Bhagat Raja Vs. The Union of India
& Ors  INSC 76 (29 March 1967)
29/03/1967 MITTER, G.K.
RAO, K. SUBBA (CJ) SHAH, J.C.
CITATION: 1967 AIR 1606 1967 SCR (3) 302
CITATOR INFO :
D 1969 SC 329 (13) F 1970 SC1302 (6) R 1971
SC 862 (90) R 1971 SC2021 (4) E 1977 SC 567 (23,24,25) RF 1984 SC1361 (28)
Mines & Minerals (Regulation and
Development Act, 1957, s. 30 and Rules 54 & 55 made under the Act-state
Government's order refusing mining lease to one party and granting it to
another-Central Government whether in deciding revision under r. 55 should pays
The appellant was one of several applicants
for a mining lease in Andhra Pradesh. The State Government however granted it
to 'respondent No. 3. The appellant then filed an application in revision,
under s. 30 of the Mines & Minerals (Regulation and Development) Act, 1957,
read with r. 54, to the Union of India. Respondent No. 3 filed a counter
statement and the State Government filed its comments. The appellant filed a
rejoinder. The Union Government without hearing the appellant rejected his
revision application. An appeal was filed before this Court. The question that
fell for consideration was whether it was necessary for the Government of India
to give reasons for its decision in view of the provisions of the Act and the
Rules or aliunde because the decision was liable to be questioned in appeal to
HELD : (i) In exercising its powers of
revision under r. 55 the Central Government discharges functions which are
quasijudicial. The decisions of tribunals in India are subject to the
supervisory powers of the High Court under Art. 227 of the Constitution and of
appellate powers of this court under Art. 136. Both the High Court and this
Court are placed under a great disadvantage if no reasons are given and the
revision is dismissed curtly by the use of the single word 'rejected' or
'dismissed'. In such a case this Court can probably only exercise its appellate
jurisdiction satisfactorily by examining the entire records of the case and
after giving a hearing come to its conclusion on the merits of the case. This
would certainly be a very unsatisfactory method of dealing with the appeal.
309B-C] If the State Government gives
sufficient reasons for accepting the application of one party and rejecting
that of others, as it must, and the Central Government adopts the -reasoning of
the State Government, this Court may proceed to examine whether the reasons given
are sufficient for the purpose of upholding the decision. But when the reasons
given in the order of the State Government are scrappy or nebulous and the
Central Government makes no attempt to clarify the same, this Court, in appeal
may have to examine the case de novo, without anybody being the wiser for the
-review by the Central Government. The same difficulty would arise where the
State Government gives a number of reasons some of which are good and some are
not and the Central Government gives its decision without specifying those
reasons which according to it are sufficient to uphold the order of the State
Government. That is why in such circumstances, what is known as a 'speaking
order' is called for. [309C-F] 3 03 A 'speaking order' is all the more
necessary in the case of a decision under r. 55 because there is provision for
new material being placed before the Central Government which was not there
before the State Government, and further, because the decision, affecting
important rights of parties, is given in a summary manner without a hearing
being allowed to the parties. A party is entitled to know why the decision has
gone against him. [320G-321B] The absence in r. 55 of any provision for giving
such reasons is not decisive of the matter in view of the above considerations.
[315H] Shivji Nathubhai v. The Union of India,  2 S.C.R. 775, M.P.
Industries v. Union,  1 S.C.R. 466, Harinagar Sugar Mills Ltd. v. Shyam
Sundar Jhunihunwala,  2 S.C.R. 339 and Sardar Govindraov. State,  1
Nandram Hunatram, Calcutta v. Union of India,
A.I.R. 1966 S.C.1922 and Commissioner of Income-tax v. K. V. Pilliah, 43 I.T.R.
Rex v. Northumberland Compensation Appeal
Tribunal Ex parte Shaw,  1 K.B. 711, Vedachala Mudaliar v. State of
Madras, A.I.R. 1952 Madras 276, Rantayya v. State of Andhra, I.L.R. 1956 Andhra
712, Annamalai v. State of Madras, A.I.R.
1957 Andhra Pradesh 738 and Joseph v.
Superintendent of Post Offices, Kottayam, I.L.R. 1961 11 Kerala 245, referred
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 2596 and 2597 of 1966.
Appeals by special leave from the Orders
dated May 2, 1966 and June 22, 1966 of the Government of India, Ministry of
Mines and Metals, New Delhi on application is filed by the appellant under Rule
54 of the Mineral Concession Rules, 1960.
S. J. Sorabji, A. J. Rana, J. R. Gagrat and
B. R. Agarwal, or the appellant (in both the appeals).
G. N. Dikshit, R. N. Sachthey for S. P.
Nayyar, for respondent No. 1 (in both the appeals).
P. Ram Reddy and B. Parthasarathy, for
respondent No. 2 (in both the appeals).
M. C. Setalvad, B. Dutta, and O. C. Mathur,
for respondent No. 3 (in both the appeals).
The Judgment of the Court was delivered by
Mitter, J. These two appeals by special leave, are Iimited to the question as
to whether in dismissing a revision and confirming the order of the State of
Andhra Pradesh, the Union of India was bound to make a speaking order. The text
of the order is the same in both the cases, the only difference being in 304
the situs and the area in respect of which the lease was applied for. One of
the orders runs as follows "New Delhi, the 22nd June, 1966".
I am directed to refer to your revision
application dated 14-12-1964 and letter dated 28-1-1966 on the above subject
and to say that after careful consideration of the grounds stated therein, the
Central Government have come to the conclusion that there is no valid -ground
for interfering with the decision of the Government of Andhra Pradesh rejecting
your application for grant of mining lease for asbestos over an area of Ac.1
13-50 in Brahmanapalii village, Cuddapah District, Andhra Pradesh. Your
application for revision is, therefore, rejected." The facts leading to
the two appeals are as follows : In response to a notification dated January 8,
1964 published in the State Gazette by the Andhra Pradesh Government inviting
applications under r. 58 of the rules framed under the Mines and Minerals
(Regulation and Development) Act, 1957 (hereinafter referred to as the Rules
and the Act) the appellant submitted two applications in the prescribed form
viz., Form "I" for areas aggregating Ac. 113-50 in village
Brahmanapalli and Ac. 13-10 in village Ippatta both in the district of Cuddapah
for mining asbestos. Respondent No. 3 also made similar applications on the
same date. According to the appellant his applications complied with all the
requirements of Form "I" while those of respondent No. 3 were
defective in some respects. Besides the appellant and the respondent No. 3,
there was only one other person who applied for a prospecting licence which was
rejected offhand. As between the appellant and the respondent No. 3, the
Government of Andhra Pradesh preferred the latter. The relevant portion of the
order dated 19th October 1964 in respect of the village Brahmanapalli under s.
10(3) of the Act was as follows :
"As between the other applicants Sri
Bhagat Raja and M/s. Tiffin's Barytes, Asbestos and, Paints Ltd., the
Government prefer M/s. Tiffin's Barytes...... as they are having adequate
general experience and technical knowledge, and are old lessees in the
district, without any arrears of mineral dues to the Government. The mining
lease application of Sri Bhagat Raja for the areas covered by the mining lease
application of M/s. Tiffin's Barytes, Asbestos and Paints Ltd. is
rejected." 305 The text of the Order with regard to village Ippatta is
practically the same.
The appellant filed application in revision
in the prescribed form i.e. Form 'N' under s. 30 of the Act read with r. 54 to
the Union of India on December 14, 1964. The appellant tried to bring out in
his revision applications that the financial condition of the 3rd respondent
was extremely precarious as would be evidenced by documents, copies whereof
were annexed to his petition. The 3rd respondent filed a counter statement to
the revision application in April 1965. In March 1966 the appellant received
the comments of the Andhra Pradesh Government on his revision applications. The
appellant filed rejoinder to the counter statements of the 3rd respondent in
May 1965 and to the comments of the Andhra Pradesh Government in April 1966. He
also asked for the grant of a personal hearing before the decision of the case
which was not given.
Ultimately, his applications were rejected by
orders quoted hereinabove.
Various grounds of appeal were taken in the
application for special leave to appeal preferred by the appellant. An, attempt
has been made therein to show that respondent No. 3 had no experience in
asbestos mining, that its financial position was very unsatisfactory and that
its application for mining lease was not in proper form. A complaint was also
made that in rejecting the applicant's revision applications the Union of India
was bound to give reasons for its decision as it was exercising quasi judicial
powers under s. 30 of the Act read with rr. 54 and 55, that principles of
natural justice and fairplay requiring the divulgence of the grounds were
violated and that a personal hearing should have been given to the appellant
before the disposal of the revision applications.
We are not called upon in this case to go
into the merits of the case but only to examine the question as to whether it
was necessary for the Government of India to give reasons for its decision in
view of the provisions of the Act and the Rules or aliunde because the decision
was liable to be questioned in appeal to this Court. It is necessary to take
note of a few provisions ofthe Act and the relevant rules framed thereunder to
ascertain the scope of a party's right to, apply for a lease and the powers and
duties of the Government in accepting or rejecting the some. The preamble to
the Act shows that its object was to provide for the regulation of mines and
the development of minerals under the control of the Union of India. Under s.
4(1) no person can undertake any prospecting or mining operations in any area,
except under and in accordance with the terms and conditions of a prospecting
licence or a mining lease granted under the Act and the Rules. Under sub-s. (2)
of the section 306 "No prospecting licence or mining lease shall be
granted otherwise than in accordance with the provisions of this Act and the
rules mad., thereunder." S.5 lays down certain conditions which a person
desiring to have a mining lease must fulfil. S. 8 provides for the period for
which a mining lease may be granted. Under s.
10(1) an application for a mining lease has
to be made to the State Government concerned in the prescribed form. Subs. (3)
of S.10 runs as follows :
"On receipt of an application under this
section, the State Government may, having regard to the provisions of this Act
and any rules made there under, grant or refuse to grant the licence or
lease." Under sub-s. (2) of s. 11 a person whose application for a licence
is received earlier than those of others shall have a preferential right for
the grant thereof over the others.
The proviso to this sub-section enacts that
where applications are received on the same day, the State Government, after
taking into consideration the matters specified in sub-s. (3), may grant the
mining lease to such one of the applicants as it may deem fit. Sub-s. (3)
specifies the matters referred to in sub-s. (2) and they are as follows : (a) any
special knowledge or experience in, prospecting operations or mining
operations, as the case may be, possessed by the applicant;
(b) the financial resources of the applicant;
(c) the nature and quality of the technical
staff employed or to be employed by the applicant;
and (d) such other matters as may be
'S. 13(1) enables the Central Government to
make rules for regulating the grant of prospecting licences and mining leases.
Under s.19 any mining lease granted, renewed or acquired in contravention of
the provisions of the Act is to be void and of no effect. Power of revision of
the order of the State Government is given to the Central Government in the
"The Central Government may, of its own
motion or on application made within the prescribed time by the aggrieved
party, revise any order made by a State Government or other authority in
exercise of the powers conferred on it by or under this Act." Rules were
made by the Central Government under s.13 of the Act known as the Mineral
Concession Rules, 1960. R.22 prescribes that an application for the grant of a
mining lease must be made to the State Government in Form "I"
accompanied by a 307 fee of Rs. 200/-, a deposit of Rs. 5001and an income-tax
clearance certificate. Under r. 26 the State Government is obliged to give
reasons for refusal to grant a mining lease.
Any person aggrieved by an order made by the
State Government may prefer an application for revision under r.
54 in Form 'N'. In every such application
against the order of the State Government refusing to grant a mining lease, a
person to whom a lease has been granted must be impleaded as a party. R. 55
originally framed in 1960 was amended in July 1965. Under the amended r.55 the
position is as follows:"(1) On receipt of an application for revision
under r. 54, copies thereof shall be sent to the State Government and to all
the impleaded parties calling upon them to make such comments as they may like
to make within three months of the date of issue of the communication and if no
comments are received within that period, it is to be presumed that the party
omitting to make such comments has none to make.
(2) On receipt of the comments from any party
under Sub-rule (1), copies thereof have to be, sent to the other parties
calling upon them to make further comments as they may like to make within one
month from the date of the issue of the communication.
(3) The revision application, the
communications containing comments and counter-comments referred to in sub-rules
(1) and (2) shall constitute the record of the case.
(4) After considering the records referred to
in sub-rule (3), the Central Government may confirm, modify or set aside the
order or pass such other order in relation thereto as it may deem just and
proper." From the above, it will be amply clear that in exercising its
powers of revision under r. 55 the Central Government must take into
consideration not only the material which was before the State Government but
comments and countercomments, if any, which the parties may make regarding the
order of the State Government. In other words, it is open to the parties to
show how and where the State Government had gone wrong, or, why the order of
the State Government should be confirmed. A party whose application for a
mining lease is turned down by the State Government is therefore given an
opportunity of showing that the State Government had taken into consideration
irrelevant matters or based its decision on grounds which were not justified.
At the time when applications for a licence are made by different parties to
the State Government. they are not L5Sup/67-7 308 given an opportunity of
showing any defects or demerits in the applications of the others or why their
applications should be Preferred to others. The State Government has to make up
its mind by considering the applications before it as to which party is to be
preferred to the other or others.
S.11(3), as already noted, prescribes the
matters which the State Government must consider before selecting one out of
the numerous applicants. But the possibility of the State Government being
misled in its consideration of the matters cannot be ruled out. It may be that
a party to whom a lease is directed to be granted has in fact no special knowledge
or experience requisite for the mining operations or it may be that his
financial resources have not been properly disclosed. It may also be that the
nature and quality of the technical staff employed or to be employed by him is
not of the requisite standard. In an application for revision under r. 55 it
will be open to an aggrieved party to contend that the matters covered by
sub-s. (3) of s. 11 were not properly examined by the State Government, or that
the State Government had not before it all the available material to make up
its mind with respect thereto before grant in a licence. In a case where
complaints of this nature are made, of necessity, the Central Government has to
scrutinise matters which were not canvassed before the State Government. A
question may arise in such cases as to whether the order of the Central
Government in the form in which it was made in this case would be sufficient, especially
in view of the fact that the correctness thereof may be tested in appeal to
It is now well-settled that in exercising its
powers of revision under r. 55 the Central Government discharges functions
which are quasi judicial : see Shivji Nathubhai v.
The Union of India & Ors. (1) and M. P.
Industries v. Union (1). In the latter case one of us (our present Chief
Justice) said (at p. 471) :
"The entire scheme of the rules posits a
judicial procedure and the Central Government is constituted as a tribunal to
dispose of the said revision. Indeed this Court in Shivji Nathubhai v. The
Union of India (supra) rules that the Central Government exercising its power
of review under r. 54 of the Mineral Concession Rules, 1949, was acting
judicially as a tribunal. The new rule, if at all, is clearer in that regard
and emphasises the judicial character of the proceeding. If it was a tribunal,
this Court under Art. 136 of the Constitution can entertain an appeal against
the order :of the Central Government made in exercise of its revisional powers
under r. 55 of the Rules." (1) 2 S.C.R. 775.
(2)  2 S. C. R. 466.
309 Let us now examine the question as to
whether it was incumbent on the Central Government to give any reasons for its
decision on review. It was argued that the very exercise of judicial or quasi
judicial powers in the case of a tribunal entailed upon it an obligation to
give reasons for arriving at a decision for or against a party. The decisions
of tribunals in India are subject to the supervisory powers of the High Courts
under Art. 227 of the Constitution and of appellate powers of this Court under
Art. 136. It goes without saying that both the High Court and this Court are
placed under a great disadvantage if no reasons are given and the revision is
dismissed curtly by the use of the single word "rejected", or, "dismissed".
In such a case, this Court can probably only exercise its appellate
jurisdiction satisfactorily by examining the entire records of the case and
after giving a hearing come to its conclusion on the merits of the appeal. This
will certainly be a very unsatisfactory method of dealing with the appeal.
Ordinarily, in a case like this, if the State
Government gives sufficient reasons for accepting the application of one party
and rejecting that of the others, as it must, and the Central Government adopts
the reasoning of the State Government, this Court may proceed to examine
whether the reasons given are sufficient for the purpose of upholding the
decision. But, when the reasons given in the order of the State Government are
scrappy or nebulous and the Central Government makes no attempt to clarify the
same, this Court, in appeal may have to examine the case de novo without
anybody being the wiser for the review by the Central Government. If the State
Government gives a number of reasons some of which are good and some are not,
and the Central Government merely endorses the order of the State Government
without specifying those reasons which according to it are ,sufficient to
uphold the order of the State Government, this Court, in appeal, may find it
difficult to ascertain which are the grounds which weighed with the Central
Government in upholding the order of the State Government. In such
circumstances, what is known as a "speaking order" is called for.
The order of the Central Government of June
22, 1966 is so worded as to be open to the construction that the reviewing
authority was primarily concerned with finding out whether any grounds had been
made out for interfering with the decision of the State Government. In other
words, the Central Government was not so much concerned to examine the grounds
or the reasons for the decision of the State Government but to find out whether
here was any cause for disturbing the same Prima facie the order does not show
that the reviewing authority had any thought of expressing its own reasons for
maintaining the decision arrived at. If detailed reasons had been given by the
310 State Government and the Central Government had indicated clearly that it
was accepting the reasons for the decision of the State Government, one would
be in a position to say that the reasons, for the grant of a lease to a person
other than the appellant were obvious. But, whereas here, the State Government
does not find any fault or defect in the application of the unsuccessfully
applicant and merely prefers another on the ground that "he had adequate
general experience and technical knowledge and was an old lessee without any
arrears of mineral dues" it is difficult to say what turned the scale in
favour of the successful applicant excepting the fact that he was known to the
State Government from before. We do not want to express any views on this but
if this be a proper test, then no new entrant in the field can have any chance
of success where there is in old lessee competing with him. The order of the
Central Government does not bring out any reason for its own decision except
that no ground for interference with the decision arrived at was established.
Now we propose to examine some decisions of
this Court where the question as to whether the reviewing authority should give
reasons for its decisions was gone into. In Harinagar Sugar Mills v. Shyam
Sundar Jhunjhunwala(1) this Court had to consider whether the Central
Government exercising appellate powers under s.111 of the Companies Act, 1956
before its amendment in 1960 was a tribunal exercising judicial functions and
as such, subject to the appellate jurisdiction of this Court under Art. 136 of
the Constitution and whether the Central Government had acted in excess of its
jurisdiction, or acted illegally otherwise in directing the company to register
the transfer or transfers in favour of the respondents. There, the articles of
association of the company concerned gave the directors the right in their
absolute discretion and without assigning any reason to refuse to register any
transfer of shares. The directors declined to register some shares in the name
of the transferees who applied to the High Court at Bombay for orders under s.
38 of the Indian Companies Act, 1913 for rectification of the share register on
the ground that the board of directors had exercised their right mala fide,
arbitrarily and capriciously. The High Court rejected these petitions on the
ground that controversial questions of law and fact could not be tried in
summary proceedings under S. 38. The transferees requested the directors once
more to register the shares. On their refusal to do so, appeals were preferred
to the Central Government under s.111(3) of the Indian Companies Act, 1956
which had since come into operation. The Joint Secretary, Ministry of Finance,
who heard the appeals declined to order registration of transfers (1) 2 S.C.R.
339 @ 357.
311 practically on grounds similar to those
put forward by the High Court of Bombay. Thereafter, the original holder of the
shares transferred some shares to his son and some to his
daughter-in-id'", and the transferees requested the company to register
the transfers. The directors once more refused. Against the resolution of the
directors, separate appeals were preferred by the son and daughter-in-law of
the original holder of the shares. The Deputy Secretary to the Government of
India set aside the resolution passed by the board of directors and directed
the company to register the transfers. No reasons were however given for such
The company came up in appeal to this Court
under Art. 136 of the Constitution. According to the judgment of the majority
of Judges, the exercise of authority by the Central Government was judicial as
it had to adjudicate upon the rights of contesting parties when there was a lis
between them. It was observed in that case that "If the Central Government
acts as a tribunal exercising judicial powers and the exercise of that power is
subject to the jurisdiction of this court under Art 136 of the Constitution, we
fail to see how the power of this court can be effectively exercised if reasons
are not given by the Central Government in support of its order." This
Court further held that there had been no proper the appeals, no reasons having
been given in support orders of the Deputy Secretary who heard them and result,
the orders were quashed with a direction that the be re-heard and disposed of
according to law.
In Sardar Govindrao v. State(1) the
appellants who to be descendants of former ruling chiefs in same districts of
Madhya Pradesh applied under the Central Provinces and Berar Revocation of Land
Revenue Exemptions Act, 1948 for grant of money or pension as suitable
maintenance for themselves.
They held estates in two districts on
favourable terms as Jahgirdars Maufidars and Ubaridars and enjoyed, an
exemption from payment of land revenue aggregating Rs. 27,828-5-0 per year. On
the passing of the Act, the exemption was lost and they claimed to be entitled
to grant of money or pension under the provisions of the Act. They applied to
the Deputy Commissioner who forwarded their applications to the State Government.
These were rejected without any reasons being given there for. The appellants
filed a petition in the High Court of Madhya Pradesh under Art. 226 of the
Constitution for a writ of certiorari 'to quash the order of the State
Government. The High Court held that the State Government "was (1) [ 1965]
1 S. C.R. 678.
312 not compelled to grant either money or
pension because the exercise of the power under s. 5 was discretionary and the
petition, therefore was incompetent." S. 5(3) of the C.P.
and Berar Act provided as follows :"The
Provincial Government may make a grant of money or pension(i) for the
maintenance or upkeep of any religious, charitable or public institution or
service of a like nature, or (ii) for suitable maintenance of any family of a
descendant from a former ruling chief." S. 6 'barred the jurisdiction of
civil courts. It was observed by this Court .
"The Act lays down upon the Government a
duty which obviously must be performed in a judicial manner. The appellants did
not seem to have been heard at all. The Act bars a suit and there is all the
more reason that Government must deal. with such case in a quasi-judicial
manner giving an opportunity to the claimants to state their case in the light
of the report of the Deputy Commissioner. The appellants were also entitled to
know the reason why their claim for the grant of money or pension was rejected
by Government and how they were considered as not falling within the class of
persons who it was clearly intended by the Act to be compensated in this
manner........ As the order of Government does not fulfil the elementary
requirements of a quasijudicial process we do not consider it necessary to
order a remit to the High Court." In the result this Court set aside the
order of the Government and directed the disposal of the case in the light of
the remarks made.
In M. P. Industries v. Union(1) the order of
the Central Government rejecting the revision application under r. 55 of the
Mineral Concession Rules was couched in exactly the same language as the order
in appeal before us (see at p. 475 of the report) One cannot help feeling that
the Ministry concerned have a special form which is to be used whenever a
review application is to be rejected. This may easily lead anyone to believe that
the review is a sham and nothing but the formal observance of the power
-granted to the Central Government. In that case, all the three learned Judges
of this Court who heard the appeal were unanimous in dismissing it : some of
the obser(1)  1 S.C.R. 466.
313 vations made bear repetition. It was
there argued that if the Central Government had to give reasons when it
functioned as a tribunals it would obstruct the work of the Government and lead
to unnecessary delays. As to this it said by our present Chief Justice :
"The Central Government functions only
through different officers and in this case it functioned through an Under
Secretary. The condition of giving reasons is only attached to an order made by
the Government when it functions judicially as a tribunal in a comparatively
small number of matters and not in regard to other administrative orders it
Our Constitution posits a welfare
State.....In the context of a welfare State, administrative tribunals have come
to stay. Indeed, they are the necessary concomitants of a welfare State.
But arbitrariness in their functioning
destroys the concept of a welfare State it-, self Self-discipline and
supervision exclude or at any rate minimise arbitrariness. The least a tribunal
can do is to disclose its mind. The compulsion of disclosure guarantees
consideration. The condition to give reasons introduces clarity and excludes or
at any rate minimises arbitrariness; it gives satisfaction to the party against
whom the order is made;
and it also enables an appellate or
supervisory court to keep the tribunals within bounds. A reasoned order is a
desirable condition of judicial disposal.
. . . . . If tribunals can make orders without
giving reasons, the said power in the hands of unscrupulous or dishonest
officers may turn out to be a potent weapon for abuse of power. But, if reasons
for an order are given, it will be an effective restraint on such abuse, as the
order, if it discloses extraneous or irrelevant considerations, will be subject
to judicial scrutiny and correction. A speaking order will at its best be a
reasonable and at its worst be at least a plausible one. The public should not
be deprived of this only safeguard." It was further observed in that case
that the position of ordinary courts of law was different from that of
tribunals exercising judicial functions and it was said :
"A Judge is trained to look at things
objectively, uninfluenced by considerations of policy or expediency; but, an
executive officer generally looks at things from the standpoint of policy and
expediency. The habit of 314 mind of an executive officer so formed cannot be
expected to change from function to function or from act to act. So it, is
essential that some restrictions shall be imposed on tribunals in the matter of
passing orders affecting the rights of parties; and the least they should do is
to give reasons for their orders. Even in the case of appellate courts
invariably reasons are given, except when they dismiss an appeal or revision in
limine and that is because the appellate or revisional court agrees with the
reasoned judgment of the subordinate court or there are no legally permissible
grounds to interfere with it. But the same reasoning cannot apply to an
appellate tribunal, for as often as not the order of the first tribunal is
laconic and does not give any reasons. That apart, when we insist upon reasons;
we do not prescribe any particular form or scale of the reasons.
The extent and the nature of the reasons
depend upon case of affirmance where the original tribunal gives bunal shall
give its own reasons succinctly; but in a case of affirmance where the original
tribunal gives adequate reasons, the appellate tribunal may dismiss the appeal
or the revision, as the case may be, agreeing with those reasons.
What is essential is that reasons shall be
given by an appellate or revisional tribunal expressly or by reference to those
given by the original tribunal. The nature and the elaboration of the reasons
necessarily depend upon the facts of each case." It must be noted however
that the above view was not shared by the two other Judges of the Bench
constituting this Court. It was said by them :
"For the purpose of an appeal under Art.
136, orders of Courts and tribunals stand on the same footing. An order of
court dismissing a revision application often gives no reason, but this is not
a sufficient ground for quashing it. Likewise, an order of an adminstrative
tribunal,' rejecting a revision application cannot be pronounced to be invalid
on the sole ground that it does not give reasons for the rejection." They
distinguished the case of Harinagar Sugar Mills Ltd.(1) on the ground that the
Central Government had reversed the decision' appealed without giving any
reasons and the latter did not disclose any apparent grounds for reversal and
"There is a vital difference between the
order of reversal by the appellate authority in that case for no (1)  2
315 reason whatsoever and the order of
affirmance by the revising authority in the present case." As has already
began noted, the board of directors in that case did not give any reasons for
the refusal to register and the Central Government adopting the same course
reversed the decision of the directors without giving any reasons.
Clearly, the act of the Central Government
there savoured of arbitrariness. Under the articles of association of the
company, the directors were not obliged to give any reasons.
Their power of refusal was unrestricted if
they acted bona fide or in the interest of the company. The reversal of their
discretion clearly amounted to a finding that they had acted arbitrarily or
mala fide and one was; left to guess the reasons of the Central Government for
coming to this conclusion. As has already been said, when the authority whose
decision is to be reviewed gives reasons for its conclusion and the reviewing
authority affirms the decision for the reasons given by the lower authority,
one can assume that the reviewing authority found the reasons given by the
lower authority as acceptable to it; but where the lower authority itself fails
to give any reason other than that the successful applicant was an old lessee
and the reviewing authority does not even refer to that ground, this Court has
to grope in the dark for finding out reasons for upholding or rejecting the
decision of the reviewing authority. After all a tribunal which exercises
judicial or quasi-judicial powers can certainly indicate its mind as to why it
acts in a particular way and when important rights of parties of far-reaching
consequence to them are adjudicated upon in a summary fashion, without giving a
personal hearing where proposals and counter-proposals are made and examined,
the least that can be expected is that the tribunal should tell the party why
the decision is going against him in all cases where the law gives a further
right of appeal.
On behalf of the respondents, it was
contended that r. 55 which provided for a revision did not envisage the filing
of fresh pleadings and fresh material but only invited comments of the parties
with regard to the matter before the Central Government. It was argued that if
after going through the comments and counter-comments the Central Government
found no reason to arrive at a conclusion different from that of the State
Government, it was not called upon to disclose any grounds for its decision in
review. Our attention was drawn in particular to r. 26 of the Mineral
Concession Rules which enjoined upon the State Government to communicate in
writing the reasons for any order refusing to grant or renew a mining lease.
The absence of any provision in r. 55 for giving such reasons was said to be
decisive on the matter as indicative of the view of the legislature that there
was no necessity for giving reasons for the order on review. We find ourselves
unable to accept this contention. Take the case 316 where the Central
Government sets aside the order of the State Government without giving any
reasons as in Harinagar Sugar Mills' case(1). The party who loses before the
Central Government cannot know why he had lost it and would be in great
difficulty in pressing his appeal to the Supreme Court and this Court would
have to do the best it could in circumstances which are not conducive to the
proper disposal of the appeal. Equally, in a case where the Central Government
merely affirms the order of the. State Government, it should make it clear in
the order itself as to why it is affirming the same. It is not suggested that
the Central Government should write out a judgment as courts of law are wont to
do. But we find no merit in the contention that an authortiy which is called
upon to determine and adjudicate upon the rights of parties subject only to a
right of appeal to this Court should not be expected to give an outline of the
process of reasoning by which they find themselves in agreement with the
decision of the State Government. As a matter of fact, r. 26 considerably
lightens the burden of the, Central Government in this respect. As the State
Government has to give reasons, the Central Government after considering the
comments and counter-comments on the reasons given by the State Government
should have no difficulty in making up its mind as to whether the reasoning of
the State Government is acceptable and to state as briefly as possible the
reasons for its own conclusion.
Our attention was drawn to a judgment of this
Court in Nandrant Hunatram, Calcutta v. Union of India(2). There, one of the
points made by the appellant in the appeal to this Court was that the order of
the Central Government, in review, upholding the action of the State Government
cancelling the mining lease granted to the appellant was bad inasmuch as no
reasons were given. It was pointed out in the judgment in that case that the
facts there were so notorious that the reasons for the action of the State Government
and the confirmation of its order by the Central Government were too obvious
and could not possibly be questioned by anybody. There the partners of the
appellant firm had fallen out among themselves and none of them was willing to
spend money on the colliery with the result that the work came to a stand-still
and the colliery began to get flooded. At this juncture, Government stepped in
and made a promise to the essential workmen that their wages would be paid and
this saved the colliery. Thereafter the Chief Inspector of Mines was informed
by one of the partners of the appellant firm that the other partners were
preventing him from making payment for running expenses of the colliery and
that he was not in a position to perform his duties as an occupier. He
accordingly resigned his office. Tre Manager also (1) 2 S.C.R. 339.
(2) A.I.R. 1966 S.C.R. 1922 resigned and the
Sub-Divisional Officer of the district informed Government that the situation
had become so alarming that some action on the part of the Government was
absolutely necessary. In spite of notice, the partners refused to take any
action with the result that the Government took over the colliery and
terminated the lease.
The revision application filed before the
Central Government under r. 54 of the rules was turned down without giving any
reasons. Negativing the contention of the appellant that the order of the
Central Government was bad in law because no reasons were given, it was said by
this Court that "The documents on the record quite clearly establish that
the colliery was being flooded as the essential services had stopped
functioning and but for the timely intervention of the State Government the colliery
would have been lost. In these circumstances, it is quite clear that the action
of the State Government was not only right but proper and this is hardly a case
in which any action other than rejecting the application for revision was
called for and a detailed order was really not required because after all the
Central Government was merely approving of the action taken in the case by the
State Government, which stood completely vindicated......... The action of the
State Government far from being arbitrary or capricious was perhaps the only
one to take and all that the Central Government has done is to approve of
it." The last portion of the passage was relied upon by the counsel for
the respondents in support of his argument that as the order in review is
merely in confirmation of the action of the State Government reasons need not
But the above dictum cannot be considered
dissociated from the setting of the circumstances in which it was made.
There it was plain as a pike-staff that the
State Government had no alternative but to cancel the lease : the absence of
any reasons in the order on review could not possibly leave anybody in doubt as
to whether reasons were. As a matter of fact in the setting of facts, the
reasons were so obvious that it was not necessary to set them out. There is
nothing in this decision which is contrary to M.P. Industries v.
Union(1). What the decision says is that the
reasons for the action of the State were so obvious that it was not necessary,
on the facts of the case, to repeat them in the order of the Central
Our attention was also drawn to another
judgment of this Court in Commissioner of Income-tax v. K. V. pilliah(2).
One of the questions in that case before the
High Court of Mysore (1)  T. S. C. R. 466.
(2) 43 1. TR. 411.
318 under s. 66(2) of the Indian Income-tax
Act was, whether, on the facts and in the circumstances of the case, the Income
tax Appellate Tribunal was justified in sustaining both the addition ,of Rs. 41
142/as income from business and Rs.
7,000/as cash credits, and whether such
addition did not result in double taxation. It was held by this Court that the
question whether Rs. 41,142/was liable to be taxed fell to be determined under.
the first question. In respect of the other amount of Rs. 7,000/the Income-tax
Officer had held that the explanation of the assessee was untrue and the
Appellate Assistant Commissioner and the Tribunal had agreed with that view. In
this setting of facts, it ,,was said by this Court:
"The Income-tax Appellate Tribunal is
the final fact finding authority and normally it should record its conclusion
on every disputed question raised before it, setting out its reasons in support
of its conclusion. But, in failing to record reasons, when the Appellate
Tribunal fully agrees with the view expressed by the Appellate Assistant
Commissioner and has no other ground to record in support of its conclusion, it
does not act illegally or irregularly, merely because it does not repeat the
grounds of the Appellate Assistant Commissioner on which the decision was given
against the assessee or the department. The criticism made by the High Court
that the Tribunal had "failed to perform its duty in merely affirming the
conclusion of the Appellate Assistant Commissioner" is apparently
unmerited. On the merits of the claim for exclusion of the amount of Rs.
7,000/-, there is no question of law which
could be said to arise out of the order of the Tribunal." The above
observations were sought to be pressed into service 'by the counsel for the
respondents 'but there, is a good deal of difference between that case and the
one with which we have to deal. The High Court there was merely called upon to
give its ,opinion on the statement of facts set out by the Appellate Tribunal.
It was for the Income tax Officer in the first instance to accept or reject the
explanation with regard to the cash credit. It the Income tax Officer found the
assessee's explanation unacceptable, lie had to say why he did not accept it.
Unless the assessee in appeal was -able to point out to the Appellate
authorities some flaw in the reasoning of the Income-tax Officer, it is not
necessary for the appellate authorities to give their reasons independently.
The ,explanation of the assessee is either accepted or rejected; but in the
-case which we have before us, the State Government has to consider the merits
and demerits of the applications and to give its reasons why it prefers one to
the other or others.
There is a dispute between two or more
contesting parties and the reasons for 319 preferring one to the other or
others may be more than one.
It is. not a question of accepting or
rejecting an explanation. In our opinion, what was said in the above Income-tax
case will not apply in the case of a review by the Central Government of a
decision of the State Government under the Act and the Rules.
It may be of interest to note that in Rex v.
Northumberland Compensation Appeal Tribunal, Ex parte Shaw(1) an application
was made in the King's Bench Division in England for an order of certiorari for
the quashing of a decision reached by the Compensation Appeal Tribunal
dismissing an appeal by Shaw against an award to him of compensation for loss
of employment as a clerk to a Hospital Board payable under the National Health
Service (Transfer of Officers and Compensation) Regulations, 1948. There the
question of the practice and procedure with regard to the issue of a writ of
certiorari was gone into at some length. The tribunal in that case had made a
speaking order. It was contended by the counsel for the tribunal that the
King's Bench Division had no power to examine the order in the case before it
on certiorari oil the ground that certiorari went only to defect of
jurisdiction. This was turned down and the Divisional Court held that it had
jurisdiction to quash by certiorari the decision of an inferior tribunal when
the latter had embodied the reasons for its decision in its order and those
reasons are bad in law. For our purpose, we need only refer to the observations
of Lord Goddard, C.J. at p. 724 of the report where he said :
"I think it is beneficial in this case
that we should do so, not merely having regard to the facts of this case, but
because so many tribunals have now been set up, all of whom, I am certain,
desire to do their duty in the best way, and are often given very difficult
sets of regulations and statutes to construe. It certainly must be for their
benefit, and I have no doubt but that they wilt welcome, that this court should
be able to give guidance to them if, in making their orders, they make their
orders speaking orders, so that this court can then consider them if they are
brought before the court on certiorari'." The case for giving reasons or
for making a speaking order becomes much stronger when the decision can be
challenged not only by the issue of a writ of certiorari but an appeal to this
Counsel for the respondents referred us to
the comment on this case made by Sir C. K. Allen in his Law and Orders (Second
Edition) at p. 259 to p. 261. According to the learned author, the
Northumberland Compensation case might be a great deterrent than encouragement
to speaking orders inasmuch as "the prospect (1) 1 K.B. 711.
320 of having their mental process set forth
in literary form, might be ,extremely disagreeable to them" and up to the
year 1956 did not seem to have assisted greatly the means of recourse against
decisions of inferior jurisdictions.
Speaking for ourselves, with great respect to
the learned author, we do not think that the position of the Central Government
as a reviewing authority tinder the Mineral Concession Rules can be equated
with an appellate tribunal of the type whose decision was before the King's
Bench Division in England. If the State Government is enjoined by law -to give
its reasons, there is no reason why it should be difficult for the appellate
authority to do so. The necessity and the desirability of tribunals making
speaking orders has been adverted upon by different High Courts in India. Thus
in Vedachala Mudaliar v. -State of Madras(3) where the State Government of
Madras set ,aside the order of the Central Road Traffic Board without giving
;any reasons, it was observed that "When the policy of the Legislature is
to confer powers on administrative tribunals with a duty to discharge their
functions judicially I do not see any reason why they should be exempted from
all those safeguards inherent in its exercise of that jurisdiction. .
From the standpoint of fair name of the
tribunals and also in the interests of the public, they should be, expected to
give reasons when they set aside an order of an inferior tribunal..........
Further, if reasons for an order are given, there will be less scope for
arbitrary or partial exercise of powers and the order 'ex facie' will indicate
whether extraneous circumstances were taken into consideration by the tribunal
in passing the order." Refrence may also be made to Ramayya v. State of
Andhra (2 and Annamalai v. State of Madras(3). To the same effect is the
judgment of the Kerala High Court in Joseph v. Superintendent of Post Offices,
We have already commented that the order of
the Central Government in this case is couched in the same language as was used
in the case before this court in M.P. Industries v.
Union(5) in August 1965. The old rule 55 was
replaced by a new rule which ,came into force on 19th July 1965. Whereas the
old rule directed the Central Government to consider comments on the petition
of review by the State Government or other authority only, the new rule is
aimed at calling upon all the parties including the State -Government to make
their comments in the matter and the parties are given the right to make
further comments on those made by (1) A.I.R. 1952 Madras 276.
(3) A.I.R. 1957 Andhra Pradesh 739.
(2) I.L.R. 1956 Andhra 712 (4) I.L.R. 1961-11
(5)  1 S.C.R. 466.
321 the other or others. In effect, the
parties are given a right to bring forth material which was not before the
State Government. It is easy to see that an unsuccessful party may challenge
the grant of a lease in favour of another by pointing out defects or demerits
which did not come to the knowledge of the State Government. The order in this
case does not even purport to show that the comments and counter comments,
which were before the Central Government in this case, had been considered. It
would certainly have been better if the order of 22nd June 1966 had shown that
the Central Government had taken into consideration all the fresh material
adduced before it and for the reasons formulated they thought that the order of
the State Government should not be disturbed.
In the result, the appeals are allowed and
the orders of the Central Government passed on 22nd June, 1966 are set aside.
The Central Government is directed to decide
the review applications afresh in the light of the observations made.
The appellant will get his costs throughout
from the 3rd respondent.
G.C. Appeals allowed.