice.

Where the approval is plainly unlawful and has not been acted upon, the authority may generally have greater scope to correct it. Where the beneficiary acted in good faith and acquired rights or materially changed position in reliance upon the approval, cancellation becomes more legally sensitive. Where fraud or misrepresentation is established, the beneficiary's position is considerably weaker, but procedural fairness may still require notice and an opportunity of hearing before adverse action.

Therefore, the governing principle is that an administrative mistake may be corrected, but the correction itself must be lawful, reasonable, procedurally fair, and within the authority's statutory power.