A repeated problem that arises in administrative law in the United Kingdom is the consequence of declaring an administrative order or an executive decision as illegal, ultra vires or void.

For example, liquor licenses were issued by a statutory authority in 2022 but are declared illegal and ultra vires in 2024. In the interval of two years, several pubs and bars functioned under these licenses. While the declaration of illegality means that the licenses were unlawful from the beginning, it will be unfair and unjust to penalise those persons who acted on the basis of licenses granted to them; licences that were valid when granted.

The solution to this problem was suggested by Dr Christopher Forsyth, by propounding “the theory of the second actor”. This is based on a brilliant article by him and Prof Ivan Hare titled The Metaphysics of Nullity: Invalidity, Conceptual Reasoning and the Rule of Law, published in 1998. Forsyth propounded the theory that a law that is found to be illegal and void remained valid in fact during the time it was in existence. If people are to be punished for the activities done before it was declared invalid or illegal, it would lead to consequences – in the words of  what Prof Mark Elliott -ranging from “mild inconvenience to profound chaos”.

The theory of the “second actor” necessarily contemplates a first actor. Dr Forsyth states that the first act is the making of law which is subsequently found to be illegal. The person making the law is the first actor. The second act is implementation of this illegal law till the declaration of its illegality. The decisions taken during this interval are second acts. The second actors are those persons who act on the basis of such a law. 

The theory of the second actor has been applied in several judicial cases and one example will be sufficient. In White v. South Derbyshire District Council, licenses to run caravan sites were granted by the local authority. These were later found to have been granted unlawfully and criminal prosecution was initiated against the licensees on the ground that caravan sites had been run without any valid license. The court quashed the prosecution on the ground that the licensee cannot be punished because the licence was declared invalid at a later point of time; the second actor cannot be penalised for the fault of the first actor.

Unlike the United Kingdom, the High Courts and the Supreme Court in India have a power to declare primary or secondary legislation as unconstitutional. When a law is made, there is a presumption of its constitutionality. As Lord Radcliffe put it, such laws do not bear the badge of invalidity on their forehead. (Smith v. East Elloe Rural District Council)

In other words, the law will continue to be perfectly valid and operational until a competent court declares it as unconstitutional. Keeping in mind the huge backlog of cases in most courts, a law may come into force in 2020 but be declared as unconstitutional in 2025. In the five-year period, the statutory authorities would have implemented the law. The legislature is the first actor and the authorities that implement the law are the second actors.

The Supreme Court has repeatedly held that a law which is declared as unconstitutional is void ab initio, still-born, and “as if it had never been in existence”. These judgments are based on American decisions and, it is submitted, are incorrect, but that is the subject matter of another article.  Today, the declaration of unconstitutionality makes the law invalid from day one.

Unfortunately, the Supreme Court has not considered the impact of what happens to the second actors, i.e. to the decisions that were taken and which may have civil, regulatory, fiscal and even penal consequences, and to the rights and liabilities created. These cannot be obliterated or wiped out by merely stating that an unconstitutional law is still-born or void ab initio. It is, therefore, necessary to apply the theory of the second actor to our constitutional law as well. 

While declaring any law as unconstitutional, it is imperative for the Supreme Court to determine the economic and other consequences of its judgment. What will happen to pending proceedings? What will happen to concluded transactions? Can one apply the principles of restitution? A judicial declaration operates in rem and can, and often does, cause substantial collateral damage. It is not possible to have a one-glove-fits-all solution to this problem as the consequences of declaring an administrative act as illegal is likely to be less significant than declaring a parliamentary or state law as unconstitutional, particularly when it was in operation for a considerable length of time.

A variation of the theory of the second actor is the de facto doctrine which has been applied in several cases in India. In case Gokaraju Rangaraju v. State of Andhra Pradesh, the appointment of a sessions judge was quashed by the Supreme Court. During the pendency of the case, the said judge had passed judgments in several cases. It was held that though his appointment was found to be invalid, he functioned as a de facto judge. He held office under the colour of lawful authority till his appointment was found to be defective. The judgments delivered by such a de facto judge will have the same effect as those rendered by a judge de jure. The de facto doctrine is borne of necessity and public policy to prevent endless confusion and endless mischief. 

It is submitted that the theory of the second actor is also a rule of necessity, and it is in public interest to avoid confusion and mischief that would arise if acts done during the operation of the primary or delegated legislation remain unaffected.

In Goan Real Estate and Construction Ltd. v. Union of India, constructions were made in a coastal area based on plans approved under a 1994 notification. This was declared illegal by the Supreme Court in 1996. As the operation of the 1994 notification had not been stayed, it was held that all actions taken pursuant to the invalid notification remained unaffected.

While this judgment implements the theory of second actor, it is necessary that there is a clear pronouncement by a bench of five judges as to what happens when a law is declared void for violation of fundamental rights under Article 13(2), or declared void for violating constitutional limitations, or declared void for being repugnant under Article 254, or declared void for being beyond legislative competence. Each of these situations presents a different challenge and the need for a clear pronouncement is overdue.

Arvind P Datar is a Senior Advocate practicing before the Supreme Court of India.