Asst. Commissioner
Vs. M/S. Shukla & Brothers [2010] INSC 276 (15 April 2010)
Judgement IN THE
SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL ......... OF
2010 (@ SLP (C) NO. 16466 OF 2009) Assistant Commissioner, Commercial Tax
Department, Works Contract & Leasing, Kota ...Appellant Versus M/s Shukla
& Brothers ...Respondent
Swatanter
Kumar, J.
1. Delay
condoned.
2. Leave
granted.
3. The
present appeal under Article 136 of the Constitution of India is directed
against the Judgment dated 29th February, 2008 passed by the High Court of
Judicature for Rajasthan Bench at Jaipur in S.B. Sales Tax Revision Petition
No.92 of 2007, and in exercise of its power under 1 Section 86 of Rajasthan
Sales Tax Act 1994 (for short `the Act'). The impugned Order reads as under:-
"After having carefully gone through the material on record, since after
due consideration proper discretion has already been used by the Deputy
Commissioner (Appeals) as also Rajasthan Tax Board, in the facts and
circumstances, no further interference is called for by this Court.
The
revision petition is dismissed accordingly as having no merits."
4. The
Learned Counsel appearing for the appellant, Assistant Commissioner of Income
Tax has argued that Order passed by the High Court does not record any reasons
for dismissing the Revision Petition preferred by the Department. According to
the Learned Counsel, various contentions raised as grounds in the Revision
Petition and two questions of law formulated by the Department for
consideration in the High Court while impugning the judgment of the Rajasthan
Tax Board, Ajmer have not been reverted to by the High Court, resulting in
serious prejudice caused to the present petitioner. On merits as well,
challenge has been raised to the Order of the Tax Board as well as that of the
Order of the High Court.
5. It may
be necessary for that to refer to the basic facts giving rise to the present
appeal. The respondent claimed to be a contractor who has obtained impartible
contract of constructing 400 shops in JP Market, Chhota Talab, Kota. As per the
contract the shops were to be handed over to Cloth Merchant Association, Kota.
The respondent had received Rs.95,26,276.00 in the year 1997-98 and
Rs.22,38,026.00 in the year 1998-99. The assessing authority formed an opinion
and recorded a finding that the shutters and doors were not manufactured from
tax paid raw material in impartible contract and as such shutter was excluded
from labour charges in the above years, and levied tax, interest, penalty and
surcharge upon the respondent. The order of the assessing authority dated 19th
July, 2000 and 22nd February, 2001 respectively were challenged by the
respondent before the Deputy Commissioner (Appeals), Kota and intended that if
the shutters were not installed in the shops, then as per the contract the
shops would not have deemed to be complete. Relying upon the judgments of the
Supreme Court in Gannon Dunkerley & Co. (Madras) Ltd. - State of Madras
[AIR 1958 SC 560] as well as State of Rajasthan in an impartible work contract
as per the terms of that contract, the material has been used in work contract
and there was no contract for 3 manufacturing shutters. Thus on account of
execution of impartible work contract, the property was immovable and tax could
not be levied thereon.
6. The
appeal preferred by the respondent was accepted by the Deputy Commissioner vide
his Order dated 23rd February, 2002. This Order was assailed in appeal by the
Department before the Rajasthan Tax Board which also came to be rejected vide
Order dated 18th October, 2003. The Board accepted the plea of the respondent
that the shutters and doors were manufactured from tax paid raw material in a
work contract, therefore, could not be the goods transferred for the purposes
of levy of tax, holding the same not justifiable to set aside the levy of tax,
penalty, interest or surcharge. Aggrieved from the Order of the Board dated
23rd February, 2002, the appellant filed Tax Revision before the High Court and
inter alia and raised the following questions of law:- A. Whether the Rajasthan
Tax Board Ajmer was justified in dismissing the appeal of the petitioner in the
facts and as mentioned above? B. Whether the iron rolling shutters & doors
were fixed by the assessee on the shops are taxable or not, when no tax was
paid by the assessee on the construction of iron rolling shutters and doors? 4
7. As is
evident from the facts narrated in the Revision Petition and the grounds raised
besides raising the question of law, a factual controversy was also raised
going to the very root of the case, that the rolling shutters & doors fixed
by the respondent on the shops were not manufactured of tax paid material.
Thus, question of law, mixed questions of law and facts were not examined by
the High Court in some detail, but as already noticed, by one line order the
Revision Petition was dismissed. During the course of hearing, we were informed
that arguments were also addressed with reference to judgments of this Court
which were also cited before the Board. However we find no mention thereof in
the impugned Order. It was also contended that similar questions do arise in
number of other cases, thus it was expected of the High Court to deal with the
contentions rather than pass a cryptic order.
8. We do
find that there is substance in the contention raised on behalf of the
petitioner before us. It would have been desirable if the High Court would have
recorded some reasons for rejecting the Revision Petition preferred by the
Department.
9. The
increasing institution of cases in all Courts in India and its resultant burden
upon the Courts has invited attention of all concerned in 5 the justice
administration system. Despite heavy quantum of cases in Courts, in our view,
it would neither be permissible nor possible to state as a principle of law,
that while exercising power of judicial review on administrative action and
more particularly judgment of courts in appeal before the higher Court,
providing of reasons can never be dispensed with.
The
doctrine of audi alteram partem has three basic essentials. Firstly, a person
against whom an order is required to be passed or whose rights are likely to be
affected adversely must be granted an opportunity of being heard. Secondly, the
concerned authority should provide a fair and transparent procedure and lastly,
the authority concerned must apply its mind and dispose of the matter by a
reasoned or speaking order. This has been uniformly applied by courts in India
and abroad.
10. The
Supreme Court in the case of S.N. Mukherjee v. Union of India [(1990) 4 SCC
594], while referring to the practice adopted and insistence placed by the
Courts in United States, emphasized the importance of recording of reasons for
decisions by the administrative authorities and tribunals. It said
"administrative process will best be vindicated by clarity in its exercise".
To enable the Courts to exercise the power of review in consonance with settled
principles, the authorities are advised of the 6 considerations underlining the
action under review. This Court with approval stated:- "the orderly
functioning of the process of review requires that the grounds upon which the
administrative agency acted be clearly disclosed and adequately
sustained."
11. In
exercise of the power of judicial review, the concept of reasoned
orders/actions has been enforced equally by the foreign courts as by the courts
in India. The administrative authority and tribunals are obliged to give
reasons, absence whereof could render the order liable to judicial chastise.
Thus, it will not be far from absolute principle of law that the Courts should record
reasons for its conclusions to enable the appellate or higher Courts to
exercise their jurisdiction appropriately and in accordance with law. It is the
reasoning alone, that can enable a higher or an appellate court to appreciate
the controversy in issue in its correct perspective and to hold whether the
reasoning recorded by the Court whose order is impugned, is sustainable in law
and whether it has adopted the correct legal approach. To sub-serve the purpose
of justice delivery system, therefore, it is essential that the Courts should
record reasons for its conclusions, whether disposing of the case at admission
stage or after regular hearing.
12. At
the cost of repetition, we may notice, that this Court has consistently taken
the view that recording of reasons is an essential feature of dispensation of
justice. A litigant who approaches the Court with any grievance in accordance
with law is entitled to know the reasons for grant or rejection of his prayer.
Reasons are the soul of orders. Non-recording of reasons could lead to dual
infirmities; firstly, it may cause prejudice to the affected party and
secondly, more particularly, hamper the proper administration of justice. These
principles are not only applicable to administrative or executive actions, but
they apply with equal force and, in fact, with a greater degree of precision to
judicial pronouncements. A judgment without reasons causes prejudice to the
person against whom it is pronounced, as that litigant is unable to know the
ground which weighed with the Court in rejecting his claim and also causes
impediments in his taking adequate and appropriate grounds before the higher
Court in the event of challenge to that judgment. Now, we may refer to certain
judgments of this Court as well as of the High Courts which have taken this
view.
13. The
principle of natural justice has twin ingredients; firstly, the person who is
likely to be adversely affected by the action of the 8 authorities should be
given notice to show cause thereof and granted an opportunity of hearing and
secondly, the orders so passed by the authorities should give reason for
arriving at any conclusion showing proper application of mind. Violation of
either of them could in the given facts and circumstances of the case, vitiate
the order itself. Such rule being applicable to the administrative authorities
certainly requires that the judgment of the Court should meet with this
requirement with higher degree of satisfaction. The order of an administrative
authority may not provide reasons like a judgment but the order must be
supported by the reasons of rationality. The distinction between passing of an
order by an administrative or quasi-judicial authority has practically
extinguished and both are required to pass reasoned orders. In the case of
Siemens Engineering and Manufacturing Co. of India Ltd. v. Union of India and
Anr. [AIR 1976 SC 1785], the Supreme Court held as under:- "6. ......If
courts of law are to be replaced by administrative authorities and tribunals,
as indeed, in some kinds of cases, with the proliferation of Administrative
Law, they may have to be so replaced, it is essential that administrative
authorities and tribunals should accord fair and proper hearing to the persons
sought to be affected by their orders and give sufficiently clear and explicit
reasons in support of the orders made by them. Then alone administrative
authorities and tribunals exercising quasi-judicial function will be able to
justify their existence and carry 9 credibility with the people by inspiring
confidence in the adjudicatory process. The rule requiring reasons to be given
in support of an order is, like the principle of audi alteram partem, a basic
principle of natural justice which must inform every quasi-judicial process and
this rule must be observed in its proper spirit and mere pretence of compliance
with it would not satisfy the requirement of law. ..."
14. In
the case of Mc Dermott International Inc. v. Burn Standard Co.
Ltd. and
Ors. (2006) SLT 345, the Supreme Court clarified the rationality behind
providing of reasons and stated the principle as follows:- ". . . Reason
is a ground or motive for a belief or a course of action, a statement in
justification or explanation of belief or action. It is in this sense that the
award must state reasons for the amount awarded.
The
rationale of the requirement of reasons is that reasons assure that the
arbitrator has not acted capriciously. Reasons reveal the grounds on which the
Arbitrator reached the conclusion which adversely affects the interests of a
party. The contractual stipulation of reasons means, as held in Poyser and
Mills' Arbitration in Re, `proper adequate reasons'.
Such
reasons shall not only be intelligible but shall be a reason connected with the
case which the Court can see is proper. Contradictory reasons are equal to lack
of reasons. . . ."
15. In
Gurdial Singh Fijji v. State of Punjab [(1979) 2 SCC 368], while dealing with
the matter of selection of candidates who could be under review, if not found
suitable otherwise, the Court explained the reasons 10 being a link between the
materials on which certain conclusions are based and the actual conclusions and
held, that where providing reasons for proposed supersession were essential,
then it could not be held to be a valid reason that the concerned officer's
record was not such as to justify his selection was not contemplated and thus
was not legal. In this context, the Court held - "... "Reasons"
are the links between the materials on which certain conclusions are based and
the actual conclusions. The Court accordingly held that the mandatory provisions
of Regulation 5(5) were not complied with by the Selection Committee. That an
officer was "not found suitable" is the conclusion and not a reason
in support of the decision to supersede him. True, that it is not expected that
the Selection Committee should give anything approaching the judgment of a
Court, but it must at least state, as briefly as it may, why it came to the
conclusion that the officer concerned was found to be not suitable for
inclusion in the Select List."
16. This
principle has been extended to administrative actions on the premise that it
applies with greater rigor to the judgments of the Courts.
In State
of Maharashtra v. Vithal Rao Pritirao Chawan [(1981) 4 SCC 129], while
remanding the matter to the High Court for examination of certain issues
raised, this Court observed:
". .
. It would be for the benefit of this Court that a speaking judgment is
given".
17. In
the cases where the Courts have not recorded reasons in the judgment, legality,
propriety and correctness of the orders by the Court of competent jurisdiction
are challenged in absence of proper discussion.
The
requirement of recording reasons is applicable with greater rigor to the
judicial proceedings. The orders of the Court must reflect what weighed with the
Court in granting or declining the relief claimed by the applicant.
In this
regard we may refer to certain judgments of this Court.
18. A
Bench of Bombay High Court in the case of M/s. Pipe Arts India Pvt. Ltd. V.
Gangadhar Nathuji Golamare [2008 (6) Maharashtra Law Journal 280], wherein the
Bench was concerned with an appeal against an order, where prayer for an
interim relief was rejected without stating any reasons in a writ petition
challenging the order of the Labour Court noticed, that legality, propriety and
correctness of the order was challenged on the ground that no reason was
recorded by the learned Single Judge while rejecting the prayer and this has
seriously prejudiced the interest of justice. After a detailed discussion on
the subject, the Court held:- "The Supreme Court and different High Courts
have taken the view that it is always desirable to record 12 reasons in support
of the Government actions whether administrative or quasi judicial. Even if the
statutory rules do not impose an obligation upon the authorities still it is
expected of the authorities concerned to act fairly and in consonance with
basic rule of law. These concepts would require that any order, particularly,
the order which can be subject matter of judicial review, is reasoned one. Even
in the case of Chabungbambohal Singh v. Union of India and Ors. 1995 (Suppl) 2
SCC 83, the Court held as under:
"His
assessment was, however, recorded as "very good" whereas qua the
appellant it had been stated unfit. As the appellant was being superseded by
one of his juniors, we do not think if it was enough on the part of the
Selection Committee to have merely stated unfit, and then to recommend the name
of one of his juniors. No reason for unfitness, is reflected in the
proceedings, as against what earlier Selection Committees had done to which
reference has already been made."
In the
case of Jawahar Lal Singh v. Naresh Singh and Ors. (1987) 2 SCC 222, accepting
the plea that absence of examination of reasons by the High Court on the basis
of which the trial Court discarded prosecution evidence and recorded the
finding of an acquittal in favour of all the accused was not appropriate, the
Supreme Court held that the order should record reasons. Recording of proper
reasons would be essential, so that the Appellate Court would have advantage of
considering the considered opinion of the High Court on the reasons which had
weighed with the trial Court.
In the
case of State of Punjab and Ors. v. Surinder Kumar and Ors. [(1992) 1 SCC 489],
while noticing the 13 jurisdictional distinction between Article 142 and
Article 226 of the Constitution of India, the Supreme Court stated that powers
of the Supreme Court under Article 142 are much wider and the Supreme Court
would pass orders to do complete justice. The Supreme Court further reiterated
the principle with approval that the High Court has the jurisdiction to dismiss
petitions or criminal revisions in limini or grant leave asked for by the
petitioner but for adequate reasons which should be recorded in the order. The
High Court may not pass cryptic order in relation to regularisation of service
of the respondents in view of certain directions passed by the Supreme Court
under Article 142 of the Constitution of India. Absence of reasoning did not
find favour with the Supreme Court. The Supreme Court also stated the principle
that powers of the High Court were circumscribed by limitations discussed and
declared by judicial decision and it cannot transgress the limits on the basis
of whims or subjective opinion varying from Judge to Judge.
In the
case of Hindustan Times Ltd. v. Union of India and Ors. [(1998) 2 SCC 242], the
Supreme Court while dealing with the cases under the Labour Laws and Employees'
Provident Funds and Miscellaneous Provisions Act, 1952 observed that even when
the petition under Article 226 is dismissed in limini, it is expected of the
High Court to pass a speaking order, may be briefly.
Consistent
with the view expressed by the Supreme Court in the afore-referred cases, in
the case of State of U.P. v. Battan and Ors. [(2001) 10 SCC 607], the Supreme
Court held as under:
14
"The High Court has not given any reasons for refusing to grant leave to
file appeal against acquittal. The manner in which appeal against acquittal has
been dealt with by the High Court leaves much to be desired.
Reasons
introduce clarity in an order. On plainest consideration of justice, the High
Court ought to have set forth its reasons, howsoever brief, in its order. The
absence of reasons has rendered the High Court order not sustainable."
Similar
view was also taken by the Supreme Court in the case of Raj Kishore Jha v.
State of Bihar and Ors.
JT 2003
(Supp.2) SC 354.
In a very
recent judgment, the Supreme Court in the case of State of Orissa v. Dhaniram
Luhar (2004) 5 SCC 568 while dealing with the criminal appeal, insisted that
the reasons in support of the decision was a cardinal principle and the High
Court should record its reasons while disposing of the matter. The Court held
as under:
"8.
Even in respect of administrative orders Lord Denning, M.R. In Breen v.
Amalgamated Engg.
Union
observed:
"The
giving of reasons is one of the fundamentals of good administration." In
Alexander Machinery (Dudley) Ltd. v. Crabtree it was observed: "Failure to
give reasons amounts to denial of justice." "Reasons are live links
between the mind of the decision-taker to the controversy in question and the
decision or conclusion arrived at." Reasons substitute 15 subjectivity by
objectivity. The emphasis on recording reasons is that if the decision reveals
the "inscrutable face of the sphinx", it can, by its silence, render
it virtually impossible for the Courts to perform their appellate function or
exercise the power of judicial review in adjudging the validity of the
decision. Right to reason is an indispensable part of a sound judicial system;
reasons at least sufficient to indicate an application of mind to the matter
before Court. Another rationale is that the affected party can know why the
decision has gone against him. One of the salutary requirements of natural
justice is spelling out reasons for the order made; in other words, a
speaking-out. The "inscrutable face of the sphinx" is ordinarily
incongruous with a judicial or quasi-judicial performance."
Following
this very view, the Supreme Court in another very recent judgment delivered on
22nd February, 2008, in the case of State of Rajasthan v. Rajendra Prasad Jain
Criminal Appeal No. 360/2008 (Arising out of SLP (Crl.) No. 904/2007) stated
that "reason is the heartbeat of every conclusion, and without the same it
becomes lifeless."
Providing
of reasons in orders is of essence in judicial proceedings. Every litigant who
approaches the Court with a prayer is entitled to know the reasons for
acceptance or rejection of such request. Either of the parties to the lis has a
right of appeal and, therefore, it is essential for them to know the considered
opinion of the Court to make the remedy of appeal meaningful. It is the
reasoning which ultimately culminates into final decision which may be subject
to examination of the appellate or other higher Courts. It is not only
desirable but, in view of the consistent position of law, 16 mandatory for the
Court to pass orders while recording reasons in support thereof, however, brief
they may be.
Brevity
in reasoning cannot be understood in legal parlance as absence of reasons.
While no reasoning in support of judicial orders is impermissible, the brief
reasoning would suffice to meet the ends of justice at least at the interlocutory
stages and would render the remedy of appeal purposeful and meaningful. It is a
settled canon of legal jurisprudence that the Courts are vested with
discretionary powers but such powers are to be exercised judiciously, equitably
and in consonance with the settled principles of law. Whether or not, such
judicial discretion has been exercised in accordance with the accepted norms,
can only be reflected by the reasons recorded in the order impugned before the
higher Court. Often it is said that absence of reasoning may ipso facto
indicate whimsical exercise of judicial discretion. Patricia Wald, Chief
Justice of the D.C. Circuit Court of Appeals in the Article, Blackrobed
Bureaucracy Or Collegiality Under Challenge, (42 MD.L. REV. 766, 782 (1983),
observed as under:- "My own guiding principle is that virtually every
appellate decision requires some statement of reasons.
The
discipline of writing even a few sentences or paragraphs explaining the basis
for the judgment insures a level of thought and scrutiny by the Court that a
bare signal of affirmance, dismissal, or reversal does not."
The Court
cannot lose sight of the fact that a losing litigant has a cause to plead and a
right to challenge the order if it is adverse to him. Opinion of the Court
alone can explain the cause which led to passing of the final order. Whether an
argument was rejected validly or otherwise, reasoning of the order alone can
show. To evaluate the submissions is obligation of the Court and to know the
reasons for rejection of its contention is a legitimate expectation on the part
of the litigant.
17
Another facet of providing reasoning is to give it a value of precedent which
can help in reduction of frivolous litigation. Paul D. Carrington, Daniel J
Meador and Maurice Rosenburg, Justice on Appeal 10 (West 1976), observed as
under:- "When reasons are announced and can be weighed, the public can
have assurance that the correcting process is working. Announcing reasons can
also provide public understanding of how the numerous decisions of the system
are integrated. In a busy Court, the reasons are an essential demonstration
that the Court did in fact fix its mind on the case at hand. An unreasoned
decision has very little claim to acceptance by the defeated party, and is difficult
or impossible to accept as an act reflecting systematic application of legal
principles. Moreover, the necessity of stating reasons not infrequently changes
the results by forcing the judges to come to grips with nettlesome facts or
issues which their normal instincts would otherwise cause them to avoid."
The
reasoning in the opinion of the Court, thus, can effectively be analysed or
scrutinized by the Appellate Court. The reasons indicated by the Court could be
accepted by the Appellate Court without presuming what weighed with the Court
while coming to the impugned decision. The cause of expeditious and effective
disposal would be furthered by such an approach. A right of appeal could be
created by a special statute or under the provisions of the Code governing the
procedure. In either of them, absence of reasoning may have the effect of
negating the purpose or right of appeal and, thus, may not achieve the ends of
justice.
It will
be useful to refer words of Justice Roslyn Atkinson, Supreme Court of
Queensland, at AIJA Conference at Brisbane on September 13, 2002 in 18 relation
to Judgment Writing. Describing that some judgment could be complex, in
distinction to routine judgments, where one requires deeper thoughts, and the
other could be disposed of easily but in either cases, reasons they must have.
While speaking about purpose of the judgment, he said, "The first matter
to consider is the purpose of the judgment. To my mind there are four purposes
for any judgment that is written: - (1) to clarify your own thoughts;
(2) to
explain your decision to the parties;
(3) to
communicate the reasons for the decision to the public; and (4) to provide
reasons for an appeal Court to consider."
Clarity
of thought leads to proper reasoning and proper reasoning is the foundation of
a just and fair decision.
In Alexander
Machinery (Dudley) Ltd. v. Crabtree 1974 ICR 120, the Court went to the extent
of observing that "Failure to give reasons amounts to denial of
justice". Reasons are really linchpin to administration of justice. They
are link between the mind of the decision taker and the controversy in
question. To justify our conclusion, reasons are essential. Absence of
reasoning would render the judicial order liable to interference by the higher
Court.
Reasons
are the soul of the decision and its absence would render the order open to
judicial chastism. The consistent judicial opinion is that every order
determining rights of the parties in a Court of law ought not to be recorded
without supportive reasons.
Issuing
reasoned order is not only beneficial to the higher Courts but is even of great
utility for providing public understanding of law and imposing self- discipline
in the Judge as their discretion is controlled by well established norms. The
contention raised before us that absence of reasoning in the impugned order
would render the order liable to be set aside, 19 particularly, in face of the
fact that the learned Judge found merit in the writ petition and issued rule,
therefore, needs to be accepted. We have already noticed that orders even at
interlocutory stages may not be as detailed as judgments but should be
supported by reason howsoever briefly stated. Absence of reasoning is
impermissible in judicial pronouncement. It cannot be disputed that the order
in question substantially affect the rights of the parties. There is an award
in favour of the workmen and the management had prayed for stay of the
operation of the award.
The Court
has to consider such a plea keeping in view the provisions of Section 17-B of
the Industrial Disputes Act, where such a prayer is neither impermissible nor
improper. The contentions raised by the parties in support of their respective
claims are expected to be dealt with by reasoned orders. We are not
intentionally expressing any opinion on the merits of the contentions alleged
to have been raised by respective parties before the learned single Judge.
Suffice
it to note that the impugned order is silent in this regard. According to the
learned Counsel appearing for the appellant, various contentions were raised in
support of the reliefs claimed but all apparently, have found no favour with
the learned Judge and that too for no reasons, as is demonstrated from the
order impugned in the present appeals."
19. The
principles stated by this Court, as noticed supra, have been reiterated with
approval by a Bench of this Court in a very recent judgment, in State of
Uttaranchal v. Sunil Kumar Singh Negi [(2008) 11 SCC 205], where the Court
noticed the order of the High Court which is reproduced hereunder:- 20 "I
have perused the order dated 27.5.2005 passed by Respondent 2 and I do not find
any illegality in the order so as to interfere under Article 226/227 of the
Constitution of India. The writ petition lacks merit and is liable to be
dismissed."
and the
Court concluded as under:- "In view of the specific stand taken by the
Department in the affidavit which we have referred to above, the cryptic order
passed by the High Court cannot be sustained. The absence of reasons has
rendered the High Court order not sustainable. Similar view was expressed in
State of U.P. v. Battan1. About two decades back in State of Maharashtra v.
Vithal Rao Pritirao Chawan2 the desirability of a speaking order was
highlighted. The requirement of indicating reasons has been judicially
recognised as imperative. The view was reiterated in Jawahar Lal Singh v.
Naresh Singh3.
In Raj
Kishore Jha v. State of Bihar4 this Court has held that reason is the heartbeat
of every conclusion and without the same, it becomes lifeless.
"8.
... Right to reason is an indispensable part of a sound judicial system;
reasons at least sufficient to indicate an application of mind to the matter
before court. Another rationale is that the affected party can know why the
decision has gone against him. One of the salutary requirements of natural
justice is spelling out reasons for the order made;...."*
____________________________________________________________
1. (2001)
10 SCC 607
2. (1981)
4 SCC 129
3. (1987)
2 SCC 222
4. (2003)
11 SCC 519 * As observed in State of Orissa vs. Dhaniram Lunar (2004) 5 SCC 568
21 In the light of the factual details particularly with reference to the stand
taken by the Horticulture Department at length in the writ petition and in the
light of the principles enunciated by this Court, namely, right to reason is an
indispensable part of sound judicial system and reflect the application of mind
on the part of the court, we are satisfied that the impugned order of the High
Court cannot be sustained."
19.
Besides referring to the above well-established principles, it will also be
useful to refer to some text on the subject. H.W.R. Wade in the book
"Administrative Law, 7th Edition, stated that the flavour of said reasons
is violative of a statutory duty to waive reasons which are normally mandatory.
Supporting a view that reasons for decision are essential, it was stated:-
".....A right to reasons is, therefore, an indispensable part of a sound
system of judicial review. Natural justice may provide the best rubric for it,
since the giving of reasons is required by the ordinary man's sense of
justice...
.....Reasoned
decisions are not only vital for the purposes of showing the citizen that he is
receiving justice: they are also a valuable discipline for the tribunal
itself....."
20. We
are not venturing to comment upon the correctness or otherwise of the
contentions of law raised before the High Court in the present petition, but it
was certainly expected of the High Court to 22 record some kind of reasons for
rejecting the revision petition filed by the Department at the very threshold.
A litigant has a legitimate expectation of knowing reasons for rejection of his
claim/prayer. It is then alone, that a party would be in a position to
challenge the order on appropriate grounds. Besides, this would be for the benefit
of the higher or the appellate court. As arguments bring things hidden and
obscure to the light of reasons, reasoned judgment where the law and factual
matrix of the case is discussed, provides lucidity and foundation for
conclusions or exercise of judicial discretion by the courts. Reason is the
very life of law. When the reason of a law once ceases, the law itself
generally ceases (Wharton's Law Lexicon). Such is the significance of reasoning
in any rule of law. Giving reasons furthers the cause of justice as well as
avoids uncertainty. As a matter of fact it helps in the observance of law of
precedent. Absence of reasons on the contrary essentially introduces an element
of uncertainty, dis- satisfaction and give entirely different dimensions to the
questions of law raised before the higher/appellate courts. In our view, the
court should provide its own grounds and reasons for rejecting claim/prayer of
a party whether at the very threshold i.e. at admission stage or after regular
hearing, howsoever precise they may be.
21. We
would reiterate the principle that when reasons are announced and can be
weighed, the public can have assurance that process of correction is in place
and working. It is the requirement of law that correction process of judgments
should not only appear to be implemented but also seem to have been properly
implemented. Reasons for an order would ensure and enhance public confidence
and would provide due satisfaction to the consumer of justice under our justice
dispensation system. It may not be very correct in law to say, that there is a
qualified duty imposed upon the Courts to record reasons. Our procedural law
and the established practice, in fact, imposes unqualified obligation upon the
Courts to record reasons. There is hardly any statutory provision under the
Income Tax Act or under the Constitution itself requiring recording of reasons
in the judgments but it is no more res integra and stands unequivocally settled
by different judgments of this Court holding that, the courts and tribunals are
required to pass reasoned judgments/orders. In fact, Order XIV Rule 2 read with
Order XX Rule 1 of the Code of Civil Procedure requires that, the Court should
record findings on each issue and such findings which obviously should be reasoned
would form part of the judgment, which in turn would be the basis for writing a
decree of the Court.
22. By
practice adopted in all Courts and by virtue of judge made law, the concept of
reasoned judgment has become an indispensable part of basic rule of law and, in
fact, is a mandatory requirement of the procedural law. Clarity of thoughts
leads to clarity of vision and proper reasoning is the foundation of a just and
fair decision. In the case of Alexander Machinery (Dudley) Ltd. (supra), there
are apt observations in this regard to say "failure to give reasons
amounts to denial of justice". Reasons are the real live links to the
administration of justice. With respect we will contribute to this view. There
is a rationale, logic and purpose behind a reasoned judgment. A reasoned
judgment is primarily written to clarify own thoughts; communicate the reasons
for the decision to the concerned and to provide and ensure that such reasons
can be appropriately considered by the appellate/higher Court. Absence of
reasons thus would lead to frustrate the very object stated hereinabove. The
order in the present case is as cryptic as it was in the case of Sunil Kumar
Singh Negi (supra). Being a cryptic order and for the reasons recorded in that
case by this Court which we also adopt, the impugned order in the present
appeal should meet the same fate.
23. In
light of the above principles, now we will revert back to the facts of the
present appeal. It cannot be doubted that challenge was raised to the order of
the Board before the High Court on alleged questions of law as well as mixed
question of law and fact. The contention that the respondent had not
manufactured the shutters from the tax paid raw material and also that the
contract in question was not impartible but a consequential item for completion
of the contract required examination by the High Court. In light of the
judgments referred to and relied upon by the parties including the judgment of
this Court, it is true that requirement of stating reasons for judicial orders
necessarily does not mean a very detailed or lengthy order, but there should be
some reasoning recorded by the Court for declining or granting relief to the
petitioner. The purpose, as already noticed, is to make the litigant aware of
the reasons for which the relief is declined as well as to help the higher
Court in assessing the correctness of the view taken by the High Court while
disposing off a matter. May be, while dealing with the matter at the admission
stage even recording of short listening dealing with the merit of the
contentions raised before the High Court may suffice, in contrast, a detailed
judgment while matter is being disposed off after final hearing, but in both
events, in our view, it is 26 imperative for the High Court to record its own
reasoning however short it might be.
24. We
are unable to find any infirmity in the arguments advanced on behalf of the
Department, that no reasons have been recorded for rejecting the contentions
raised, this legal infirmity has, in fact, prejudicially affected the case of
the appellant before us. The judgment of the High Court must speak for itself
to enable the higher Court to do complete and effective justice between the
parties.
25. For
the reasons afore-recorded we set aside the order dated 29th February, 2008 and
remit the case to the High Court with a request to hear the case de novo and
pass appropriate order in accordance with law. To that extent the appeal is
allowed.
26. There
shall be no order as to costs.
........................................J. [ S.H. KAPADIA ]
........................................J.
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