Himachal Pradesh High Court
Malkiat Singh vs State Of Himachal Pradesh And Another on 23 August, 2017
Author: Tarlok Singh Chauhan
Bench: Tarlok Singh Chauhan
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Arb. Case No. 54 of 2016.
.
Decided on: 21.8.2017.
Malkiat Singh ...Petitioner
Versus
State of Himachal Pradesh and another ...Respondents.
Coram
The Hon'ble Mr. Justice Tarlok Singh Chauhan, Judge.
Whether approved for reporting ?1 No
For the Petitioner : Mr. J.S. Bhogal, Senior Advocate,
with Mr.Pramod Negi, Advocate.
For the respondents : Ms. Meenakshi Sharma, Addl. A.G.
with Mr. Neeraj K. Sharma, Dy.
A.G.
Tarlok Singh Chauhan, Judge (Oral)
Looking to the nature of the order I propose to pass, it is not at all necessary to delve into the facts in detail, suffice it to state that on a dispute having been arisen between the parties, the Superintending Engineer, Irrigation & Public Health Circle, Dharamshala, was appointed as Arbitrator by the Chief Engineer (DZ) vide office order dated 26.02.2014. The Arbitrator entered the reference on 13.3.2014 and Arbitrator appears to have been transferred to IPH Circle, Dharamshala and thereafter fresh appointment was re-made vide letter dated 18.11.2014.
1Whether reporters of Local Papers may be allowed to see the Judgment ? Yes ::: Downloaded on - 12/12/2008 06:58:16 :::HCHP 2
2. The petitioner filed his claim vide his letter dated 11.7.2014 and the Executive Engineer submitted a counter-
.
claim vide his letter dated 11.9.2014. The description of the claims and counter-claims is as under:
Sr. Description of Amount Amount Remarks No. claim. demanded awarded(Lac) (Lac.)
1. Claim No.1 139.67 0 As per description Reg. Withholding/ below.
impounding legitimate committed payments.
2. Claim No.2 on 37.41 0 Agreement which account of give authority to escalation charges arbitrate has not admissible under 10CC Clause.
clause 10CC.
3. Claim No.3 on 20.57 0 As per description account of below.
compensation of
prolongation of
contract.
4. Claim No.4 0 0 As per actual.
Interest @ 18% on
sum due.
5. Claim No.5 3.40 0 Claim is not
arbitration justified.
expenses.
Description of Claim No.1.
Claimant demanded the claim as under:
Sr. Description Qty. Agree- Rate Diff.(Rs) Amount No. of item as per executed ment demanded. payable schedule. beyond rate. (Rs.) specified specification of BoQ.
1. RCC 507 cum 3350 4200 850 430950 1:1. 5:3 (4b)
2. 4(c ) 673 cum 3400 4250 850 572050
3. 4(d) 781 cum 3450 4650 1200 937200
4. 5(b) 3239(sqm) 250 1400 1150 3714500
5. 5 (c ) 5388 (sqm) 150 1300 1150 6196200
6. 5(d) 2497 (sqm) 300 900 600 1498200 ::: Downloaded on - 12/12/2008 06:58:16 :::HCHP 3
7. Steel item 6. 176490 (kg) 55.50 59 3.50 617715 Total amt. 13966815 .
3. The learned Arbitrator answered Claims No. 1 and 3 and counter-claim of the department as under:
"During the course of negotiation in the office of CE (D/Z) dated 26.11.2010 contractor undertake to submit the working programme/plan for execution of work within 7 days and further undertake to complete the work within one year.
Contractor further reduced the rates for which he is claiming the enhanced rates. It is proved that contractor was aware of site condition and rates offered by the contractor was for complete works including all leads and lifts. Clause-12A says that if executed quantity exceed the deviation limit, the contractor shall within 7 days from the receipt of order claim revision of rates supported by proper analysis in respect of such items for quantity in excess of deviation limit. As per terms and conditions of DNIT condition No.2 (quantities can be increased or decreased as per site conditions). The work was awarded to the contractor on 29/11/2010 and the revision of rates were sought by the contractor on dated 20/07/2011. (Annexure C-3 exhibited by the claimant contractor). As per clause 12-A contractor should apply for the revision of rates within 7 days from receipt of order. In this case the contractor has applied after more than 6 months. The claim of the contractor is not justified as per agreement which gives authority to arbitrator to decide the case.::: Downloaded on - 12/12/2008 06:58:16 :::HCHP 4
Description of claim No.3:
As per agreement, it is clear that site of work is .
available partly. This situation was clear both to the claimant as well as respondent. The claimant has agreed this condition prior to the execution of work while signing to the term and condition of the agreement. Site was clear from RD 39910 to 40480 and even the main work on this portion was not completed upto July 2012. The respondent has also accorded time extension to the contractor vide letter No. 2023-25 dated 28/8/2012. As per clause 5 which is extension of time, says that if the contractor shall desire an extension of time for completion of work on the ground of his having been unavoidably hindered in its execution or on any other ground, he shall apply in writing to divisional officer within 30 days of date of hindrance on the account of which he desires such extension. The claimant has not sought extension of time and Executive Engineer has allowed provisional extension. Hence the compensation demanded by the claimant is unjustified as per agreement. Counter claim of department: NIL.
4. It would be seen that for some strange reasons, the other claims i.e. Claims No. 2, 4 and 5 have not at all been touched much less answered. Even the claims so answered are bereft of any reasons, more particularly, in teeth of the detailed written arguments filed by the petitioner in support of his claim.
::: Downloaded on - 12/12/2008 06:58:16 :::HCHP 55. 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.
6. A judgment without reasons causes prejudice to the person against whom it is pronounced, as the litigant is unable to know the ground which weighed with the Court in rejecting his claim or accepting the claim of the opposite party. It also causes impediments in his taking adequate and appropriate grounds before the higher Court in the event of challenge to that judgment/order.
7. The Hon'ble Supreme Court in Kanti Associates Private Limited and another Vs. Masood Ahmed Khan and others (2010) 9 SCC 496, elaborately discussed the necessity of recording reasons in the following manner:
12. The necessity of giving reason by a body or authority in support of its decision came up for consideration before this Court in several cases. Initially this Court recognized a sort of demarcation between administrative orders and ::: Downloaded on - 12/12/2008 06:58:16 :::HCHP 6 quasi-judicial orders but with the passage of time the distinction between the two got blurred and thinned out and virtually reached a vanishing point in the judgment of this .
Court in A.K. Kraipak and others vs. Union of India and others AIR 1970 SC 150.
13. In Keshav Mills Co. Ltd. and another vs. Union of India and others AIR 1973 SC 389, this Court approvingly referred to the opinion of Lord Denning in R. vs. Gaming Board for Great Britain ex p Benaim (1970) 2 WLR 1009 and quoted him as saying "that heresy was scotched in Ridge v. Boldwin, 1964 AC 40".
14. The expression `speaking order' was first coined by Lord Chancellor Earl Cairns in a rather strange context. The Lord Chancellor, while explaining the ambit of Writ of Certiorari, referred to orders with errors on the face of the record and pointed out that an order with errors on its face, is a speaking order. (See pp.1878-97 Vol. 4 Appeal Cases 30 at 40 of the report).
15. This Court always opined that the face of an order passed by a quasi-judicial authority or even an administrative authority affecting the rights of parties, must speak. It must not be like the "inscrutable face of a Sphinx".
16. In Harinagar Sugar Mills Ltd. vs. Shyam Sunder Jhunjhunwala and others, AIR 1961 SC 1669, the question of recording reasons came up for consideration in the context of a refusal by Harinagar to transfer, without giving reasons, shares held by Shyam Sunder. Challenging such refusal, the transferee moved the High Court contending, inter alia, that the refusal is mala fide, arbitrary and capricious. The High Court rejected such pleas and the transferee was asked to file a suit. The transferee filed an appeal to the Central Government under Section 111 (3) of Indian Companies Act, 1956 which was dismissed. Thereafter, the son of the original transferee filed another application for transfer of his shares which was similarly refused by the Company. On appeal, the Central Government quashed the resolution passed by the Company and directed the Company to register the transfer. However, in passing the said order, ::: Downloaded on - 12/12/2008 06:58:16 :::HCHP 7 Government did not give any reason. The company challenged the said decision before this Court.
17. The other question which arose in Harinagar was .
whether the Central Government, in passing the appellate order acted as a tribunal and is amenable to Article 136 jurisdiction of this Court.
18. Even though in Harinagar the decision was administrative, this Court insisted on the requirement of recording reason and further held that in exercising appellate powers, the Central Government acted as a tribunal in exercising judicial powers of the State and such exercise is subject to Article 136 jurisdiction of this Court. Such powers, this Court held, cannot be effectively exercised if reasons are not given by the Central Government in support of the order ( AIR pp 1678-79, para 23).
19. Again in Bhagat Raja vs. Union of India and others, AIR 1967 SC 1606, the Constitution Bench of this Court examined the question whether the Central Government was bound to pass a speaking order while dismissing a revision and confirming the order of the State Government in the context of Mines and Minerals (Regulation and Development) Act, 1957, and having regard to the provision of Rule 55 of Mineral and Concessions Rules. The Constitution Bench held that in exercising its power of revision under the aforesaid Rule the Central Government acts in a quasi-judicial capacity (AIR para 8 p. 1610). Where 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 any reason, this Court, exercising its jurisdiction under Article 136, may find it difficult to ascertain which are the grounds on which Central Government upheld the order of the State Government (See AIR para 9 page 1610). Therefore, this Court insisted on reasons being given for the order.
20. In Mahabir Prasad Santosh Kumar vs. State of U.P AIR 1970 SC 1302, while dealing with U.P. Sugar Dealers License Order under which the license was cancelled, this Court held that such an order of cancellation is quasi-judicial ::: Downloaded on - 12/12/2008 06:58:16 :::HCHP 8 and must be a speaking one. This Court further held that merely giving an opportunity of hearing is not enough and further pointed out where the order is subject to appeal, the .
necessity to record reason is even greater. The learned Judges held that the recording of reasons in support of a decision on a disputed claim ensures that the decision is not a result of caprice, whim or fancy but was arrived at after considering the relevant law and that the decision was just. (See AIR para 7 page 1304).
21. In Travancore Rayons Ltd. vs. The Union of India, AIR 1971 SC 862, the Court, dealing with the revisional jurisdiction of the Central Government under the then Section 36 of the Central Excise and Salt Act, 1944, held that the Central Government was actually exercising judicial power of the State and in exercising judicial power reasons in support of the order must be disclosed on two grounds. The first is that the person aggrieved gets an opportunity to demonstrate that the reasons are erroneous and secondly, the obligation to record reasons operates as a deterrent against possible arbitrary action by the executive authority invested with the judicial power (See AIR para 11 page 865 -866).
22. In Woolcombers of India Ltd. vs. Woolcombers Workers Union, AIR 1973 SC 2758, this Court while considering an award under Section 11 of Industrial Disputes Act insisted on the need of giving reasons in support of conclusions in the Award. The Court held that the very requirement of giving reason is to prevent unfairness or arbitrariness in reaching conclusions. The second principle is based on the jurisprudential doctrine that justice should not only be done, it should also appear to be process and opined that such reasons should be communicated unless there are specific justification for not doing so (see SCC Para 10, page 284-85).
23. In Union of India vs. Mohan Lal Capoor, AIR 1974 SC 87, this Court while dealing with the question of selection under Indian Administrative Service/Indian Police Service (Appointment by Promotion) Regulations held that the expression "reasons for the proposed supersession" should ::: Downloaded on - 12/12/2008 06:58:16 :::HCHP 9 not be mere rubber stamp reasons. Such reasons must disclose how mind was applied to the subject matter for a decision regardless of the fact whether such a decision is .
purely administrative or quasi-judicial. This Court held that the reasons in such context would mean the link between materials which are considered and the conclusions which are reached. Reasons must reveal a rational nexus between the two (See AIR paras 27-28 page 97-98).
24. In Siemens Engineering and Manufacturing Co. of India Ltd. vs. The Union of India , AIR 1976 SC 1785, this Court held that it is far too well settled that an authority in making an order in exercise of its quasi-judicial function, must record reasons in support of the order it makes. The learned Judges emphatically said that every quasi-judicial order must be supported by reasons. The rule requiring reasons in support of a quasi-judicial order is, this Court held, as basic as following the principles of natural justice. And the rule must be observed in its proper spirit. A mere pretence of compliance would not satisfy the requirement of law (See AIR para 6 page 1789).
25. In Maneka Gandhi vs. Union of India., AIR 1978 SC 597, which is a decision of great jurisprudence significance in our Constitutional law, Chief Justice Beg, in a concurring but different opinion held hat an order impounding a passport is a quasi-judicial decision ( AIR Para 34, page
612). The learned Chief Justice also held when an administrative action involving any deprivation of or restriction on fundamental rights is taken, the authorities must see that justice is not only done but manifestly appears to be done as well. This principle would obviously demand disclosure of reasons for the decision.
26. Y.V. Chandrachud, J. (as His Lordship then was) in a concurring but a separate opinion also held that refusal to disclose reasons for impounding a passport is an exercise of an exceptional nature and is to be done very sparingly and only when it is fully justified by the exigencies of an uncommon situation. The learned Judge further held that law cannot permit any exercise of power by an executive to ::: Downloaded on - 12/12/2008 06:58:16 :::HCHP 10 keep the reasons undisclosed if the only motive for doing so is to keep the reasons away from judicial scrutiny. (See AIR para 39 page 613).
.
27. In Rama Varma Bharathan Thampuran vs. State of Kerala AIR1979 SC 1918, V.R. Krishna Iyer, J. speaking for a three-Judge Bench held that the functioning of the Board was quasi-judicial in character. One of the attributes of quasi-judicial functioning is the recording of reasons in support of decisions taken and the other requirement is following the principles of natural justice. Learned Judge held that natural justice requires reasons to be written for the conclusions made ( See AIR para 14 page 1922).
28. r In Gurdial Singh Fijji vs. State of Punjab,(1979) 2 SCC 368, this Court, dealing with a service matter, relying on the ratio in Capoor (supra), held that "rubber-stamp reason" is not enough and virtually quoted the observation in Capoor (supra) to the extent that: (Capoor Case, SCC p.854, para 28) "28....Reasons are the links between the materials on which certain conclusions are based and the actual conclusions" (See AIR para 18 page 377).
29. In a Constitution Bench decision of this Court in Shri Swamiji of Shri Admar Mutt etc. etc. vs. The Commissioner, Hindu Religious and Charitable Endowments Dept. and Ors., AIR 1980 SC 1, while giving the majority judgment Y.V. Chandrachud, CJ, referred to(SCC p.658, 29) Broom's Legal Maxims (1939 Edition, page 97) where the principle in Latin runs as follows:
"Cessante Ratione Legis Cessat Ipsa Lex"
30. The English version of the said principle given by the Chief Justice is that:(H.H. Shri Swamiji case, SCC p.658, para 29) "29...... 'reason is the soul of the law, and when the reason of any particular law ceases, so does the law itself'." (See AIR para 29 page 11)
31. In Bombay Oil Industries Pvt. Ltd. vs. Union of India , AIR 1984 SC 160, this Court held that while disposing of ::: Downloaded on - 12/12/2008 06:58:16 :::HCHP 11 applications under Monopolies and Restrictive Trade Practices Act the duty of the Government is to give reasons for its order. This court made it very clear that the faith of .
the people in administrative tribunals can be sustained only if the tribunals act fairly and dispose of the matters before them by well considered orders. In saying so, this Court relied on its previous decisions in Capoor (supra) and Siemens Engineering (supra), discussed above.
32. In Ram Chander vs. Union of India, AIR 1986 SC 1173, this Court was dealing with the appellate provisions under the Railway Servants (Discipline and Appeal) Rules, 1968 condemned the mechanical way of dismissal of appeal in the context of requirement of Rule 22(2) of the aforesaid Rule. This Court held that the word "consider" occurring to the Rule 22(2) must mean the Railway Board shall duly apply its mind and give reasons for its decision.
The learned Judges held that the duty to give reason is an incident of the judicial process and emphasized that in discharging quasi-judicial functions the appellate authority must act in accordance with natural justice and give reasons for its decision ( AIR Para 4, page 1176).
33. In Star Enterprises and others vs. City and Industrial Development Corporation of Maharashtra Ltd.,(1990) 3 SCC 280, a three-Judge Bench of this Court held that in the present day set up judicial review of administrative action has become expansive and is becoming wider day by day and the State has to justify its action in various field of public law. All these necessitate recording of reason for executive actions including the rejection of the highest offer. This Court held that disclosure of reasons in matters of such rejection provides an opportunity for an objective review both by superior administrative heads and for judicial process and opined that such reasons should be communicated unless there are specific justification for not doing so (see SCC Para 10, page 284-85).
::: Downloaded on - 12/12/2008 06:58:16 :::HCHP 1234. In Maharashtra State Board of Secondary and Higher Secondary Education vs. K.S. Gandhi, (1991) 2 .
SCC 716, this Court held that even in domestic enquiry if the facts are not in dispute non-recording of reason may not be violative of the principles of natural justice but where facts are disputed necessarily the authority or the enquiry officer, on consideration of the materials on record, should record reasons in support of the conclusion reached (see SCC para 22, pages 738-39).
35. In M.L. Jaggi vs.MTNL (1996) 3 SCC 119, this Court dealt with an award under Section 7 of the Telegraph Act and held that since the said award affects public interest, reasons must be recorded in the award. It was also held that such reasons are to be recorded so that it enables the High Court to exercise its power of judicial review on the validity of the award. (see SCC para 8, page 123).
36. In Charan Singh vs. Healing Touch Hospital, AIR 2000 SC 3138, a three-Judge Bench of this Court, dealing with a grievance under CP Act, held that the authorities under the Act exercise quasi-judicial powers for redressal of consumer disputes and it is, therefore, imperative that such a body should arrive at conclusions based on reasons. This Court held that the said Act, being one of the benevolent pieces of legislation, is intended to protect a large body of consumers from exploitation as the said Act provides for an alternative mode for consumer justice by the process of a summary trial. The powers which are exercised are definitely quasi-judicial in nature and in such a situation the conclusions must be based on reasons and held that requirement of recording ::: Downloaded on - 12/12/2008 06:58:16 :::HCHP 13 reasons is "too obvious to be reiterated and needs no emphasizing". (See AIR Para 11, page 3141 of the .
report)
37. Only in cases of Court Martial, this Court struck a different note in two of its Constitution Bench decisions, the first of which was rendered in the case of Som Datt Datta vs. Union of India , AIR 1969 SC 414, where Ramaswami, J. delivering the judgment for the unanimous Constitution Bench held that provisions of Sections 164 and 165 of the Army Act do not require an order confirming proceedings of Court Martial to be supported by reasons. The Court held that an order confirming such proceedings does not become illegal if it does not record reasons. (AIR Para 10, pageS 421-22 of the report).
38. About two decades thereafter, a similar question cropped up before this Court in the case of S.N. Mukherjee vs. Union of India, AIR 1990 SC 1984. A unanimous Constitution Bench speaking through S.C. Agrawal, J. confirmed its earlier decision in Som Datt in S.N.Mukherjee case, SCC p.619,para 47 of the report and held reasons are not required to be recorded for an order confirming the finding and sentence recorded by the Court Martial.
39. It must be remembered in this connection that the Court Martial as a proceeding is sui generis in nature and the Court of Court Martial is different, being called a Court of Honour and the proceeding therein are slightly different from other proceedings. About the nature of Court Martial and its proceedings the observations of Winthrop in Military Law and Precedents are very pertinent and are extracted herein below:
::: Downloaded on - 12/12/2008 06:58:16 :::HCHP 14"Not belonging to the judicial branch of the Government, it follows that courts -martial must .
pertain to the executive department; and they are in fact simply instrumentalities of the executive power, provided by Congress for the President as Commander-in-Chief, to aid him in properly commanding the Army and Navy and enforcing discipline therein, and utilized under his orders or those of his authorized military representatives."
40. Our Constitution also deals with Court Martial proceedings differently as is clear from Articles 33, 136(2) and 227(4) of the Constitution.
41. In England there was no common law duty of recording of reasons. In Marta Stefan vs. General Medical Council, (1999) 1 WLR 1293, it has been held (WLR page 1300) the established position of the common law is that there is no general duty imposed on our decision makers to record reasons. It has been acknowledged in the Justice Report, Administration Under Law (1971) at page 23 that :
"No single factor has inhibited the development of English administrative law as seriously as the absence of any general obligation upon public authorities to give reasons for their decisions".
42. Even then in R. vs. Civil Service Appeal Board, ex p Cunningham (1991) 4 All ER 310, Lord Donaldson, Master of Rolls, opined very strongly in favour of disclosing of reasons in a case where the Court is acting in its discretion. The learned Master of Rolls said: (All ER page 317) "... '.... It is a corollary of the discretion conferred upon the board that it is their duty to set out ::: Downloaded on - 12/12/2008 06:58:16 :::HCHP 15 their reasoning in sufficient form to show the principles on which they have proceeded.
.
Adopting Lord Lane CJ's observations (in R vs. Immigration Appeal Tribunal, ex p Khan (Mahmud) [1983] 2 All ER 420 at 423, (1983) QB 790 at 794-795), the reasons for the lower amount is not obvious. Mr. Cunningham is entitled to know, either expressly or inferentially stated, what it was to which the board were addressing their mind in arriving at their conclusion. It must be obvious to the board that Mr. Cunningham is left with a burning sense of grievance. They should be sensitive to the fact that he is left with a real feeling of injustice, that having been found to have been unfairly dismissed, he has been deprived of his just desserts (as he sees them).' "
43. The learned Master of Rolls further clarified by saying: (Civil Service Appeal Board Case, All ER 317) "..... '....Thus, in the particular circumstances of this case, and without wishing to establish any precedent whatsoever, I am prepared to spell out an obligation on this board to give succinct reasons, if only to put the mind of Mr. Cunningham at rest. I would therefore allow this application.' "
44. But, however, the present trend of the law has been towards an increasing recognition of the duty of Court to give reasons (See North Range Shipping Limited vs. Seatrans Shipping Corporation, (2002) 1 WLR 2397). It has been acknowledged that this trend is consistent with the development towards openness in Government and judicial administration.
::: Downloaded on - 12/12/2008 06:58:16 :::HCHP 1645. In English vs. Emery Reimbold and Strick Limited, (2002) 1 WLR 2409, it has been held that .
justice will not be done if it is not apparent to the parties why one has won and the other has lost. The House of Lords in Cullen vs. Chief Constable of the Royal Ulster Constabulary, (2003) 1 WLR 1763, Lord Bingham of Cornhill and Lord Steyn, on the requirement of reason held:(WLR p.1769, para 7) "7......First, they impose a discipline ... which may contribute to such decisions being considered with care. Secondly, reasons ncourage transparency ... Thirdly, they assist the Courts in performing their supervisory function if judicial review proceedings are launched."
46. The position in the United States has been indicated by this Court in S.N. Mukherjee in SCC p.602, para 11 of the judgment. This Court held that in the United States the Courts have always insisted on the recording of reasons by administrative authorities in exercise of their powers. It was further held that such recording of reasons is required as "the Court cannot exercise their duty of review unless they are advised of the considerations underlying the action under review". In S.N. Mukherjee this court relied on the decisions of the U.S. Court in Securities and Exchange Commission vs. Chenery Corporation, (1942) 87 Law Ed 626 and Dunlop vs. Bachowski, (1975) 44 Law Ed 377 in support of its opinion discussed above.
47. Summarizing the above discussion, this Court holds:
::: Downloaded on - 12/12/2008 06:58:16 :::HCHP 17(a) In India the judicial trend has always been to record reasons, even in administrative decisions, if .
such decisions affect anyone prejudicially.
(b) A quasi-judicial authority must record reasons in support of its conclusions.
(c) Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well.
(d) Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power.
(e) Reasons reassure that discretion has been exercised by the decision maker on relevant grounds and by disregarding extraneous considerations.
(f) Reasons have virtually become as indispensable a component of a decision making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies.
(g) Reasons facilitate the process of judicial review by superior Courts.
(h) The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the life blood of judicial decision making justifying the principle that reason is the soul of justice.
(i) Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants' faith in the justice delivery system.
::: Downloaded on - 12/12/2008 06:58:16 :::HCHP 18(j) Insistence on reason is a requirement for both judicial accountability and transparency.
.
(k) If a Judge or a quasi-judicial authority is not candid enough about his/her decision making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism.
(l) Reasons in support of decisions must be cogent, clear and uccinct. A pretence of reasons or "rubber-stamp reasons" is not to be equated with a valid decision making process.
(m) It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision making not only makes the judges and decision makers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor (1987) 100 Harward Law Review 731-
37).
(n) Since the requirement to record reasons emanates from the broad doctrine of fairness in decision making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See Ruiz Torija v.Spain (1994) 19 EHRR 553, at 562 para 29 and Anya vs. University of Oxford, 2001 EWCA Civ 405, wherein the Court referred to Article 6 of European Convention of Human Rights which requires, "adequate and intelligent reasons must be given for judicial decisions".
(o) In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "Due Process".
8. The necessity of recording reasons even by the administrative authorities was emphasized by the Hon'ble ::: Downloaded on - 12/12/2008 06:58:16 :::HCHP 19 Supreme Court in Ravi Yashwant Bhoir Vs. District Collector, Raigad and others (2012) 4 SCC 407, wherein it has been held .
as under:-
"38. It is a settled proposition of law that even in administrative matters, the reasons should be recorded as it is incumbent upon the authorities to pass a speaking and reasoned order.
39. In Shrilekha Vidyarthi Vs. U.P.(1991) 1 SCC 212 this Court has observed as under: (SCC p. 243, para
36).
"36......Every State action may be informed by reason and it follows that an act uninformed by reason, is arbitrary. The rule of law contemplates governance by laws and not by humour, whims or caprices of the men to whom the governance is entrusted for the time being. It is the trite law that 'be you ever so high, the laws are above you'. This is what men in power must remember, always."
40. In LIC Vs. Consumer Education and Research Centre (1995) 5 SCC 482 this Court observed that the State or its instrumentality must not take any irrelevant or irrational factor into consideration or appear arbitrary in its decision. "Duty to act fairly" is part of fair procedure envisaged under Articles 14 and
21. Every activity of the public authority or those under public duty must be received and guided by the public interest. A similar view has been reiterated by this Court in Union of India Vs. Mohan Lal Capoor (1973) 2 SCC 836 and Mahesh Chandra Vs. U.P. Financial Corpn.(1993) 2 SCC 279.
::: Downloaded on - 12/12/2008 06:58:16 :::HCHP 2041. In State of W.B. Vs. Atul Krishna Shaw 1991 Supp (1) SCC 414, this Court observed that : (SCC p.
.
421, para 7) "7....Giving of reasons is an essential element of administration of justice. A right to reason is, therefore, an indispensable part of sound system of judicial review."
42. In S.N. Mukherjee Vs . Union of India(1990) 4 SCC 594, it has been held that the object underlying the rules of natural justice is to prevent miscarriage of justice and secure fair play in action. The expanding horizon of the principles of natural justice provides for requirement to record reasons as to it is now regarded as one of the principles of natural justice, and it was held in the above case that except in cases where the requirement to record reasons is expressly or by necessary implication dispensed with, the authority must record reasons for its decision.
43. In Krishna Swami Vs. Union of India (1992) 4 SCC 605, this Court observed that the rule of law requires that any action or decision of a statutory or public authority must be founded on the reason stated in the order or borne out from the record. The Court further observed: (SCC p. 637, para 47).
"47......Reasons are the links between the material, the foundation for their erection and the actual conclusions. They would also demonstrate how the mind of the maker was activated and actuated and their rational nexus and synthesis with the facts considered and the conclusions reached. Lest it would be arbitrary, unfair and unjust, violating Article 14 or unfair procedure offending Article 21".::: Downloaded on - 12/12/2008 06:58:16 :::HCHP 21
44. This Court while deciding the issue in Sant Lal Gupta Vs. Modern Coop. Group Housing Society .
Ltd.(2010) 13 SCC 336, placing reliance on its various earlier judgments held as under: (SCC pp. 345-46, para 27).
"27. It is a settled legal proposition that not only administrative but also judicial orders must be supported by reasons recorded in it. Thus, while deciding an issue, the court is bound to give reasons for its conclusion. It is the duty and obligation on the part of the court to record reasons while disposing of the case. The hallmark of order and exercise of judicial power by a judicial forum is for the forum to disclose its reasons by itself and giving of reasons has always been insisted upon as one of the fundamentals of sound administration of the justice delivery system, to make it known that there had been proper and due application of mind to the issue before the court and also as an essential requisite of the principles of natural justice.
'3....The giving of reasons for a decision is an essential attribute of judicial and judicious disposal of a matter before courts, and which is the only indication to know about the manner and quality of exercise undertaken, as also the fact that the court concerned had really applied its mind'.
The reason is the heartbeat of every conclusion. It introduces clarity in an order and without the same, the order becomes lifeless. Reasons ::: Downloaded on - 12/12/2008 06:58:17 :::HCHP 22 substitute subjectivity with objectivity. The absence of reasons renders an order .
indefensible/unsustainable particularly when the order is subject to further challenge before the higher forum. Recording of reasons is the principle of natural justice and every judicial order must be supported by reasons recorded in writing. It ensures transparency and fairness in decision making. The person who is adversely affected must know why his application has been rejected."
45. In Institute of Chartered Accountants of India Vs. L.K. Ratna (1986) 4 SCC 537, this Court held that on charge of misconduct the authority holding the inquiry must record reasons for reaching its conclusion and record clear findings. The Court further held: (SCC p. 558, para 30).
"30.....In fairness and justice, the member is entitled to know why he has been found guilty. The case can be so serious that it can attract the harsh penalties provided by the Act. Moreover, the member has been given a right of appeal to the High Court under Section 22-A of the Act. To exercise his right of appeal effectively he must know the basis on which the Council has found him guilty. We have already pointed out that a finding by the Council is the first determinative finding on the guilty of the member. It is a finding by a Tribunal of first instance. The conclusion of the Disciplinary Committee does not enjoy the status of a 'finding'. Moreover, the reasons contained in the report by the Disciplinary Committee for its conclusion may or ::: Downloaded on - 12/12/2008 06:58:17 :::HCHP 23 may not constitute the basis of the finding rendered by the Council. The Council must, .
therefore, state the reasons for its finding."
46. The emphasis on recording reason 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 of the authority before the 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 the 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."
9. 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 exercise powers of judicial review in adjudging the validity of the decision. This was so held by the Hon'ble Supreme Court in Director, Horticulture, Punjab and others versus Jagjivan Parshad (2008) 5 SCC 539, the relevant paragraphs read thus:-
"7. Reasons introduce clarity in an order. On plainest consideration of justice, the High Court ought to have set forth its reasons, ::: Downloaded on - 12/12/2008 06:58:17 :::HCHP 24 howsoever brief, in its order indicative of an application of its mind, all the more when its order is amenable to further avenue of .
challenge. The absence of reasons has rendered the High Court's judgment not sustainable.
8. We find that the writ petition involved disputed issues regarding eligibility. The manner in which the High Court has disposed of the writ petition shows that the basic requirement of indicating reasons was not kept in view and is a classic case of non-
application of mind. This Court in several cases has indicated the necessity for recording reasons.
9. "15.......Even in respect of administrative orders Lord Denning, M.R. in Breen v.
Amalgamated Engg. Union (1971) 1 All ER 1148 observed: (All ER p. 1154h) 'The giving of reasons is one of the fundamentals of good administration.' In Alexander Machinery (Dudley) Ltd. v. Crabtree (1974 1 CR 120) 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 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 ::: Downloaded on - 12/12/2008 06:58:17 :::HCHP 25 the decision. Right to reason is an indispensable part of a sound judicial system. 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 (See: Chairman and Managing Director, United Commercial Bank v. P.C. Kakkar (2003) 4 SCC 364 ( SCC r p.377, para 15)."
10. The juristic basis underlying the requirement that the Courts and indeed all such authorities as exercise the power to determine the rights and obligations of individuals must give reasons in support of their orders has been examined in detail by the Hon'ble Supreme Court in Maya Devi (dead) through LRs. Versus Raj Kumari Batra (dead) through LRs and others (2010) 9 SCC 486 wherein it has been held as under:-
"22........ In Hindustan Times Limited v. Union of India & Ors. 1998 (2) SCC 242 the need to give reasons has been held to arise out of the need to minimize chances of arbitrariness and induce clarity.
23. In Arun v. Inspector General of Police 1986 (3) SCC 696 the recording of reasons in support of the order passed by the High Court has been held to inspire public confidence in administration of justice, and help the Apex Court to dispose of appeals filed against such orders.
24. In Union of India . v. Jai Prakash Singh 2007 (10) SCC 712, reasons were held to be live links ::: Downloaded on - 12/12/2008 06:58:17 :::HCHP 26 between the mind of the decision maker and the controversy in question as also the decision or conclusion arrived at.
.
25. In Victoria Memorial Hall v. Howrah Ganatantrik Nagrik Samity 2010 (3) SCC 732, reasons were held to be the heartbeat of every conclusion, apart from being an essential feature of the principles of natural justice, that ensure transparency and fairness, in the decision making process.
26. In Ram Phal v. State of Haryana 2009 (3) SCC 258, giving of satisfactory reasons was held to be a requirement arising out of an ordinary man's sense of justice and a healthy discipline for all those who exercise power over others.
27. In Director, Horticulture Punjab & Ors. v. Jagjivan Parshad 2008 (5) SCC 539, the recording of reasons was held to be indicative of application of mind specially when the order is amenable to further avenues of challenge.
28. It is in the light of the above pronouncements unnecessary to say anything beyond what has been so eloquently said in support of the need to give reasons for orders made by Courts and statutory or other authorities exercising quasi judicial functions. All that we may mention is that in a system governed by the rule of law, there is nothing like absolute or unbridled power exercisable at the whims and fancies of the repository of such power. There is nothing like a power without any limits or constraints. That is so even when a Court or other authority may be vested with wide discretionary power, for even discretion has to be exercised only along well recognized and sound juristic principles with a view to promoting fairness, inducing transparency and aiding equity.
29. What then are the safeguards against an arbitrary exercise of power? The first and the most effective check against any such exercise is ::: Downloaded on - 12/12/2008 06:58:17 :::HCHP 27 the well recognized legal principle that orders can be made only after due and proper application of mind. Application of mind brings reasonableness .
not only to the exercise of power but to the ultimate conclusion also. Application of mind in turn is best demonstrated by disclosure of the mind. And disclosure is best demonstrated by recording reasons in support of the order or conclusion.
30. Recording of reasons in cases where the order is subject to further appeal is very important from yet another angle. An appellate Court or the authority ought to have the advantage of examining the reasons that prevailed with the Court or the authority making the order. Conversely, absence of reasons in an appealable order deprives the appellate Court or the authority of that advantage and casts an onerous responsibility upon it to examine and determine the question on its own. An appellate Court or authority may in a given case decline to undertake any such exercise and remit the matter back to the lower Court or authority for a fresh and reasoned order. That, however, is not an inflexible rule, for an appellate Court may notwithstanding the absence of reasons in support of the order under appeal before it examine the matter on merits and finally decide the same at the appellate stage. Whether or not the appellate Court should remit the matter is discretionary with the appellate Court and would largely depend upon the nature of the dispute, the nature and the extent of evidence that may have to be appreciated, the complexity of the issues that arise for determination and whether remand is going to result in avoidable prolongation of the litigation between the parties. Remands are usually avoided if the appellate Court is of the view that it will prolong the litigation."
::: Downloaded on - 12/12/2008 06:58:17 :::HCHP 2811. Recording of reasons in cases where the order is subject to further appeal/revision is very important from yet .
another angle. The revisional or appellate Court or authority ought to have the advantage of examining the reasons that prevailed with the Court or the authority making the order.
Conversely, absence of reasons in an appealable or revisional order deprives the appellate or revisional Court or the authority of that advantage and casts an onerous responsibility upon it to examine and determine the question on its own. The appellate or revisional Court or authority may in a given case decline to undertake any such exercise and remit the matter back to the lower Court or authority for a fresh and reasoned order. That, however, is not an inflexible rule, for an appellate or revisional Court may notwithstanding the absence of reasons in support of the order examine the matter on merits and finally decide the same. This discretion is vested with the appellate or revisional Court or authority.
12. As regards the arbitral proceedings, a non-
speaking award under the Act is exfacie illegal as per Section 31(3) which is reproduced for the sake of convenience and reads as follows:
"31. Form and contents of arbitral award........ (3) The arbitral award shall state the reasons upon which it is based, unless-
(a) the parties have agreed that no reasons are to be given, or ::: Downloaded on - 12/12/2008 06:58:17 :::HCHP 29
(b) the award is an arbitral award on agreed terms under Section 30....."
.
13. In Som Datt Builders Limited vs. State of Kerala (2009) 10 SCC 259, the Hon'ble Supreme Court after noticing some of the judgments that have been quoted above, held that the requirement of reasons by the Arbitrator is not an empty formality and further held that merely noticing the submissions of the parties or reference documents is no substitute for reasons. The relevant portion r to the of the judgment reads as follows:
"25. The requirement of reasons in support of the award under Section 31(3) is not an empty formality. It guarantees fair and legitimate consideration of the controversy by the arbitral tribunal. It is true that arbitral tribunal is not expected to write judgment like a court nor it is expected to give elaborate and detailed reasons in support of its finding(s) but mere noticing the submissions of the parties or reference to documents is no substitute for reasons which the arbitral tribunal is obliged to give. Howsoever brief these may be, reasons must be indicated in the award as that would reflect the thought process leading to a particular conclusion. To satisfy the requirement of Section 31(3), the reasons must be stated by the arbitral tribunal upon which the award is based; want of reasons would make such award legally flawed."
14. Thus, it is obvious in teeth of the provisions of the act, coupled with the law on the subject that the award passed by the learned Arbitrator being non-speaking one is exfacie illegal and cannot, therefore, withstand the legal ::: Downloaded on - 12/12/2008 06:58:17 :::HCHP 30 scrutiny and is, therefore, liable to be set-aside. Ordered accordingly.
.
15. It would be noticed that earlier the Superintending Engineer of the Irrigation and Public Health Department was appointed as an Arbitrator, who cannot by any stretch of imagination, be said to be an independent and impartial Arbitrator. The Arbitration and Conciliation Act, 1996 has undergone a change and one of the major requirements under the amendment carried out in Sections 11 and 12 of the Act is to secure the appointment of an independent and impartial Arbitrator or else his award can be assailed and set-
aside under Section 12 of the Act. Therefore, in such circumstances, it is neither prudent nor desirable that an officer whether serving or retired from the department should be appointed as an Arbitrator.
16. Therefore, I deem it proper to appoint Sh. S.K. Chaudhary, District & Sessions Judge (Retd.), R/o House No. 98-99, Mission Compound, Palampur, District Kangra, H.P.-
176061 an Arbitrator to adjudicate the dispute between the parties. The parties through their counsel(s) are directed to appear before the Arbitrator on 11.9.2017. A copy of this judgment be sent to learned Arbitrator by post for information and necessary action.
::: Downloaded on - 12/12/2008 06:58:17 :::HCHP 3117. Since the pleadings and evidence etc. have already been completed, the Arbitrator is only required to consider .
the pleadings and evaluate the same in light of the evidence led and thereafter pass an award. It is, therefore, expected that the learned Arbitrator would conclude the proceedings at the earliest preferably before 31st December, 2017. The fee payable to the Arbitrator shall be as per the provisions contained in Section 11 read with Schedule-V of the Act. The fee payable to the Arbitrator shall be shared equally by the parties. A sum of `50,000/- shall be paid to the Arbitrator in advance and the remaining fee will be paid well before the pronouncement of the award.
18. The petition is disposed of in the aforesaid terms, leaving the parties to bear their own costs. Pending application(s) if any, also stands disposed of.
August 21, 2017. ( Tarlok Singh Chauhan), (GR) Judge ::: Downloaded on - 12/12/2008 06:58:17 :::HCHP