Kanco Enterprises Limited vs Authorised Officer Of State Bank Of ... on 6 May, 2015

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Gujarat High Court

Kanco Enterprises Limited vs Authorised Officer Of State Bank Of ... on 6 May, 2015

Bench: R.M.Chhaya

     C/SCA/6331/2015                                     ORDER




         IN THE HIGH COURT OF GUJARAT AT AHMEDABAD



            SPECIAL CIVIL APPLICATION NO. 6331 of 2015

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          KANCO ENTERPRISES LIMITED....Petitioner(s)
                           Versus
 AUTHORISED OFFICER OF STATE BANK OF INDIA & 1....Respondent(s)
================================================================
Appearance:
MR AS VAKIL, ADVOCATE for the Petitioner(s) No. 1
MR INDRAVADAN PARMAR, ADVOCATE for the Respondent(s) No. 1
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       CORAM: HONOURABLE MR.JUSTICE R.M.CHHAYA

                         Date : 06/05/2015


                          ORAL ORDER

1. By way of this petition under Article 226 of the Constitution of India, the petitioner has challenged the order dated 19.3.2015 passed by the Debt Recovery Tribunal1, Ahmedabad on an application for stay in Securitisation Application No.62 of 2014 filed by the petitioner under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the Page 1 of 115 C/SCA/6331/2015 ORDER Act").

2. As the present petition is filed against the interim order and with the consent of the learned advocate for the petitioner and learned advocate for respondent No.1 Bank appearing on caveat, the matter was heard at the admission stage itself.

3. The facts which can be culled out from the record of the petition are as under: 3.1 Respondent No.1 Bank extended financial facilities to the petitioner in the year 1997 98 and initially sanctioned credit facilities of approximately Rs.10.80 crores which came to be revised from time to time. The record indicates that an indenture of mortgage came to be executed on 4.4.2005 and 9.6.2006 and a master agreement was executed on 3.4.2008. As stated in Paragraph 2.3 of the petition, respondent No.1 Bank vide sanction letter dated 20.6.2009, sanctioned base limit of Rs.33.85 crores, total nonfund base limit of Rs.3.50 Page 2 of 115 C/SCA/6331/2015 ORDER crores and forward contract limit of Rs.2.80 crores. It also appears from the record that movable properties comprising of stocks, stocks in trade, receivable, entire current assets, plant and machineries of the petitioner were hypothecated. Equitable mortgage of land admeasuring 1,51,353 sq. mtrs. situated at Village Waldhera, Taluka Dholka, District Ahmedabad and so also the building structure as well as plant and machinery were mortgaged. The record indicates that in addition to that, undivided impartible right and other non agricultural land situated at Ambavadi, Ahmedabad city and offices situated in a building known as Shitiratna constructed upon the said land was also came to be executed. The record indicates that on 18.11.2009, a deed of equitable mortgage was executed in favour of IDBI Bank Ltd. to secure its working capital term loan of Rs.300 lacs and in favour of respondent No.1 Bank to secure its working capital term loan of Rs.125 lacs as well as Page 3 of 115 C/SCA/6331/2015 ORDER funded interest term loan of Rs.470 lacs. It further appears that again on 3.1.2011, respondent No.1 Bank enhanced the financial facilities and the existing forward contract limit was reduced to Rs.1.94 crores. The record further indicates that as forward contract transactions were entered into, the said limit was reduced. The record further indicates that the indenture of mortgage was extended further by a document dated 7.9.2011 and executed by the petitioner in favour of respondent No.1 Bank as well as IDBI Bank Ltd. It appears from the record that the account of the petitioner came to be classified as NonPerforming Assets (NPA) by respondent No.1 Bank on 30.1.2012. The record indicates that upto 22.2.2012, respondent No.1 Bank debited a sum of Rs.66,55,000/ on account of loss under the forward contract transactions and the same were in respect of forward contract transactions that had taken place after 24.5.2011 i.e. after the forward contract limit of Rs.1.94 crores Page 4 of 115 C/SCA/6331/2015 ORDER which was already exhausted.

3.2 The record indicates that thereafter, respondent No.1 Bank issued a statutory demand notice dated 22.2.2012 as provided under Section 13(2) of the Act, whereby a demand of Rs.28,29,22,224.29 ps. was raised, being amount due and outstanding as on 31.1.2012. The petitioner replied the said notice by its reply dated 17.4.2012. It appears that thereafter, respondent No.1 Bank gave response to the same vide its communication dated 27.4.2012. It further appears that by another notice dated 5.2.2013, respondent No.1 Bank raised a demand of Rs.11,78,81,338.00 ps. which came to be replied by the petitioner vide its reply dated 3.4.2013. Respondent No.1 Bank replied the same vide its reply dated 20.4.2013. Respondent No.1 Bank thereafter issued a notice as provided under Section 13(4) of the Act dated 21.6.2013.

3.3 The record further indicates that the Page 5 of 115 C/SCA/6331/2015 ORDER petitioner thereafter filed a writ petition before this Court being Special Civil Application No.10338 of 2013 challenging the notice under Section 13(4) of the Act and also challenged the Vires of certain provisions of the Act. The record indicates that the Division Bench of this Court protected the petitioner vide order dated 28.6.2013. However, the same was discontinued by an order dated 8.7.2013.

3.4 The record indicates that the petitioner challenged the said order passed by the Division Bench of this Court dated 8.7.2013 before the Hon'ble Supreme Court being Special Leave Petition (C) No.3967 of 2014. The Hon'ble Supreme Court vide order dated 28.2.2014 granted the order of statusquo with regard to secured assets and ultimately, by an order dated 7.3.2014, the said Special Leave Petition came to be disposed of with a direction that the statusquo shall be maintained with regard to secured assets by the Bank as well as the owner, till the judgment is delivered by this Page 6 of 115 C/SCA/6331/2015 ORDER Court. The record indicates that ultimately, by a common final judgment and order dated 24.4.2014, the Division Bench dismissed the matters including the writ petition filed by the petitioner being Special Civil Application No.10338 of 2013. The petitioner, being aggrieved by the same, preferred a Special Leave Petition before the Hon'ble Supreme Court in Special Leave Petition (C) No.12588 of 2014 and it is a matter of fact that the said Special Leave Petition along with the other allied SLPs came to be dismissed by the Hon'ble Supreme Court, being Keshavlal Khemchand and Sons Pvt. Ltd. & Ors. Vs. Union of India & Ors., reported in AIR 2015 SC 1168.

3.5 The record indicates that while the matter was pending before this Court and the Hon'ble Supreme Court, the petitioner filed a Civil Suit being Civil Suit No.269 of 2013 before the Hon'ble Calcutta High Court against respondent No.1 Bank. The record indicates that initially, the Hon'ble Calcutta High Court had granted Page 7 of 115 C/SCA/6331/2015 ORDER stay. Thereafter, as respondent No.1 Bank raised the issue of jurisdiction, the Hon'ble Calcutta High Court was pleased to pass an order of return of plaint, for filing it before the appropriate Court at Ahmedabad. It further appears that respondent No.1 Bank filed an application as provided under Order 7 Rule 11 of the Code of Civil Procedure, 1908, inter alia, contending that the Civil Court has no jurisdiction and prayed that the plaint is required to be transferred to the Debt Recovery Tribunal1, Ahmedabad.

3.6 It further appears that respondent No.1 Bank thereafter also filed an application under Section 14 of the Act which came to be numbered as Securitization Case No.5 of 2014 before the learned District Magistrate. It is also a matter of record that while the matter was pending before the Apex Court, the petitioner also submitted an OTS proposal dated 26.5.2014, which was turned down by respondent No.1 Bank vide its reply dated 12.6.2014.

Page 8 of 115 C/SCA/6331/2015 ORDER

3.7 It appears from the record that the learned District Magistrate issued a notice and on receipt of the notice, the petitioner filed the present Securitization Application as provided under Section 17 of the Act on 4.6.2014 which came to be numbered as Securitization Appeal No.62 of 2014, interalia, challenging the demand notice as well as the notice dated 21.6.2013 issued by respondent No.1 Bank under Section 13(4) of the Act.

3.8 The petitioner has raised various contentions before the Debt Recovery Tribunal in the said application filed under Section 17 of the Act.

Respondent No.1 Bank herein filed its reply and a rejoinder is also filed. After hearing the petitioner as well as the Bank by the impugned order dated 19.3.2015, the Tribunal was pleased to reject the same. The record further indicates that respondent No.1 Bank has also filed an Original Application before the Debt Recovery Tribunal under Section 19 of the Page 9 of 115 C/SCA/6331/2015 ORDER Recovery of Debts due to Banks and Financial Institutions Act, 1993 being Original Application No.402 of 2014 and the same is pending. The record indicates that the petitioner has also approached BIFR by way of Reference Case No.6 of 2013 which, as per the record of the petition, is still pending. The record indicates that the petitioner has also filed an application for OTS before IDBI Bank Ltd. and has also initially deposited a sum of Rs.90 lacs with IDBI Bank Ltd. to show its bonafide. It further appears that similarly, the petitioner has also offered a fresh OTS proposal to respondent No.1 Bank on 18.2.2015 and has initially deposited a sum of Rs.1.10 crores on 25.2.2015.

3.9 The impugned order passed upon an application for stay in Securitization Appeal No.62 of 2014 is challenged by the petitioner in this petition. Respondent No.1 Bank has also filed an affidavitinreply to the contentions raised by the petitioner and respondent No.1 Bank has Page 10 of 115 C/SCA/6331/2015 ORDER raised preliminary objection as regards the very maintainability of the present petition as predominantly contended in Paragraph 4 of the affidavitinreply. The petitioner has further filed an affidavit dated 19.4.2015 and has contended that certain contentions raised by the petitioner are not considered by the Debt Recovery Tribunal while passing the impugned order, more particularly, to canvass that non consideration of the same has resulted into breach of principles of natural justice.

4. Heard Mr. A.S. Vakil, learned advocate for the petitioner and Mr. Indravadan Parmar, learned advocate for respondent No.1 Bank on caveat.

The learned advocates appearing for the parties have also submitted their written submissions as well.

5. Mr. A.S. Vakil, learned advocate for the petitioner has contended that even though the petitioner has got a statutory remedy of appeal as provided under Section 18 of the Act, this Page 11 of 115 C/SCA/6331/2015 ORDER Court has power to issue prerogative writ under Article 226 of the Constitution of India which is plenary in nature and which is not limited by any other Act. It was contended that even though there are inbuilt restrictions and it was further contended that an alternative remedy is not a bar especially in contingencies, more particularly, like violation of principles of natural justice. It was submitted that in facts of the present case, there is clear violation of principles of natural justice, inasmuch as, that the contentions raised by the petitioner are either not considered by the Tribunal or no reasons are given by the Tribunal while passing the impugned order. It was therefore contended that the same amounts to breach of principles of natural justice and therefore, the petitioner has approached this Court under Article 226 of the Constitution of India directly. It was contended that the Debt Recovery Tribunal has not passed a reasoned order. It was further Page 12 of 115 C/SCA/6331/2015 ORDER contended that none of the judgments lay down a blanket proposition that in matters arising under the Act, no writ should be entertained directly as there is an alternative remedy. It was contended that the petitioner cannot be compelled to avail statutory remedy, on presumption or on allegation that the petitioner has chosen not to avail the statutory remedy, more particularly, on the ground that it provides for appeal fees as well as predeposit that too, against an interim order.

5.1 Mr. Vakil, elucidating the aforesaid principle, contended that nonrecording of reasons would constitute violation of principles of natural justice. It was contended that the rule of principles of natural justice requires reasons to be given in support of an order and is like the basic principles of natural justice i.e. audi alterem partem. It was contended that it is the duty of every quasi judicial authority to observe the same in proper letter and spirit Page 13 of 115 C/SCA/6331/2015 ORDER and mere pretence of compliance with it would not satisfy the requirement of law. It was also contended that requirement of recording the reasons is one of the principles of natural justice. Even in case of administrative orders and recording of finding without any reasons much less cogent reasons would amount to violation of principles of natural justice. Mr. Vakil has relied upon the judgment of the Apex Court in the case of Kranti Associates Private Limited & Anr. Vs. Sh. Masood Ahmed Khan & Ors.

reported in (2010) 9 SCC 496. It was contended that as held by the Apex Court in the case of Kranti Associates Private Limited (supra), recording of reason is now virtually a component of human right. It was further submitted that every adjudicating authority is required to act fairly and fair play in action and has to give reasons in support of the decisions taken by it. Mr. Vakil has relied upon the following judgments to buttress his contentions: Page 14 of 115 C/SCA/6331/2015 ORDER

(a) Siemens Engineering & Manufacturing Company of India Limited Vs. Union of India & Anr., reported in (1976) 2 SCC 981 = AIR 1976 SC 1785 (Paragraph 6)

(b) S.N. Mukherjee Vs. Union of India, reported in (1990) 4 SCC 594 = AIR 1990 SC 1984 (Paragraphs 21 to 39)

(c) G. Vallikumari Vs. Andhra Education Society & Anr. reported in (2010) 2 SCC 497 = AIR 2010 SC 1105. (Paragraphs 13 and 14)

(d) Kranti Associates Private Limited (supra) (Paragraphs 14 to 51)

(e) BA Linga Reddy Vs. Karnataka State Transport Authority, reported in AIR 2015 SC 767 (Paragraphs 18 to 29) 5.2 Mr. Vakil further relying upon the judgments in the cases of - (i) MP Industries Limited Vs. Union of India reported in AIR 1966 SC 671 @ 677, (ii) Bhagat Raja Vs. Union of India Page 15 of 115 C/SCA/6331/2015 ORDER reported in AIR 1967 SC 1606, 1610, (iii) Rama Vilas Service (Private) Limited Vs. C. Chandrashekharan reported in AIR 1965 SC 107,

(iv) Institute of Chartered Accountants of India Vs. K.L. Ratna reported in AIR 1987 SC 71, (v) State of Maharashtra Vs. Salem Hasan Khan reported in AIR 1990 SC 1984, has contended that though no form of recording of reasons has been provided or prescribed under any statute, such reasons should be proper, relevant, germane, intelligible and deal with the arguments advanced, points raised, issues involved and conclusions recorded in support of the order passed by the authority. It was contended that even while passing a byparte interim order, the administrative as well as quasijudicial authorities cannot bypass the requirement of recording of reasons and in absence of any such reasons, the petitioner cannot be asked to avail an alternative remedy of filing an appeal under Section 18 of the Act. It was further pointed out, more Page 16 of 115 C/SCA/6331/2015 ORDER particularly, from the affidavit dated 19.4.2015 that various points were raised as enumerated in the said affidavit; however, the same has not been dealt with and no reasons are given by the Debt Recovery Tribunal while rejecting the application filed by the petitioner for interim relief. It was contended that hearing of the interim relief application went on for 4 days before the Debt Recovery Tribunal. However, the submissions made by the petitioner are not recorded and by simply summarizing the same, the application has been dealt with and rejected. In light of the aforesaid, Mr. Vakil submitted that there is a breach of principles of natural justice by the Debt Recovery Tribunal and as no reasons are recorded in support of the order passed by it and as the submissions made by the petitioner have not been dealt with by giving elaborate reasons, this Court may be pleased to hold that there is a breach of principles of natural justice and entertain this petition by allowing Page 17 of 115 C/SCA/6331/2015 ORDER the petition and/or remanding the proceedings to Debt Recovery Tribunal for its rehearing on interim relief and till the Tribunal rehears the parties, the petitioner may be protected.

5.3 It is also contended by Mr. Vakil that even the basic principles of grant of interim relief namely primafacie case, balance of convenience and irreparable loss are not rightly considered by the Debt Recovery Tribunal. It was contended that the petitioner is a running concern and the forward contracts which were undertaken after the forward contract limit was exhausted is not a secured debt and for such a debt, proceedings under the Act cannot be initiated by respondent No.1 Bank. It was contended that thus, respondent No.1 Bank has no jurisdiction to enforce the demand notices and thus, the petitioner has got a primafacie case, which has not been considered by the Tribunal. Mr. Vakil also relying upon the additional affidavit filed in this proceeding, contended that vital contentions raised by the petitioner Page 18 of 115 C/SCA/6331/2015 ORDER are not dealt with by the Debt Recovery Tribunal and the issue which goes to the very jurisdiction and more particularly, the question whether respondent No.1 Bank can enforce two different demand notices is not examined by the Debt Recovery Tribunal and thus, Debt Recovery Tribunal has wrongly come to the conclusion that there is no primafacie case and balance of convenience is not in favour of the petitioner. Relying upon the averments made in the affidavitinreply filed by respondent No.1 Bank, it was contended that on the contrary, reply of respondent No.1 Bank establishes that there is a primafacie case in favour of the petitioner and balance of convenience is entirely in favour of the petitioner as the petitioner is a running Company and nongrant of interim relief would completely jeopardize the petitioner bringing it to a grinding halt. It was contended that if the interim relief is not granted, the petitioner would suffer irreparable loss, Page 19 of 115 C/SCA/6331/2015 ORDER whereas there would not be irreparable loss to respondent No.1 Bank and therefore, the petitioner is required to be protected by restraining respondent No.1 Bank from taking any further measures under Section 13(4) of the Act. It was also contended that power of the Tribunal under Section 17(3) of the Act to restore possession cannot render the power of the Tribunal to grant interim relief nugatory.

It was therefore contended that this Court may entertain this petition, even though the petitioner has not availed the alternative remedy under Section 18 of the Act and grant the interim relief as prayed for before the Tribunal or by quashing and setting aside the impugned order, remand the proceedings back to the Tribunal with a direction to rehear the parties on interim relief. It was therefore submitted that on all these aspects, this Court has jurisdiction to issue a prerogative writ by entertaining the petition as prayed for.

6. Per contra, Mr. Indravadan Parmar, learned Page 20 of 115 C/SCA/6331/2015 ORDER advocate for respondent No.1 Bank on caveat submitted that the jurisdiction of this Court under Article 227 of the Constitution of India is a supervisory jurisdiction and the same is regulated by the statute and power of superintendence under Article 227 of the Constitution of India. It was further submitted that this Court in exercise of powers under Article 226 of the Constitution of India cannot reappreciate or evaluate the evidence and this Court cannot act as an Appellate Court. It was further submitted that only because easy access to justice may be available by way of a petition under Article 227 of the Constitution of India, the same cannot be used as a licence to bypass an efficacious statutory remedy. It was therefore contended that this Court may not entertain the petition permitting the petitioner to bypass the statutory remedy. Mr. Parmar has relied upon the following judgments on the aforesaid aspect:

(a) Ranjeet Singh Vs. Ravi Prakash, reported in AIR Page 21 of 115 C/SCA/6331/2015 ORDER 2004 SC 3892 (Paragraph 4)

(b) State of Haryana & Ors. Manoj Kumar, reported in (2010) 4 SCC 350 (Paragraphs 17 to 23)

(d) Punjab National Bank Vs. O.C. Krishnan, reported in AIR 2001 SC 3208 (Paragraph 6)

(e) Gujarat Fisheries Central CoOp. Association Ltd. Vs. Union of India & Ors. reported in 2003 (2) GLR 1639 (Paragraphs 4 and 5)

(f) State Bank of India Vs. Allied Chemical Laboratories & Anr., reported in (2006) 9 SCC 252 (Paragraphs 6 and 7) 6.1 It was submitted that the petitioner is a defaulter of public financial system and therefore, the petitioner does not deserve any reliefs claimed for in this petition. It was contended that the present petition is filed Page 22 of 115 C/SCA/6331/2015 ORDER only to restrain respondent No.1 Bank from pursuing its action and right as conferred under the Act. It was contended that the present petition is nothing but a tool and device to avoid payment of deposit of amount which is a precondition for approaching the appellate forum under Section 18 of the Act and such an attempt needs to be strongly discouraged by this Court. It was further contended that any interference by this Court would become a precedent which may lead to shortcircuit and circumvent statutory procedure by every defaulter who will ignore and bypass statutory remedy of filing an appeal. Relying upon the judgment of the Apex Court in the case of M/s. Transcore Vs. Union of India & Anr. reported in AIR 2007 SC 712, it was further contended that the same would frustrate the object of the Act. It is further contended that there is no hardship as contended by the petitioner and as such in the impugned order, the Tribunal has dealt with the Page 23 of 115 C/SCA/6331/2015 ORDER contentions raised by the petitioner and even if it is presumed that it is not a proper consideration, only the appeal would be maintainable. It is further contended that the same can be done only by an Appellate Court and not by a writ Court and writ Court may not issue any prerogative writ or a writ of certiorari. It was contended that the contentions raised by the petitioner mainly on the plank that as some grounds are not observed in the impugned order, it would not amount to any breach of principles of natural justice.

Mr. Parmar has further relied upon the following judgments:

(i) United Bank of India Vs. Satyawati Tondon & Ors. reported in (2010) 8 SCC 110 (Paragraphs 42 to 45 and 49, 50 and 55)

(ii) Kanaiyalal Lalchand Sachdev & Ors. Vs. State of Maharashtra & Ors., reported in (2011) 2 SCC 782 (Paragraphs 23 and 25)

(iii)Easland Combines, Coimbatore Vs. Collector of Page 24 of 115 C/SCA/6331/2015 ORDER Central Excise, Coimbatore, reported in (2003) 3 SCC 410 (Paragraph 18)

(iv) Ratanlal Vs. Bardi Bai & Ors. reported in AIR 2003 Madhya Pradesh 248 (Paragraph 13)

(v) Tajender Singh Ghambhir & Anr. Vs. Gurpree Singh & Ors. reported in (2014) 10 SCC 702 (Paragraph 11) 6.2 It was also contended on behalf of respondent No.1 that it cannot be said that the impugned judgment did not record submissions that were canvassed on behalf of the petitioner. It was contended that recording of evidence cannot be equated with recording of reasons in an order.

It was contended that the grounds raised in the petition itself are selfdefeating and it would require determination of complex nature of disputed question of fact which demands elaborate inquiry/examination of material and evidence to adjudicate the lis and such a remedy is already provided under Section 18 of Page 25 of 115 C/SCA/6331/2015 ORDER the Act. It was further submitted that in light of the ratio laid down by the Apex Court in the case of Kanaiyalal Lalchand Sachdev (supra), the petition deserves to be dismissed and the petitioner be relegated to the alternative remedy of filing an appeal. It was further submitted that the Tribunal, after appreciating the contentions raised by both the parties, did not find any primafacie case and/or balance of convenience. It was contended that the Tribunal has rightly considered the material on record and considering the huge due payable by the petitioner, has rightly come to the conclusion that there is no irreparable loss. It was therefore submitted that the petition is devoid of merits and the same deserves to be dismissed in limine.

7. Mr. Apurva Vakil, learned advocate for the petitioner reiterated the contentions which are raised in the petition and contended that there is no provision under the Act to recover unsecured debt and the petitioner has Page 26 of 115 C/SCA/6331/2015 ORDER specifically raised the contention that the notices impugned are unenforcible and the reasons which are enumerated in Paragraph 5 of the petition clearly sets out the reason why the present petition is maintainable under Article 226 of the Constitution of India and/or Article 227 of the Constitution of India and as to why this Court may entertain the petition despite existence of remedy under Section 18 of the Act.

8. No other or further submissions are made by the learned advocates appearing for the respective parties.

9. Before reverting to the submissions made by the learned advocates appearing for the parties, it would be appropriate to quote Sections 17 and 18 of the Act.

"17. Right to appeal (1) Any person (including borrower), aggrieved by any of the measures referred to in subsection (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter, may make an application Page 27 of 115 C/SCA/6331/2015 ORDER alongwith such fee, as may be prescribed to the Debts Recovery Tribunal having jurisdiction in the matter within fortyfive days from the date on which such measure had been taken:

PROVIDED that different fees may be prescribed for making the application by the borrower and the person other than the borrower.

(2) The Debts Recovery Tribunal shall consider whether any of the measures referred to in subsection (4) of section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder.

(3) If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub section (4) of section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management of the business to the borrower or restoration of possession of the secured assets to the borrower, it may by order, declare the recourse to any one or more measures referred to in sub section (4) of section 13 taken by the secured creditors as invalid and restore the possession of the secured assets to the borrower or restore the management of the business to the borrower, as the case may be, and Page 28 of 115 C/SCA/6331/2015 ORDER pass such order as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under subsection (4) of section 13.

(4) If, the Debts Recovery Tribunal declares the recourse taken by a secured creditor under subsection (4) of section 13, is in accordance with the provisions of this Act and the rules made thereunder, then, notwithstanding anything contained in any other law for the time being in force, the secured creditor shall be entitled to take recourse to one or more of the measures specified under subsection (4) of section 13 to recover his secured debt.

(5) Any application made under sub section (1) shall be dealt with by the Debts Recovery Tribunal as expeditiously as possible and disposed of within sixty days from the date of such application:

PROVIDED that the Debts Recovery Tribunal may, from time to time, extend the said period for reasons to be recorded in writing, so, however, that the total period of pendency of the application with the Debts Recovery Tribunal, shall not exceed four months from the date of making of such application made under sub section (1).

(6) If the application is not disposed of by the Debts Recovery Tribunal within the period of four months as specified in subsection (5), any part to the application may make an application, in such form as Page 29 of 115 C/SCA/6331/2015 ORDER may be prescribed, to the Appellate Tribunal for directing the Debts Recovery Tribunal for expeditious disposal of the application pending before the Debts Recovery Tribunal and the Appellate Tribunal may, on such application, make an order for expeditious disposal of the pending application by the Debts Recovery Tribunal.

(7) Save as otherwise provided in this Act, the Debts Recovery Tribunal shall, as far as may be, dispose of the application in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the rules made thereunder.

17A. Making of application to Court of District Judge in certain cases In the case of a borrower residing in the State of Jammu and Kashmir, the application under section 17 shall be made to the Court of District Judge in that State having jurisdiction over the borrower which shall pass an order on such application.

18. Appeal to Appellate Tribunal(1) Any person aggrieved, by any order made by the Debts Recovery Tribunal under section 17, may prefer an appeal alongwith such fee, as may be prescribed to the Appellate Tribunal within thirty days from the date of receipt of the order of Debts Recovery Tribunal:

PROVIDED that different fees may be prescribed for filing an appeal by the borrower or by the person other than the borrower:

Page 30 of 115 C/SCA/6331/2015 ORDER

PROVIDED further that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal fifty per cent. of the amount of debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less:

PROVIDED also that the Appellate Tribunal may, for the reasons to be recorded in writing, reduce the amount to not less than twentyfive per cent. of debt referred to in the second proviso.

18A. Validation of fees levied Any fee levied and collected for preferring, before the commencement of the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act, 2004, an appeal to the Debts Recovery Tribunal or the Appellate Tribunal under this Act, shall be deemed always to have been levied and collected in accordance with law as if amendments made to sections 17 and 18 of this Act by sections 11 and 12 of the said Act were in force at all material times.

18B. Appeal to High Court in certain cases Any borrower residing in the State of Jammu and Kashmir and aggrieved by any order made by the Court of District Judge under section 17A may prefer an appeal, to the High Court having jurisdiction over such Court, within thirty days from the date of receipt of the order of the Court of District Judge:

PROVIDED that no appeal shall be Page 31 of 115 C/SCA/6331/2015 ORDER preferred unless the borrower has deposited, with the Jammu and Kashmir High Court, fifty per cent of the amount of the debt due from him as claimed by the secured creditor or determined by the Court of District Judge, whichever is less:

PROVIDED further that the High Court may, for the reasons to be recorded in writing, reduce the amount to not less than twentyfive per cent. of the debt referred to in the first proviso.

18C. Right to lodge a caveat - (1) Where an application or an appeal is expected to be made or has been made under subsection (1) of section 17 or section 17A or subsection (1) of section 18 or section 18B, the Secured Creditor or any person claiming a right to appear before the Tribunal or the Court of District Judge or the Appellate Tribunal or the High Court, as the case may be, on the hearing of such application or appeal, may lodge a caveat in respect thereof.

(2) Where a caveat has been lodged under subsection (1)

(a) the Secured Creditor by whom the caveat has been lodged (hereafter in this section referred to as the caveator) shall serve notice of the caveat by registered post, acknowledgment due, on the person by whom the application has been or is expected to be made under subsection (1);

(b) any person by whom the caveat Page 32 of 115 C/SCA/6331/2015 ORDER has been lodged (hereafter in this section referred to as the caveator) shall serve notice of the caveat by registered post, acknowledgment due, on the person by whom the application has been or is expected to be made under subsection (1).

(3) Where after a caveat has been lodged under subsection (1) any application or appeal is filed before the Tribunal or the court of District Judge or the Appellate Tribunal or the High Court, as the case may be, the Tribunal or the District Judge or the Appellate Tribunal or the High Court, as the case may be, shall serve a notice of application or appeal filed by the applicant or the appellant on the caveator.

(4) Where a notice of any caveat has been served on the applicant or the appellant, he shall periodically furnish the caveator with a copy of the application or the appeal made by him and also with copies of any paper or document which has been or may be filed by him in support of the application or the appeal.

(5) Where a caveat has been lodged under subsection (1), such caveat shall not remain in force after the expiry of the period of ninety days from the date on which it was lodged unless the application or appeal referred to in subsection (1) has been made before the expiry of the said period."

10. It is an admitted position that the present Page 33 of 115 C/SCA/6331/2015 ORDER petition is filed directly by the petitioner under Article 226 of the Constitution of India challenging the order dated 19.3.2015 passed by the Debt Recovery Tribunal1, Ahmedabad on an application for stay in Securitisation Application No.62 of 2014 filed by the petitioner, pending the main application. The provisions of Section 18 of the Act are crystal clear and the same provides an alternative efficacious remedy to the petitioner. The statutory appeal is provided under the said provision. The learned advocates appearing for the parties have relied upon the judgments as enumerated above.

11. In the case of Siemens Engineering & Manufacturing Company of India Limited (supra), it has been observed as under: "6. Before we part with this appeal, we must express our regret at the manner in which the Assistant Collector, the Collector and the Government of India disposed of the proceedings before them. It is incontrovertible that the proceedings before the Assistant Collector arising Page 34 of 115 C/SCA/6331/2015 ORDER from the notices demanding differential duty were quasijudicial proceedings and so also were the proceedings in revision before the Collector and the Government of India. Indeed, this was not disputed by the learned counsel appearing on behalf of the respondents. It is now settled law that where an authority makes an order in exercise of a quasijudicial function, it must record its reasons in support of the order it makes. Every quasijudicial order must be supported by reasons. That has been laid down by a long line of decisions of this Court ending with N. M. Desai v. Testeels Ltd., C. A. No. 245 of 1970 decided on 17121975 (SC). But, unfortunately, the Assistant Collector did not choose to give any reasons in support of the order made by him confirming the demand for differential duty. This was in plain disregard of the requirement of law. The Collector in revision did give some sort of reason but it was hardly satisfactory. He did not deal in his order with the arguments advanced by the appellants in their representation dated 8th December, 1961 which were repeated in the subsequent representation dated 4th June, 1965. It is not suggested that the Collector should have made an elaborate order discussing the arguments of the appellants in the manner of a court of law. But the order of the Collector could have been little more explicit and articulate so as to lend assurance that the case of the appellants had been properly considered by him. If courts of law are to be replaced by administrative authorities and tribunals, as indeed, in some kinds of cases, with the Page 35 of 115 C/SCA/6331/2015 ORDER 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 quasijudicial function will be able to justify their existence and carry 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 quasijudicial 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. The Government of India also failed to give any reasons in support of its order rejecting the revision application. But we may presume that in rejecting the revision application, it adopted the same reason which prevailed with the Collector. The reason given by the Collector was, as already pointed out, hardly satisfactory and it would, therefore, have been better if the Government of India had given proper and adequate reasons dealing with the arguments advanced on behalf of the appellants while rejecting the revision application. We hope and trust that in future the Customs Authorities will be more careful in adjudicating upon the proceedings which come before them and pass properly reasoned orders, so that Page 36 of 115 C/SCA/6331/2015 ORDER those who are affected by such orders are assured that their case has received proper consideration at the hands of the Customs authorities and the validity of the adjudication made by the Custom authorities can also be satisfactorily tested in a superior tribunal or court. In fact in would be desirable that in cases arising under Customs and Excise laws an independent quasijudicial tribunal, like the Incometax Appellate Tribunal or the Foreign Exchange Regulation Appellate Board, is set up which would finally dispose of appeals and revision applications under these laws instead of leaving the determination of such appeals and revision applications to the Government of India. An independent quasijudical tribunal would definitely inspire greater confidence in the public mind."

12. In the case of S.N. Mukherjee (supra), it has been observed as under: "21. The question as to whether an administrative authority should record the reasons for its decision has come up for consideration before this Court in a number of cases.

22. In Harinagar Sugar Mills Ltd. v. Shyam Sundar Jhunjhunwala, (1962) 2 SCR 339 : (AIR 1961 SC 1669), a Constitution Bench of this Court, while dealing with an orderpassed by the Central Government in exercise of its appellate powers under Section 114(3) of the Companies Act, 1956 in the matter of refusal by a company to register the transfer of shares, has held that there was no proper trial of Page 37 of 115 C/SCA/6331/2015 ORDER the appeals before the Central Government since no reasons had been given in support of the order passed by the Deputy Secretary who heard the appeals. In that case it has been observed:

"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 Article 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." (p. 357) (of SCR): (at p. 1678 of AIR)

23. In Madhya Pradesh Industries Ltd. v. Union of India, (1966) 1 SCR 466:

(AIR 1966 SC 671) the order passed by the Central Government dismissing the revision petition under Rule 55 of the Mineral Concession Rules, 1960, was challenged before this Court on the ground that it did not contain reasons. Bachawat, J., speaking for himself and Mudholkar, J., rejected this contention on the view that the reason for rejecting the revision application appeared on the face of the order because the Central Government had agreed with the reasons given by the State Government in its order. The learned Judges did not agree with the submission that omission to give reasons for the decision is of itself a sufficient ground for quashing it and held that for the purpose of an appeal under Article 136 orders of courts and tribunals stand on the same footing. The learned Judges pointed out that an Page 38 of 115 C/SCA/6331/2015 ORDER order of court dismissing a revision application often gives no reasons but this is not a sufficient ground for quashing it and likewise an order of an administrative tribunal rejecting a revision application cannot be pronounced to be invalid on the sole ground that it does not give reasons for the rejection. The decision in Hari Nagar Sugar Mills case (AIR 1961 SC 1669) (supra) was distinguished on the ground that in that case the Central Government had reversed the decision appealed against without giving any reasons and the record did not disclose any apparent ground for the reversal'. According to the learned Judges there is a vital difference between an order of reversal and an order of affirmance. Subba Rao, J., as he then was, did not concur with this view and found that the order of the Central Government was vitiated as it did not disclose any reasons for rejecting the revision application. The learned Judge has observed:

"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 itself. Selfdiscipline and supervision exclude or at any rate minimize 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 minimizes arbitrariness; it gives satisfaction to the party against whom Page 39 of 115 C/SCA/6331/2015 ORDER 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 " (p.

472) (of SCR) : (at p. 674 of AIR 1966 SC 671).

"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 to be 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." (p. 472 of SCR) : (at pp. 67475 of AIR).

"There is an essential distinction between a court and an administrative tribunal. 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 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 Page 40 of 115 C/SCA/6331/2015 ORDER 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." (pp. 47273) (of SCR) : (at p. 675 of AIR).

24. With reference to an order of affirmance the learned Judge observed that where the original tribunal gives reasons, the appellate tribunal may dismiss the appeal or the revision, as the case may be, agreeing with those reasons and that 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.

25. This matter was considered by a Constitution Bench of this Court in Bhagat Raja case (1967 (3) SCR 302:

AIR 1967 SC 1606) (supra) where also the order under challenge had been passed by the Central Government in exercise of its revisional powers under Section 30 of the Mines and Minerals (Regulation and Development) Act, 1957 read with rules 54 and 55 of the Mineral Concession Rules, 1960. Dealing with the question as to whether it was incumbent on the Central Government to give any reasons for its decision on review this Court has observed :

"The decisions of tribunals in India Page 41 of 115 C/SCA/6331/2015 ORDER 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." (p. 309) (of SCR): (at p. 1610 of AIR).

26. This Court has referred to the decision in Madhya Pradesh Industries case (AIR 1966 SC 671) (supra) and the observations of Subba Rao, J., referred to above, in that decision have been quoted with approval. After taking note of the observations of Bachawat, J., in that case, the learned Judges have held :

"After all a tribunal which exercises judicial or quasijudicial powers can certainly indicate its mind as to why it acts in a particular way and when important rights of parties of far reaching consequences to them are adjudicated upon in a summary fashion, without giving a personal hearing when proposals and counter proposals are made and examined, the least that can be expected is that the tribunal shall tell the party why the decision is going against him in all cases where Page 42 of 115 C/SCA/6331/2015 ORDER the law gives a further right of appeal." (p. 315) (of SCR) : (at p. 1613 of AIR 1967 SC 1606).

27. Reference has already been made to Som Datt Datta's case (AIR 1969 SC

414) (supra) wherein a Constitution Bench of this Court has held that the confirming authority, while confirming the findings and sentence of .a court martial, and the Central Government, while dealing with an appeal under Section 165 of the Act, are not required to record the reasons for their decision and it has been observed that apart from any requirement imposed by the statute or statutory rule either expressly or by necessary implication, it could not be said that there is any general principle or any rule of natural justice that a statutory tribunal should always and in every case give reasons in support of its decision. In that case the Court was primarily concerned with the interpretation of the provisions of Act and the Army Rules, 1954. There is no reference to the earlier decisions in Harinagar Sugar Mills case (AIR 1961 SC 1669) (supra) and Bhagat Raja case (AIR 1967 SC 1606) (supra) wherein the duty to record reasons was imposed in view of the appellate jurisdiction of this Court and the supervisory jurisdiction of the High Court under Articles 136 and 227 of the Constitution of India respectively.

28. In Tranvancore Rayon Ltd. v. Union of India, (1970) 3 SCR 40: (AIR 1971 SC 862) this Court has observed:

"The Court insists upon disclosure of reasons in support of the order on two Page 43 of 115 C/SCA/6331/2015 ORDER grounds: one, that the party aggrieved in a proceedings before the High Court or this Court has the opportunity to demonstrate that the reasons which persuaded the authority to reject his case were erroneous; the other, that the obligation to record reasons operates as a deterrent against possible arbitrary action by the executive authority invested with the judicial power." (p. 46) (of SCR) :

(at p. 866 of AIR).

29. In Mahabir Prasad Santosh Kumar v. State of U. P. (1970 (1) SCR 201 : AIR 1970 SC 1302) (supra) the District Magistrate had cancelled the. licence granted under the U. P. Sugar Dealers' Licensing Order, 1962 without giving any reason and the State Government had dismissed the appeal against the said order of the District Magistrate without recording the reasons. This Court has held:

"The practice of the executive authority dismissing statutory appeal against orders which prima facie seriously prejudice the rights of the aggrieved party without giving reasons is a negation of the rule of law." (p.

204) (of SCR): (at p. 1304 of AIR).

"Recording of reasons in support of a decision on a disputed claim by a quasijudicial authority ensures that the decision is reached according to law and is not the result of caprice, whim or fancy or reached on grounds of policy or expediency. A party to the dispute is ordinarily entitled to know the grounds on which the authority has rejected his claim. If the order is subject to appeal, the necessity to Page 44 of 115 C/SCA/6331/2015 ORDER record reasons is greater, for without recorded reasons the appellate authority has no material on which it may determine whether the facts were properly ascertained, the relevant law was correctly applied and the decision was just.' (p. 205) (of SCR): (at p. 1304 of AIR).

30. In Woolcombers of India Ltd. case (1974 (1) SCR 504 : AIR 1973 SC 2758) (supra) this Court was dealing with an award of an Industrial Tribunal. It was found that the award stated only the conclusions and it did not give the supporting reasons. This Court has observed :

"The giving of reasons in support of their conclusions by judicial and quasijudicial authorities when exercising initial jurisdiction is essential for various reasons. First, it is calculated to prevent unconscious, unfairness or arbitrariness in reaching the conclusions. The very search for reasons will put the authority on the alert and minimise the chances of unconscious infiltration of personal bias or unfairness in the conclusion. The authority will adduce reasons which will be regarded as fair and legitimate by a reasonable man and will discard irrelevant or extraneous considerations. Second, it is a well known principle that justice should not only be done but should also appear to be done. Unreasoned conclusions may be just but they may not appear to be just to those who read them. Reasoned conclusions, on the other hand, will have also the appearance of justice. Third, it Page 45 of 115 C/SCA/6331/2015 ORDER should be remembered that an appeal generally lies from the decision of judicial and quasijudicial authorities to this Court by special leave granted under Article 136. A judgment which does not disclose the reasons will be of little assistance to the Court." (p. 507) (of SCR) : (at p. 2761 of AIR).

31. In Siemens Engineering and Manufacturing Co. of India Limited case (1976 Suppl SCR 489: AIR 1976 SC 1785) (supra) this Court was dealing with an appeal against the order of the Central Government on a revision application under the Sea Customs Act, 1878. This Court has laid down:

"It is now settled law that where an authority makes an order in exercise of a quasijudicial function it must record its reasons in support of the order it makes. Every quasijudicial order must be supported by reasons."

(p. 495) (of SCR) : (at p. 1789 of AIR).

"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 quasijudicial function will be able to justify their existence and carry credibility with the people by Page 46 of 115 C/SCA/6331/2015 ORDER 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 quasijudicial 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." (p.

496) (of SCR) : (at p. 1789 of AIR).

32. Tarachand Khatri v. Municipal Corporation of Delhi, (1977) 2 SCR 198 : (AIR 1917 SC 567) was a case where an inquiry was conducted into charges of .misconduct and the disciplinary authority, agreeing with the findings of the Inquiry Officer, had imposed the penalty of dismissal. The said order of dismissal was challenged on the ground that the disciplinary authority had not given its reasons for passing the order. The said contention was negatived by this Court and distinction was drawn between an order of affirmance and an order of reversal. It was observed:

"....... while it may be necessary for a disciplinary or administrative authority exercising quasijudicial functions to state the reasons in support of its order if it differs from the conclusions arrived at and the recommendations made by the Inquiry Officer in view of the scheme of a particular enactment or the rules made thereunder, it would be laying down the proposition too broadly to say that even an ordinary concurrence must be supported by reasons." (p.

208) (of SCR) : (at p. 574 of AIR).

Page 47 of 115 C/SCA/6331/2015 ORDER

33. In Raipur Development Authority v. M/s. Chokhamal Contractors (1989) 2 SCC 721 : (AIR 1990 SC 1426) a Constitution. Bench of this Court was considering the question whether it is obligatory for an arbitrator under the Arbitration Act, 1940 to give reasons for the award. It was argued that the requirement of giving reasons for the decision is a part of the rules of natural justice which are also applicable to the award of an arbitrator and reliance was placed on the ,decisions in Bhagat Raja case (AIR 1967 SC 1606) (supra) and Siemens Engineering Co. case (AIR 1976 SC 1785) (supra). The said contention was rejected by this Court. After referring to the decisions in Bhagat Raja case (supra), Som Datt Datta case (AIR 1969 SC 414) (supra) and Siemens Engineering Co. case (supra) this Court has observed:

"It is no doubt true that in the decisions pertaining to Administrative Law, this Court in some cases has observed that the giving of reasons in an administrative decision is a rule of natural justice by an extension of the prevailing rules. It would be in the interest of the world of commerce that the said rule is confined to the area of Administrative Law ........But at the same time it has to be borne in mind that What applies generally to settlement of disputes by authorities governed by public law need not be extended to all cases arising under private law such as those arising under the law of arbitration which is intended for settlement of private disputes." (pp. 75152) (of SCC) : (at Page 48 of 115 C/SCA/6331/2015 ORDER pp. 1444 and 1445 of AIR).

34. The decisions of this Court referred to above indicate that with regard to the requirement to record reasons the approach of this Court is more in line with that of the American Courts. An important consideration which has weighed with the Court for holding that an administrative authority exercising quasijudicial functions must record the reasons for its decision, is that such a decision is subject to the appellate jurisdiction of this Court under Article 136 of the Constitution as well as the supervisory jurisdiction of the High Courts under Article 227 of the Constitution and that the reasons, if recorded, would enable this Court or the High Courts to effectively exercise the appellate or supervisory power. But this is not the sole consideration. The other considerations which have also weighed with the Court in taking this view are that the requirement of recording reasons would (i) guarantee consideration by the authority; (ii) introduce clarity in the decisions; and (iii) minimise chances of arbitrariness in decisionmaking. In this regard a distinction has been drawn between ordinary Courts of law and tribunals and authorities exercising judicial functions on the ground that a Judge is trained to look at things objectively uninfluenced by considerations of policy or expediency whereas an executive officer generally looks at things from the stand point of policy and expediency.

35. Reasons, when recorded by an Page 49 of 115 C/SCA/6331/2015 ORDER administrative authority in an order passed by it while exercising quasi judicial functions, would no doubt facilitate the exercise of its jurisdiction by the appellate or supervisory. authority. But the other considerations,referred to above, which have also weighed with this Court in holding that an administrative authority must record reasons for its decision are of no less significance. These considerations show that the recording of reasons by an administrative authority serves a salutary purpose, namely, it excludes chances of arbitrariness and ensures a degree of fairness in the process of decisions making. 'The said purpose would apply equally to all decisions and its application cannot be confined to decisions which are subject to appeal, revision or judicial review. In our opinion, therefore, the requirement that reasons be recorded should govern the decisions of an administrative authority exercising quasijudicial functions irrespective of the fact whether the decision is subject to appeal, revision or judicial review. It may, however, be added that it is not required that the reasons should be as elaborate as in the decision of a Court of law. The extent and nature of the reasons would depend on particular facts and circumstances. What is necessary is that the reasons are clear and explicit so as to indicate that the authority has given due consideration to the points in controversy. The need for recording of reasons is greater in a case where the order is passed at the original stage. The appellate or revisional authority, Page 50 of 115 C/SCA/6331/2015 ORDER if it affirms such art order, need not give separate reasons if the appellate or revisional authority agrees with the reasons contained in the order under challenge.

36. Having considered the rationale for the requirement to record the reasons for the decision of an administrative authority exercising quasijudicial functions we may now examine the legal basis for imposing this obligation. While considering this aspect the Donoughmore Committee observed that it, may well be argued that there is a third principle of natural justice, namely, that a party is entitled to know the reason for the decision, be it judicial or quasi judicial. The Committee expressed the opinion that "there are some cases where the refusal to give grounds for a decision may be plainly unfair; and this may be so, even when the decision is final and no further proceedings are open to the disappointed party by way of appeal or otherwise" and that "where further proceedings are open to a disappointed party, it is contrary to natural justice that the silence of the Minister or the Ministerial Tribunal should deprive them of the opportunity." (p. 80) Prof. H. W. R. Wade has also expressed the view that "natural justice may provide the best rubric for it, since the giving of reasons is required by the ordinary man's sense of justice." (see Wade, Administrative Law, 6th Edn. p. 548). In Siemens Engineering Co. case (AIR 1976 SC 1785) (supra) this Court has taken the same view when it observed that "the rule requiring reasons to be given in support of an order is, like Page 51 of 115 C/SCA/6331/2015 ORDER the. principles of audi alteram partem, a basic principle of natural justice which must inform every quasi judicial process." This decision proceeds on the basis that the two wellknown principles of natural justice, namely (i) that no man should be a Judge in his own cause and (ii) that no person should be judged without a hearing, are not exhaustive' and that in addition to these two principles there may be .rules which seek to ensure fairness in the process of decisionmaking and can be regarded as part of the principles of natural justice. This view is in consonance with the law laid down by this Court in A. K. Kraipak v. Union of India, (1970) 1 SCR 457: (AIR 1970 SC 150), wherein it has been held:

"The concept of natural justice has undergone a great deal of change in recent years. In the past it Was thought that it included just two rules, namely (i) no one shall be a Judge in his own cause (nemo debetesse judex propria causa) and (ii) no decision shall be given against a party without affording him a reasonable hearing (audi alteram partem). Very soon thereafter a third rule was envisaged and that is that quasijudicial enquiries must be held ingood faith, without bias and not arbitrarily or unreasonably. But in the course of years many more subsidiary rules came to be added to the rules of natural justice." (pp. 46869) (of SCR): (at pp. 15657 Of AIR).

37. A similar trend is discernible in the decisions of English Courts Page 52 of 115 C/SCA/6331/2015 ORDER wherein it has been held that natural justice demands that the decision should be based on so me evidence of probative value. (See R v. Deputy Industrial Injuries Commissioner ex P. Moore, (1965) 1 QB 456; Mohan v. Air New Zealand Ltd., 1984 AC 808).

38. The object underlying the rules of natural justice "is to prevent miscarriage of justice" and secure "fair play in action." As pointed out earlier the requirement about recording of reasons for its decision by an administrative authority exercising quasijudicial functions achieves this object by excluding chances of arbitrariness and ensuring a degree of fairness in the process of decisionmaking. Keeping in view the expanding horizon of the principles of natural justice, we are of the opinion, that the requirement to record reason can be regarded as one of the principles of natural justice which govern exercise of power by administrative authorities. The rules of natural justice are not embodied rules. The extent of their application depends upon the particular statutory framework whereunder jurisdiction has been conferred on the administrative authority. With regard to the exercise of a particular power by an administrative authority including exercise of judicial or quasijudicial functions the legislature, while conferring the said power, may feel that it would not be in the larger public interest that the reasons for the order passed by the administrative authority be recorded in the order and be communicated to the aggrieved party and it may dispense with such a Page 53 of 115 C/SCA/6331/2015 ORDER requirement. It may do so by making an express provision to that effect as those contained in the Administrative Procedure Act, 1946 of U. S. A. and the Administrative Decisions (Judicial Review) Act, 1977 of Australia whereby the orders passed by certain specified authorities are excluded from the ambit of the enactment. Such an exclusion can also arise by necessary implication from the nature of the subject matter, the scheme and the provisions of the enactment. The public interest underlying such a provision would outweigh the salutary purpose served by the requirement to record the reasons. The said requirement cannot, therefore, be insisted upon in such a case.

39.For the reasons aforesaid, it must be concluded that except in cases where the requirement has been dispensed with expressly or by necessary implication, an administrative authority exercising judicial or quasijudicial functions is required to record the reasons for its decision."

13. In the case of G. Vallikumari (supra), it has been observed as under: "13. We shall now deal with the question whether the Division Bench of the High Court was justified in setting aside the direction given by the Tribunal for reinstatement of the appellant with consequential benefits. Shri Y. S. Rao, who conducted inquiry against the appellant submitted report dated Page 54 of 115 C/SCA/6331/2015 ORDER 4.7.1999 with the findings that all the charges except charge No.4 have been proved against the appellant. She was given a copy of the inquiry report along with show cause notice to which she filed reply dated 20.11.1995.In his order, the Chairman of the Managing Committee did refer to the allegations levelled against the appellant and representation submitted by her in the light of the findings recorded by the inquiry officer but without even adverting to the contents of her representation and giving a semblance of indication of application of mind in the context of Rule 120(1)(iv) of the Rules, he directed her removal from service. Therefore, there is no escape from the conclusion that the order of punishment was passed by the Chairman without complying with the mandate of the relevant statutory rule and the principles of natural justice. The requirement of recording reasons by every quasi judicial or even an administrative authority entrusted with the task of passing an order adversely affecting an individual and communication thereof to the affected person is one of the recognized facets of the rules of natural justice and violation thereof has the effect of vitiating the order passed by the concerned authority.

14. A careful reading of the Tribunal's order shows that though it did not find any procedural infirmity in the inquiry against the appellant, the order passed by the Chairman of the Managing Committee was nullified only on the ground of violation of Section 8(2) of the Act read with Page 55 of 115 C/SCA/6331/2015 ORDER Rule 120(2) of the Rules inasmuch as permission of the Director was not obtained before removing the appellant from service. The High Court set aside the order of the Tribunal and indirectly restored the order passed by the Chairman of the Managing Committee because it was of the view that Section 8(2) is not applicable to the minority institutions. Neither the Tribunal nor the Division Bench of the High Court dealt with and decided the appellant's challenge to the findings recorded by the inquiry officer and her plea that the extreme penalty of removal from service imposed on her was not justified because she was not found guilty of any serious misconduct."

14. In the case of Kranti Associates Private Limited (supra), it has been observed as under: "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 the 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. 187897, 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 Page 56 of 115 C/SCA/6331/2015 ORDER must not be like the "inscrutable face of a sphinx".

16. In Harinagar Sugar Mills Ltd. v. Shyam Sunder Jhunjhunwala, 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 the 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, the 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, Page 57 of 115 C/SCA/6331/2015 ORDER 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. 167879, para 23).

19. Again in Bhagat Raja v. Union of India 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 the Mines and Minerals (Development and Regulation) Act, 1957, and having regard to the provision of Rule 55 of the Mineral Concession Rules. The Constitution Bench held that in exercising its power of revision under the aforesaid Rule the Central Government acts in a quasijudicial capacity (see AIR p. 1610, para 8). 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 the Central Government upheld the order of the State Government (see AIR p. 1610, para 9). Therefore, this Court insisted on reasons being given for the order.

20. In Mahabir Prasad Santosh Kumar v. State of U.P., while dealing with the U.P. Sugar Dealers' Licensing Page 58 of 115 C/SCA/6331/2015 ORDER Order under which the licence was cancelled, this Court held that such an order of cancellation is quasi judicial 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 SCC p. 768, para 7 : AIR p. 1304, para 7.)

21. In Travancore Rayon Ltd. v. Union of India, the Court, dealing with the revisional jurisdiction of the Central Government under the then Section 36 of the Central Excises 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 SCC p. 874, para 11 : AIR pp. 86566, para 11).

22. In Woolcombers of India Ltd. v. Workers Union this Court while considering an award under Section 11 of the Industrial Disputes Act Page 59 of 115 C/SCA/6331/2015 ORDER 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 done as well. The learned Judges said that a just but unreasoned conclusion does not appear to be just to those who read the same. Reasoned and just conclusion on the other hand will also have the appearance of justice. The third ground is that such awards are subject to Article 136 jurisdiction of this Court and in the absence of reasons, it is difficult for this Court to ascertain whether the decision is right or wrong (see SCC pp. 32021, para 5 : AIR p. 2761, para 5).

23. In Union of India v. Mohan Lal Capoor this Court while dealing with the question of selection under the Indian Administrative Service/Indian Police Service (Appointment by Promotion) Regulations held that the expression "reasons for the proposed supersession" should not be mere rubberstamp reasons. Such reasons must disclose how mind was applied to the subjectmatter for a decision regardless of the fact whether such a decision is purely administrative or quasijudicial. 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 Page 60 of 115 C/SCA/6331/2015 ORDER two (see SCC pp. 85354, paras 27 28 : AIR pp. 9798, paras 2728).

24. In Siemens Engg. and Mfg. Co. of India Ltd. v. Union of India 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 quasijudicial 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 SCC p. 986, para 6 : AIR p. 1789, para 6).

25. In Maneka Gandhi v. Union of India which is a decision of great jurisprudential significance in our constitutional law, Beg, C.J. in a concurring but different opinion held that an order impounding a passport is a quasijudicial decision (SCC p. 311, para 34 : AIR p. 612, para 34). 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.

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26. Y.V. Chandrachud, J. (as His Lordship then was) in a concurring but a separate opinion in Maneka Gandhi 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 keep the reasons undisclosed if the only motive for doing so is to keep the reasons away from judicial scrutiny. (See SCC p. 317, para 39 : AIR p. 613, para 39.)

27. In Rama Varma Bharathan Thampuram v. State of Kerala V.R. Krishna Iyer, J. speaking for a threeJudge Bench held that the functioning of the Board was quasijudicial in character. One of the attributes of quasijudicial functioning is the recording of reasons in support of decisions taken and the other requirement is following the principles of natural justice. The learned Judge held that natural justice requires reasons to be written for the conclusions made (see SCC p. 788, para 14 : AIR p. 1922, para 14).

28. In Gurdial Singh Fijji v. State of Punjab this Court, dealing with a service matter, relying on the ratio in Capoor, held that "rubberstamp reason" is not enough and virtually quoted the observation in Capoor to the extent that: (Capoor case, SCC p. 854, para 28) Page 62 of 115 C/SCA/6331/2015 ORDER "28. ... Reasons are the links between the materials on which certain conclusions are based and the actual conclusions." (See AIR p. 377, para

18.)

29. In a Constitution Bench decision of this Court in H.H. Shri Swamiji of Shri Amar Mutt v. Commr., Hindu Religious and Charitable Endowments Deptt. while giving the majority judgment Y.V. Chandrachud, C.J. referred to (SCC p. 658, para 29) Broom's Legal Maxims (1939 Edn., p.

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 p. 11, para

29.)

31. In Bombay Oil Industries (P) Ltd. v. Union of India this Court held that while disposing of applications under the 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 Page 63 of 115 C/SCA/6331/2015 ORDER before them by wellconsidered orders. In saying so, this Court relied on its previous decisions in Capoor and Siemens Engg. discussed above.

32. In Ram Chander v. Union of India 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 Rules. This Court held that the word "consider" occurring in Rule 22(2) must mean that 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 emphasised that in discharging quasi judicial functions the appellate authority must act in accordance with natural justice and give reasons for its decision (SCC pp. 10607, para 4 : AIR p. 1176, para 4).

33. In Star Enterprises v. City and Industrial Development Corpn. of Maharashtra Ltd. a threeJudge Bench of this Court held that in the present day setup 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 fields 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 Page 64 of 115 C/SCA/6331/2015 ORDER both by superior administrative heads and for judicial process and opined that such reasons should be communicated unless there are specific justifications for not doing so (see SCC pp. 28485, para 10).

34. In Maharashtra State Board of Secondary and Higher Secondary Education v. K.S. Gandhi 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 pp. 738 39, para 22).

35. In M.L. Jaggi v. MTNL 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 p. 123, para 8.)

36. In Charan Singh v. Healing Touch Hospital a threeJudge Bench of this Court, dealing with a grievance under the CP Act, held that the authorities under the Act exercise quasijudicial powers for redressal of consumer disputes and it is, therefore, imperative that such a body should arrive at conclusions based on Page 65 of 115 C/SCA/6331/2015 ORDER 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 reasons is "too obvious to be reiterated and needs no emphasising". (See SCC p. 673, para 11 : AIR p. 3141, para 11 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 Som Datt Datta v. Union of India 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. This Court held that an order confirming such proceedings does not become illegal if it does not record reasons. (AIR pp. 42122, para 10 of the Report.)

38. About two decades thereafter, a similar question cropped up before this Court in S.N. Mukherjee v. Union of India. 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 : AIR para 47 at p.

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2000 of the Report and held that 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 proceedings 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 hereinbelow:

"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 Commanderin Chief, to aid him in properly commanding the Army and Navy and enforcing discipline therein, and utilised under his orders or those of his authorised military representatives."

40. Our Constitution also deals with courtmartial 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 Stefan v. General Medical Council it has been held: (WLR p. 1300) Page 67 of 115 C/SCA/6331/2015 ORDER 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 p. 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. v. Civil Service Appeal Board, ex p Cunningham, 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 p. 317) "... '... it is a corollary of the discretion conferred upon the Board that it is their duty to set out their reasoning in sufficient form to show the principles on which they have proceeded. Adopting Lord Lane, C.J.'s observations [in R. v. Immigration Appeal Tribunal, ex p Khan (Mahmud) All ER at p. 423, QB at pp. 79495], 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 Page 68 of 115 C/SCA/6331/2015 ORDER 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 p.

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 Ltd. v. Seatrans Shipping Corpn.). It has been acknowledged that this trend is consistent with the development towards openness in the Government and judicial administration.

45. In English v. Emery Reimbold and Strick Ltd. 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 v. Chief Constable of the Royal Ulster Constabulary, Lord Bingham of Cornhill and Lord Page 69 of 115 C/SCA/6331/2015 ORDER Steyn, on the requirement of reason held: (WLR p. 1769, para 7) "7. ... First, they impose a discipline ... which may contribute to such refusals being considered with care. Secondly, reasons encourage 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 : AIR para 11 at p. 1988 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 courts 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 US Court in Securities and Exchange Commission v. Chenery Corpn. and Dunlop v. Bachowski in support of its opinion discussed above.

47. Summarising the above discussion, this Court holds:

(a) In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially.

(b) A quasijudicial authority must record reasons in support of its Page 70 of 115 C/SCA/6331/2015 ORDER 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 quasijudicial 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 decisionmaking process as observing principles of natural justice by judicial, quasijudicial 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 lifeblood of judicial decisionmaking justifying the principle that reason is the soul of justice.

(i) Judicial or even quasijudicial 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.

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(j) Insistence on reason is a requirement for both judicial accountability and transparency.

(k) If a judge or a quasijudicial authority is not candid enough about his/her decisionmaking 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 succinct. A pretence of reasons or "rubberstamp reasons" is not to be equated with a valid decisionmaking 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 decisionmakers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor.)

(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 EHRR, at 562 para 29 and Anya v. University of Oxford, wherein the Court referred to Article 6 of the 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, Page 72 of 115 C/SCA/6331/2015 ORDER requirement of giving reasons for the decision is of the essence and is virtually a part of "due process".

48. For the reasons aforesaid, we set aside the order of the National Consumer Disputes Redressal Commission and remand the matter to the said forum for deciding the matter by passing a reasoned order in the light of the observations made above. Since some time has elapsed, this Court requests the forum to decide the matter as early as possible, preferably within a period of six weeks from the date of service of this order upon it.

49. Insofar as the appeal filed by the Bank is concerned, this Court finds that the National Consumer Disputes Redressal Commission in its order dated 442008 has given some reasons in its finding. The reasons, inter alia, are as under:

"We have gone through the orders of the District Forum and the State Commission, perused the record placed before us and heard the parties at length. The State Commission has rightly confirmed the order of the District Forum after coming to the conclusion that the petitioner and the builder, Respondents 3 and 4 have colluded with each other and hence, directed them to compensate the complainant for the harassment caused to them."

50. From the order of the State Commission dated 2672007 in connection with the appeal filed by Page 73 of 115 C/SCA/6331/2015 ORDER the Bank, we do not find that the State Commission has independently considered the Bank's appeal. The State Commission dismissed the Bank's appeal for the reasons given in its order dated 672007 in connection with the appeal of the builders.

51. This Court is of the view that since the Bank has filed a separate appeal, it has a right to be heard independently in support of its appeal. That right has been denied by the State Commission. In that view of the matter, this Court quashes the order dated 2672007 passed by the State Commission as also the order of the National Commission dated 44 2008 which has affirmed the order of the State Commission."

15. In the case of BA Linga Reddy (supra), it has been observed as under: "18. It is apparent from the provisions that the scheme is framed for providing efficient, adequate, economical and properly coordinated road transport service in public interest. Section 102 of the Act of 1988 does not lay down the requirement of recording any express finding on any particular aspect; whereas the duty is to hear and consider the objections. It requires the State Government to act in public interest to cancel or modify a scheme after giving the State Transport Undertaking or any other affected person by the proposed modification an opportunity of hearing. The State is supposed to be acting in public Page 74 of 115 C/SCA/6331/2015 ORDER interest while exercising the power under the provision. However, that does not dispense with the requirement to record reasons while dealing with objections.

19. Modification of the scheme is a quasijudicial function while modifying or cancelling a scheme. The State Government is dutybound to consider the objections and to give reasons either to accept or reject them. The rule of reason is anti thesis to arbitrariness in action and is a necessary concomitant of the principles of natural justice.

20. In Siemens Engineering & Manufacturing Co. of India Ltd. v. Union of India [1976 (2) SCC 981], it was held :

"6. x x x It is now settled law that where an authority makes an order in exercise of a quasijudicial function, it must record its reasons in support of the order it makes. Every quasijudicial order must be supported by reasons. That has been laid down by a long line of decisions of this Court ending with N.M. Desai v. Testeels Ltd.. But, unfortunately, the Assistant Collector did not choose to give any reasons in support of the order made by him confirming the demand for differential duty. This was in plain disregard of the requirement of law. The Collector in revision did give some sort of reason but it was hardly satisfactory. He did not deal in his order with the arguments advanced by the appellants in their representation dated December 8, 1961 which were repeated Page 75 of 115 C/SCA/6331/2015 ORDER in the subsequent representation dated June 4, 1965. It is not suggested that the Collector should have made an elaborate order discussing the arguments of the appellants in the manner of a Court of law. But the order of the Collector could have been a little more explicit and articulate so as to lend assurance that the case of the appellants had been properly considered by him. 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 quasijudicial function will be able to justify their existence and carry 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 quasijudicial 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. x x x."

21. This Court in Rani Lakshmi Bai Kshetriya Gramin Bank's case (supra) while relying upon S.N. Mukherjee v.

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Union of India [1990 (4) SCC 594] has laid down thus :

"8. The purpose of disclosure of reasons, as held by a Constitution Bench of this Court in S.N. Mukherjee v. Union of India (1990 (4) SCC 594), is that people must have confidence in the judicial or quasijudicial authorities. Unless reasons are disclosed, how can a person know whether the authority has applied its mind or not? Also, giving of reasons minimises the chances of arbitrariness. Hence, it is an essential requirement of the rule of law that some reasons, at least in brief, must be disclosed in a judicial or quasijudicial order, even if it is an order of affirmation."

22. A Constitution Bench of this Court has laid down in Krishna Swami v. Union of India & Ors. [1992 (4) SCC 605] that if a statutory or public authority/functionary does not record the reasons, its decision would be rendered arbitrary, unfair, unjust and violating Articles 14 and 21 of the Constitution. This Court has laid down thus :

"Undoubtedly, in a parliamentary democracy governed by rule of law, any action, decision or order of any statutory/public authority/functionary must be founded upon reasons stated in the order or staring from the record. 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 Page 77 of 115 C/SCA/6331/2015 ORDER 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. But exceptions are envisaged keeping institutional pragmatism into play, conscious as we are of each other's limitations.

23. In Workmen of Meenakshi Mills Ltd. & Ors. v. Meenakshi Mills Ltd. & Anr. [1992 (3) SCC 336] while considering the principles of natural justice, it has been observed that it is the duty to give reasons and to pass a speaking order; that excludes arbitrariness in action as the same is necessary to exclude arbitrariness. This Court has observed thus :

"We have already dealt with the nature of the power that is exercised by the appropriate Government or the authority while refusing or granting permission under subsection (2) and have found that the said power is not purely administrative in character but partakes of exercise of a function which is judicial in nature. The exercise of the said power envisages passing of a speaking order on an objective consideration of relevant facts after affording an opportunity to the concerned parties. Principles or guidelines are insisted on with a view to control the exercise of discretion conferred by the statute. There is need for such principles or guidelines when the discretionary power is purely administrative in character to be Page 78 of 115 C/SCA/6331/2015 ORDER exercised on the subjective opinion of the authority. The same is, however, not true when the power is required to be exercised on objective considerations by a speaking order after affording the parties an opportunity to put forward their respective points of view.

x x x x x We are also unable to agree with the submission that the requirement of passing a speaking order containing reasons as laid down in subsection (2) of Section 25N does not provide sufficient safeguard against arbitrary action. In S.N. Mukherjee v. Union of India [1990 (4) SCC 594], it has been held that irrespective of the fact whether the decision is subject to appeal, revision or judicial review, the recording of reasons by an administrative authority by itself serves a salutary purpose, viz., "it excludes chances of arbitrariness and ensures a degree of fairness in the process of decisionmaking."

24. In Divisional Forest Officer, Kothagudem & Ors. v. Madhusudhan Rao [2008 (3) SCC 469], this Court has laid down thus :

"20. It is no doubt also true that an appellate or revisional authority is not required to give detailed reasons for agreeing and confirming an order passed by the lower forum but, in our view, in the interests of justice, the delinquent officer is entitled to know at least the mind of the appellate or revisional authority in dismissing his appeal and/or revision. It is true that no detailed Page 79 of 115 C/SCA/6331/2015 ORDER reasons are required to be given, but some brief reasons should be indicated even in an order affirming the views of the lower forum."

25. In Chairman, Disciplinary Authority, Rani Lakshmi Bai Kshetriya Gramin Bank v. Jagdish Sharan Varshney & Ors. [2009 (4) SCC 240], it was observed that :

"8. The purpose of disclosure of reasons, as held by a Constitution Bench of this Court in S.N. Mukherjee v. Union of India (supra), is that people must have confidence in the judicial or quasijudicial authorities. Unless reasons are disclosed, how can a person know whether the authority has applied its mind or not? Also, giving of reasons minimises the chances of arbitrariness. Hence, it is an essential requirement of the rule of law that some reasons, at least in brief, must be disclosed in a judicial or quasijudicial order, even if it is an order of affirmation."

26. In Manohar v. State of Maharashtra & Anr. [2012 (13) SCC 14] it has been laid down that in the context of State Information Commission, it has to hear the parties, apply its mind and record the reasons as they are the basic elements of natural justice. This Court has laid down thus:

"17. The State Information Commission is performing adjudicatory functions where two parties raise their respective issues to which the State Page 80 of 115 C/SCA/6331/2015 ORDER Information Commission is expected to apply its mind and pass an order directing disclosure of the information asked for or declining the same. Either way, it affects the rights of the parties who have raised rival contentions before the Commission. If there were no rival contentions, the matter would rest at the level of the designated Public Information Officer or immediately thereafter. It comes to the State Information Commission only at the appellate stage when rights and contentions require adjudication. The adjudicatory process essentially has to be in consonance with the principles of natural justice, including the doctrine of audi alteram partem. Hearing the parties, application of mind and recording of reasoned decision are the basic elements of natural justice. It is not expected of the Commission to breach any of these principles, particularly when its orders are open to judicial review. Much less to Tribunals or such Commissions, the courts have even made compliance with the principle of rule of natural justice obligatory in the class of administrative matters as well."

27. Now we come to the order passed in the instant case with respect to the Bellary Scheme which is to the following effect :

"The objections and representations received in this regard is examined and the arguments advanced by the representatives of the STUs and private operators for and against the modification proposed by the State Page 81 of 115 C/SCA/6331/2015 ORDER Government is considered in the light of the provisions of the Motor Vehicles Act, 1988. Sec. 102 of the M.V.Act, 1988 empowers the State Government, at any time, if it consider necessary in the public interest so to do, modify any approved scheme. Therefore, what is paramount for modifying the scheme is that it should be in the public interest. The modification now proposed is necessitated in view of the stand taken by the Hon'ble Supreme Court of India in Ashrafulla Khan's case reported in AIR 2002 SC

629. During the period from 04.12.1995 and 14.01.2002, considering the interpretation with regard to the words "overlapping", "intersection" and "corridor restriction" of the Hon'ble High Court of Karnataka, the Transport Authorities have granted the permits to the private operators in accordance with the provisions of M.V.Act, 1988 and rules made thereunder considering the need of the travelling public, as these operators are meeting the genuine demands of the travelling public in excess of the services provided by the STUs. Hence, it has become necessary to save all the permits, granted by the RTAs which were in operation as on 1.4.2002 in the interest of the travelling public. Therefore, on the facts and averments made before me, I do not find the sufficient grounds is established to support the objections and representations received and made in person opposing the modification of the approved Bellary and Raichur schemes published in Notification Page 82 of 115 C/SCA/6331/2015 ORDER No.HD/22/TMP/64 Dated 18.4.64 and TD/140/TMI/82, dated 03.11.1987. Hence, the draft notification modifying the above schemes published in Notification No.HTD/122/TMA97 dated 25.10.2002 is upheld and approved. All the permits held as on 1.4.2002 are saved with the condition that they shall not pick up of set down passengers except in the bus stands."

28. It is apparent that there is no consideration of the objections except mentioning the arguments of the rival parties. Objections both factual and legal have not been considered much less reasons assigned to overrule them. Even in brief, reasons have not been assigned indicating how objections are disposed of.

29. Situation is worse in the orders modifying other schemes. Thus, modification of the Schemes could not be said to be in accordance with the principles of natural justice in the absence of reasons so as to reach the conclusion that private operators are meeting the genuine demands of the public in excess of the service provided by the STOs., hence, it cannot be said to be sustainable."

16. In the case of Ranjeet Singh (supra), it has been observed as under: "4.Feeling aggrieved by the judgment of the appellate Court, the respondent preferred a writ petition in the High Court of Judicature at Page 83 of 115 C/SCA/6331/2015 ORDER Allahabad under Art. 226 and alternatively under Art. 227 of the Constitution. It was heard by a learned single Judge of the High Court. The High Court has set aside the judgment of the appellate Court and restored that of the trial Court. A perusal of the judgment of the High Court shows that the High Court has clearly exceeded its jurisdiction in setting aside the judgment of the appellate Court. Though not specifically stated, the phraseology employed by the High Court in its judgment, goes to show that the High Court has exercised its certiorari jurisdiction for correcting the judgment of the appellate Court. In Surya Dev Rai v. Ram Chander Rai and others (2003) 6 SCC 675, this Court has ruled that to be amenable to correction in certiorari jurisdiction, the error committed by the Court or authority on whose judgment the High Court was exercising jurisdiction, should be an error which is selfevident. An error which needs to be established by lengthy and complicated arguments or by indulging into a long drawn process of reasoning, cannot possibly be an error available for correction by writ of certiorari. If it is reasonably possible to form two opinions on the same material, the finding arrived at one way or the other, cannot be called a patent error. As to the exercise of supervisory jurisdiction of the High Court under Art. 227 of the Constitution also,it has been held in Surya Dev Rai (supra) that the jurisdiction was not available to be exercised for indulging into re Page 84 of 115 C/SCA/6331/2015 ORDER appreciation or evaluation of evidence or correcting the errors in drawing inferences like a Court of appeal. The High Court has itself recorded in its judgment that "considering the evidence on the record carefully" it was inclined not to sustain the judgment of the appellate Court. On its own showing, the High Court has acted like an appellate Court which was not permissible for it to do under Art. 226 or Art. 227 of the Constitution."

17. In the case of State of Haryana (supra), it has been observed as under:

17. The appellants urged that the jurisdiction of the High Court under Article 227 is very limited and the High Court, while exercising the jurisdiction under Article 227, has to ensure that the courts below work within the bounds of their authority. More than half a century ago, the Constitution Bench of this court in Nagendra Nath Bora and Another v. Commissioner of Hills Division and Appeals, Assam and Others, AIR 1958 SC 398 settled that power under Article 227 is limited to seeing that the courts below function within the limit of its authority or jurisdiction.

18. This court placed reliance on Nagendra Nath's case in a subsequent judgment in Nibaran Chandra Bag v. Mahendra Nath Ghughu, AIR 1963 SC 1895. The court observed that: "12. ... jurisdiction conferred Page 85 of 115 C/SCA/6331/2015 ORDER under Article 227 is not by any means appellate in its nature for correcting errors in the decisions of subordinate courts or tribunals but is merely a power of superintendence to be used to keep them within the bounds of their authority..."

19. This court had an occasion to examine this aspect of the matter in the case of Mohd. Yunus v. Mohd. Mustaqim and Others (1983) 4 SCC 566 : (AIR 1984 SC 38). The court observed as under : "7. The supervisory jurisdiction conferred on the High Courts under Article 227 of the Constitution is limited "to seeing that an inferior Court or Tribunal functions within the limits of its authority," and not to correct an error apparent on the face of the record, much less an error of law. for this case there was, in our opinion, no error of law much less an error apparent on the face of the record. There was no failure on the part of the learned Subordinate Judge to exercise jurisdiction nor did he act in disregard of principles of natural justice. Nor was the procedure adopted by him not in consonance with the procedure established by law. In exercising the supervisory power under Article 227, the High Court does not act as an Appellate Court or Tribunal. It will not review or reweigh the evidence upon which the determination of the inferior court or tribunal purports to be based or to correct errors of law in the decision."

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20. This court again clearly reiterated the legal position in Laxmikant Revchand Bhojwani and Another v. Pratapsing Mohansingh Pardeshi (1995) 6 SCC 576. The court again cautioned that:

"9. ...The High Court under Article 227 of the Constitution cannot assume unlimited prerogative to correct all species of hardship or wrong decisions. It must be restricted to cases of grave dereliction of duty and flagrant abuse of fundamental principles of law or justice, where grave injustice would be done unless the High Court interferes.

21. A threeJudge Bench of this court in Rena Drego (Mrs.) v. Lalchand Soni and Others (1998) 3 SCC 341 : (AIR 1998 SC 1990 : 1998 AIR SCW 1840) again abundantly made it clear that the High Court cannot interfere with the findings of fact recorded by the subordinate court or the tribunal while exercising its jurisdiction under Article 227. Its function is limited to seeing that the subordinate court or the tribunal functions within the limits of its authority. It cannot correct mere errors of fact by examining the evidence and reappreciating it.

22. In Virendra Kashinath Ravat and Another v. Vinayak N. Joshi and Others (1999) 1 SCC 47 : (AIR 1999 SC 162 : 1998 AIR SCW 3521) this court held that the limited power under Article 227 cannot be invoked except for ensuring that the subordinate courts function within its limits.

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23. This court over 50 years has been consistently observing that limited jurisdiction of the High Court under Article 227 cannot be exercised by interfering with the findings of fact and set aside the judgments of the courts below on merit.

18. In the case of Sameer Suresh Gupta (supra), it has been observed as under: "6. In our view, the impugned order is liable to be set aside because while deciding the writ petition filed by the respondent the learned Single Judge ignored the limitations of the High Court's jurisdiction under Article 227 of the Constitution. The parameters for exercise of power by the High Court under that article were considered by the twoJudge Bench of this Court in Surya Dev Rai v. Ram Chander Rai. After considering various facets of the issue, the twoJudge Bench culled out the following principles: (SCC pp. 69496, para 38) "(1) Amendment by Act 46 of 1999 with effect from 172002 in Section 115 of the Code of Civil Procedure cannot and does not affect in any manner the jurisdiction of the High Court under Articles 226 and 227 of the Constitution.

(2) Interlocutory orders, passed by the courts subordinate to the High Court, against which remedy of revision has been excluded by CPC Amendment Act 46 of 1999 are Page 88 of 115 C/SCA/6331/2015 ORDER nevertheless open to challenge in, and continue to be subject to, certiorari and supervisory jurisdiction of the High Court.

(3) Certiorari, under Article 226 of the Constitution, is issued for correcting gross errors of jurisdiction i.e. when a subordinate court is found to have acted (i) without jurisdiction -- by assuming jurisdiction where there exists none, or (ii) in excess of its jurisdiction

-- by overstepping or crossing the limits of jurisdiction, or (iii) acting in flagrant disregard of law or the rules of procedure or acting in violation of principles of natural justice where there is no procedure specified, and thereby occasioning failure of justice.

(4) Supervisory jurisdiction under Article 227 of the Constitution is exercised for keeping the subordinate courts within the bounds of their jurisdiction. When a subordinate court has assumed a jurisdiction which it does not have or has failed to exercise a jurisdiction which it does have or the jurisdiction though available is being exercised by the court in a manner not permitted by law and failure of justice or grave injustice has occasioned thereby, the High Court may step in to exercise its supervisory jurisdiction.

(5) Be it a writ of certiorari or the exercise of supervisory jurisdiction, none is available to correct mere errors of fact or of law unless the following requirements are satisfied:

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(i) the error is manifest and apparent on the face of the proceedings such as when it is based on clear ignorance or utter disregard of the provisions of law, and (ii) a grave injustice or gross failure of justice has occasioned thereby.

(6) A patent error is an error which is selfevident i.e. which can be perceived or demonstrated without involving into any lengthy or complicated argument or a longdrawn process of reasoning. Where two inferences are reasonably possible and the subordinate court has chosen to take one view, the error cannot be called gross or patent.

(7) The power to issue a writ of certiorari and the supervisory jurisdiction are to be exercised sparingly and only in appropriate cases where the judicial conscience of the High Court dictates it to act lest a gross failure of justice or grave injustice should occasion. Care, caution and circumspection need to be exercised, when any of the abovesaid two jurisdictions is sought to be invoked during the pendency of any suit or proceedings in a subordinate court and the error though calling for correction is yet capable of being corrected at the conclusion of the proceedings in an appeal or revision preferred thereagainst and entertaining a petition invoking certiorari or supervisory jurisdiction of the High Court would obstruct the smooth flow and/or early disposal of the suit or proceedings. The High Court may feel inclined to intervene where the error is such, as, if not Page 90 of 115 C/SCA/6331/2015 ORDER corrected at that very moment, may become incapable of correction at a later stage and refusal to intervene would result in travesty of justice or where such refusal itself would result in prolonging of the lis.

(8) The High Court in exercise of certiorari or supervisory jurisdiction will not convert itself into a court of appeal and indulge in reappreciation or evaluation of evidence or correct errors in drawing inferences or correct errors of mere formal or technical character.

(9) In practice, the parameters for exercising jurisdiction to issue a writ of certiorari and those calling for exercise of supervisory jurisdiction are almost similar and the width of jurisdiction exercised by the High Courts in India unlike English courts has almost obliterated the distinction between the two jurisdictions. While exercising jurisdiction to issue a writ of certiorari, the High Court may annul or set aside the act, order or proceedings of the subordinate courts but cannot substitute its own decision in place thereof. In exercise of supervisory jurisdiction the High Court may not only give suitable directions so as to guide the subordinate court as to the manner in which it would act or proceed thereafter or afresh, the High Court may in appropriate cases itself make an order in supersession or substitution of the order of the subordinate court as the court should have made in the facts and circumstances of the case."

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7. The same question was considered by another Bench in Shalini Shyam Shetty v. Rajendra Shankar Patil, and it was held: (SCC pp. 34749, para 49) "(a) A petition under Article 226 of the Constitution is different from a petition under Article 227. The mode of exercise of power by the High Court under these two articles is also different.

(b) In any event, a petition under Article 227 cannot be called a writ petition. The history of the conferment of writ jurisdiction on High Courts is substantially different from the history of conferment of the power of superintendence on the High Courts under Article 227 and have been discussed above.

(c) High Courts cannot, at the drop of a hat, in exercise of its power of superintendence under Article 227 of the Constitution, interfere with the orders of tribunals or courts inferior to it. Nor can it, in exercise of this power, act as a court of appeal over the orders of the court or tribunal subordinate to it. In cases where an alternative statutory mode of redressal has been provided, that would also operate as a restrain on the exercise of this power by the High Court.

(d) The parameters of interference by High Courts in exercise of their power of superintendence have been repeatedly laid down by this Court. In this regard the High Court must be Page 92 of 115 C/SCA/6331/2015 ORDER guided by the principles laid down by the Constitution Bench of this Court in Waryam Singh5 and the principles in Waryam Singh5 have been repeatedly followed by subsequent Constitution Benches and various other decisions of this Court.

(e) According to the ratio in Waryam Singh5, followed in subsequent cases, the High Court in exercise of its jurisdiction of superintendence can interfere in order only to keep the tribunals and courts subordinate to it, 'within the bounds of their authority'.

(f) In order to ensure that law is followed by such tribunals and courts by exercising jurisdiction which is vested in them and by not declining to exercise the jurisdiction which is vested in them.

(g) Apart from the situations pointed in (e) and (f), High Court can interfere in exercise of its power of superintendence when there has been a patent perversity in the orders of the tribunals and courts subordinate to it or where there has been a gross and manifest failure of justice or the basic principles of natural justice have been flouted.

(h) In exercise of its power of superintendence High Court cannot interfere to correct mere errors of law or fact or just because another view than the one taken by the tribunals or courts subordinate to it, is a possible view. In other words the Page 93 of 115 C/SCA/6331/2015 ORDER jurisdiction has to be very sparingly exercised.

(i) The High Court's power of superintendence under Article 227 cannot be curtailed by any statute. It has been declared a part of the basic structure of the Constitution by the Constitution Bench of this Court in L. Chandra Kumar v. Union of India6 and therefore abridgment by a constitutional amendment is also very doubtful.

(j) It may be true that a statutory amendment of a rather cognate provision, like Section 115 of the Civil Procedure Code by the Civil Procedure Code (Amendment) Act, 1999 does not and cannot cut down the ambit of High Court's power under Article

227. At the same time, it must be remembered that such statutory amendment does not correspondingly expand the High Court's jurisdiction of superintendence under Article 227.

(k) The power is discretionary and has to be exercised on equitable principle. In an appropriate case, the power can be exercised suo motu.

(l) On a proper appreciation of the wide and unfettered power of the High Court under Article 227, it transpires that the main object of this article is to keep strict administrative and judicial control by the High Court on the administration of justice within its territory.

(m) The object of superintendence, both administrative and judicial, is Page 94 of 115 C/SCA/6331/2015 ORDER to maintain efficiency, smooth and orderly functioning of the entire machinery of justice in such a way as it does not bring it into any disrepute. The power of interference under this article is to be kept to the minimum to ensure that the wheel of justice does not come to a halt and the fountain of justice remains pure and unpolluted in order to maintain public confidence in the functioning of the tribunals and courts subordinate to the High Court.

(n) This reserve and exceptional power of judicial intervention is not to be exercised just for grant of relief in individual cases but should be directed for promotion of public confidence in the administration of justice in the larger public interest whereas Article 226 is meant for protection of individual grievance. Therefore, the power under Article 227 may be unfettered but its exercise is subject to high degree of judicial discipline pointed out above.

(o) An improper and a frequent exercise of this power will be counterproductive and will divest this extraordinary power of its strength and vitality."

19. In the case of Punjab National Bank (supra), it has been observed as under: "6. The Act has been enacted with a view to provide a special procedure for recovery of debts due to the banks and the financial institutions.

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There is hierarchy of appeal provided in the Act, namely, filing of an appeal under S. 20 and this fast track procedure cannot be allowed to be derailed either by taking recourse to proceedings under Arts. 226 and 227 of the Constitution or by filing a civil suit, which is expressly barred. Even though a provision under an Act cannot expressly oust the jurisdiction of the Court under Arts. 226 and 227 of the Constitution, nevertheless when there is an alternative remedy available judicial prudence demands that the Court refrains from exercising its jurisdiction under the said constitutional provisions. This was a case where the High Court should not have entertained the petition under Art. 227 of the Constitution and should have directed the respondent to take recourse to the appeal mechanism provided by the Act."

20. In the case of Gujarat Fisheries Central CoOp.

Association Ltd. (supra), it has been observed as under: "4. While providing the statutory Appellate Forum in Section 20 and making some safeguards, and additionally statutorily prescribing 75 per cent of the amount, to be deposited as a condition precedent for filing an appeal, evidently, aims at to discourage the unscrupulous persons and to encourage the bonafide, honest people to take the orders for further judicial scrutiny in the Appellate Forum. With a view to obviate the depositing of 75 per Page 96 of 115 C/SCA/6331/2015 ORDER cent of amount as prescribed under Section 21 and with a view to avail the statutory appellate provision, the parties cannot be permitted to invoke extraordinary, plenary, equitable, discretionary writ jurisdiction under Article 226 and 227 of the Constitution of India. Though there is no ban and bar to entertain the petition, the prudence and the practice would, undoubtedly, command that ordinarily when alternative efficacious remedy is available, and, more so, when statutory appellate mechanism is available in the Statute, no petition should be entertained. The view, which we are inclined take, is very reinforced by the decision of the Hon'ble Apex Court rendered in Punjab National Bank Vs. O.C. Krishnan and Others - (2001) 6 Supreme Court Cases

569. In a similar case, it has been clearly propounded and held that the High Court ought not to have exercised its jurisdiction under Article 227, in view of the provision for alternative remedy contained in the Act. It will also be interesting to note that the Act has been enacted with a view to provide a special procedure for recovery of debts due to the banks and financial institutions. There is a hierarchy of appeal provided in the Act. The appeal is provided in Section 20 and obviously therefore such an fast track procedure cannot be allowed to be derailed either by taking recourse to proceedings under Articles 226 and 227 of the Constitution or by filing a civil suit under Section 9 of the Code of Civil Procedure. It is in this context it has been succinctly Page 97 of 115 C/SCA/6331/2015 ORDER observed in the said decision by the Hon'ble Apex Court, that, "Even though a provision under an Act cannot expressly oust the jurisdiction of the court under Articles 226 and 227 of the Constitution, nevertheless, when there is an alternative remedy available, judicial prudence demands that the Court refrains from exercising its jurisdiction under the constitutional writ provisions. In this connection, it would also be interesting to refer the Division Bench decision of this Court delivered by us [Coram: J.N. Bhatt and K.A. Puj, JJ.] in Letters Patent Appeal No. 685 of 2002 on 1922003, wherein, in a similar case, we have taken the same view and we find no reason to make a departure from our earlier view.

5. The learned Advocate for the appellant has taken us through following Judgments in course of his submissions before us and in support of his version that the impugned order is without jurisdiction and that despite the provision of appeal into the Act, the jurisdiction of the Court, under Article 226/227, is not barred. The proposition, which is advanced and sought to be supported by the following decisions, cannot be questioned. Therefore, without entering into the meticulous details of the entire hosts of case law, relied on by the learned advocate for the appellant, we would just highlight the cases relied on and through which we are taken in course of the submissions, but they are not attracted and applicable to the facts Page 98 of 115 C/SCA/6331/2015 ORDER of this case:

1. Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai & Others (1998) 8 Supreme Court Cases

1.

2. Dr. Smt. Kuntesh Gupta Vs. Management of Hindu Kanya Mahavidyalaya, Sitapur (U.P.) and Others AIR 1987 S.C. 2186.

3. Harbanslal Sahnia & Anr. Vs. Indian Oil Corporation Ltd & Others 2002 (9) SCALE 724.

4. Rohtas Industries Ltd Vs. Rohtas Industries Staff Union and Others AIR 1976 SC 425.

5. Union of India and Another Vs. State of Haryana and Another (2000) 10 SCC 482.

6. State of West Bengal Vs. North Adjai Coal Co. Ltd. 1971 (1) SCC 309.

7. State of U.P.& Ors. Vs. M/s.

Indian Hume Pipe Co.Ltd. AIR 1977 SC 1132.

8. Himmatlal Harilal Mehta Vs. State of M.P. & Others AIR 1954 SC 403.

9. T.C. Basappa Vs. T. Nagappa and Another AIR 1954 SC 440.

10. State of U.P. Vs. Mohammad Nooh AIR 1958 SC 86.

11. Calcutta Discount Co. Ltd vs.Incometax Officer, Companies District & Another AIR 1961 SC 372.

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12. A.V. Venkateswaran Collector of Customs, Bombay Vs. Ramchand Sobhraj Wadhwani and Another AIR 1961 SC 1506.

13. M.G. Abrol, Additional Collector of Customs, Bombay and another Vs. M/s. Shantilal Chhotalal and Co. AIR 1966 SC 197."

21. In the case of State Bank of India (supra), it has been observed as under: "6. We have heard learned counsel for the parties. We fail to understand how the High Court could have exercised its jurisdiction under Articles 226 and 2327 of the Constitution to set aside a decree/final order passed by the DRT on 9.4.2003, in a collateral proceeding wherein the decree/final order was challenged indirectly on the ground that the application of the respondent for crossexamining the deponent had earlier been wrongly rejected. We have no hesitation in holding that when the DRT did not accede to the request of the respondent to crossexamine the deponent, it could have, in the appeal preferred by it, assailed the decree/final order on that ground and the Appellate Authority would have passed appropriate orders. The mere fact that the respondent had not been given an opportunity to crossexamine the deponent did not enable the respondent to bypass the provision for appeal and approach the High Court directly by a writ petition under Articles 226 and 227 of the Page 100 of 115 C/SCA/6331/2015 ORDER Constitution, challenging the decree/final order on the ground that the order earlier passed, refusing to permit the crossexamination of the deponent, was erroneous.

7. In the facts and circumstances of this case, we hold that the respondent ought to have availed the remedy provided under Section 20 of the Act and preferred an appeal before the Appellate Tribunal wherein he could have urged all his grievances and challenged the decree/final order passed by the DRT. The order passed by the High Court in exercise of writ jurisdiction is wholly unjustified and it is accordingly set aside."

22. In the case of United Bank of India (supra), it has been observed as under: "42. There is another reason why the impugned order should be set aside. If respondent No.1 had any tangible grievance against the notice issued under Section 13(4) or action taken under Section 14, then she could have availed remedy by filing an application under Section 17(1). The expression 'any person' used in Section 17(1) is of wide import. It takes within its fold, not only the borrower but also guarantor or any other person who may be affected by the action taken under Section 13(4) or Section 14. Both, the Tribunal and the Appellate Tribunal are empowered to pass interim orders under Sections 17 and 18 and are required to decide the matters within a fixed time Page 101 of 115 C/SCA/6331/2015 ORDER schedule. It is thus evident that the remedies available to an aggrieved person under the SARFAESI Act are both expeditious and effective.

43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc., the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute.

44. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or authority, including in appropriate cases, any Government, directions, orders or Page 102 of 115 C/SCA/6331/2015 ORDER writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of selfimposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution.

45. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance.

49. The views expressed in Titaghur Paper Mills Co. Ltd. v. State of Orissa (AIR 1983 SC 603) (supra) were echoed in Assistant Collector of Central Excise, Chandan Nagar, West Bengal v. Dunlop India Ltd. and others (1985) 1 SCC 260 : (AIR 1985 SC 330) in the following words:

"Article 226 is not meant to short circuit or circumvent statutory procedures. It is only where statutory remedies are entirely ill suited to meet the demands of extraordinary situations, as for instance where the very vires of the Page 103 of 115 C/SCA/6331/2015 ORDER statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to Article 226 of the Constitution. But then the Court must have good and sufficient reason to bypass the alternative remedy provided by statute. Surely matters involving the revenue where statutory remedies are available are not such matters. We can also take judicial notice of the fact that the vast majority of the petitions under Article 226 of the Constitution are filed solely for the purpose of obtaining interim orders and thereafter prolong the proceedings by one device or the other. The practice certainly needs to be strongly discouraged."

50. In Punjab National Bank v. O. C. Krishnan and others (2001) 6 SCC 569 : (AIR 2001 SC 3208 : 2001 AIR SCW 2993), this Court considered the question whether a petition under Article 227 of the Constitution was maintainable against an order passed by the Tribunal under Section 19 of the DRT Act and observed:

"5. In our opinion, the order which was passed by the Tribunal directing sale of mortgaged property was appealable under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short "the Act"). The High Court ought not to have exercised its jurisdiction under Article 227 in view of the provision for alternative remedy contained in the Act. We do Page 104 of 115 C/SCA/6331/2015 ORDER not propose to go into the correctness of the decision of the High Court and whether the order passed by the Tribunal was correct or not has to be decided before an appropriate forum.

55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection."

23. In the case of Kanaiyalal Lalchand Sachdev (supra), it has been observed as under: "23. In our opinion, therefore, the High Court rightly dismissed the petition on the ground that an efficacious remedy was available to the appellants under Section 17 of the Act. It is wellsettled that ordinarily relief under Articles 226/227 of the Constitution of India is not available if an efficacious alternative remedy is available to any aggrieved person. (See: Sadhana Lodh Vs. National Insurance Co. Ltd. & Anr.5; Surya Dev Rai Vs. Ram Chander Rai & Ors.6; State Bank of India Vs. Allied Chemical Laboratories & Anr.) Page 105 of 115 C/SCA/6331/2015 ORDER

25. In the instant case, apart from the fact that admittedly certain disputed questions of fact viz. non receipt of notice under Section 13(2) of the Act, noncommunication of the order of the Chief Judicial Magistrate etc. are involved, an efficacious statutory remedy of appeal under Section 17 of the Act was available to the appellants, who ultimately availed of the same. Therefore, having regard to the facts obtaining in the case, the High Court was fully justified in declining to exercise its jurisdiction under Articles 226 and 227 of the Constitution."

24. In the case of Easland Combines, Coimbatore (supra), it has been observed as under: "18. In our view, it would be difficult to accept the aforesaid contention. It is well settled law that merely because a law causes hardship, it cannot be interpreted in a manner so as to defeat its object. It is also to be remembered that the Courts are not concerned with the legislative policy or with the result, whether injurious or otherwise, by giving effect to the language used nor it is the function of the Court where the meaning is clear not to give effect to it merely because it would lead to some hardship. It is the duty imposed on the Courts in interpreting a particular provision of law to ascertain the meaning and intendment of the Legislature and in doing so, Page 106 of 115 C/SCA/6331/2015 ORDER it should presume that the provision was designed to effectuate a particular object or to meet a particular requirement. Re: Firm Amar Nath Basheshar Dass v. Tek Chand, [1972] 1 SCC 893."

25. In the case of Ratanlal (supra), it has been observed as under: "13. The various decisions cited by the learned counsel for applicant only lay down that even when a case is disposed of in motion hearing, the Court is required to record in brief its ground for doing so. However, non supply of grounds cannot be characterized as "error apparent". It could be a ground for the applicant to assail the order in appeal, but not to invoke review jurisdiction of this Court. Recourse to Order 41(47), R.1 of CPC by the applicant is wholly misconceived and his application deserves dismissal with costs."

26. In the case of Tajender Singh Ghambhir (supra), it has been observed as under: "11. The High Court was also in error in holding that the deficiency in courtfee in respect of plaint cannot be made good during the appellate stage. In this regard, the High Court, overlooked well known legal position that appeal is continuation of suit and the power of the appellate court is coextensive with that of the trial court. It failed to Page 107 of 115 C/SCA/6331/2015 ORDER bear in mind that what could be done by the trial court in the proceeding of the suit, can always be done by the appellate court in the interest of justice."

27. Considering the impugned order in this petition, though at first blush, the contention put forth by the learned advocate for the petitioner appears to be appealing, however, on going through the impugned order, it cannot be said that no reasons are assigned by the Tribunal. In the present case, it cannot be said that the Tribunal has just dismissed the application for stay by merely stating that it is dismissed. Even if it is presumed as stated in the additional affidavit filed by the petitioner that certain contentions raised by the Tribunal, though recorded, are not dealt with, is examined, it cannot be said that no reasons are given. The Tribunal was dealing with an application for stay and therefore, prima facie case was to be examined. In opinion of this Court, the contentions raised herein Page 108 of 115 C/SCA/6331/2015 ORDER touches the merits of the main application which requires elaborate examination and even considering the impugned order, it cannot be said that there is no consideration by the Tribunal and hence, it cannot be said that there is breach of principles of natural justice as contended by the petitioner and in facts arising out of this petition, such a contention deserves to be negatived while exercising extraordinary discretionary jurisdiction of this Court.

28. The petitioner having failed even before the Apex Court has filed this petition directly under Article 226 of the Constitution of India.

The decision of the Apex Court in the case of Keshavlal Khemchand & Sons Pvt. Ltd. (supra) was rendered in a group of petitions and one of the petitions therein was filed by the present petitioner. In the said judgment, the Apex Court has observed thus: "74. Before closing these matters, we may also deal with one aspect of the Page 109 of 115 C/SCA/6331/2015 ORDER judgment of the Gujarat High Court. The Gujarat High Court recorded that the impugned amendment is ultra vires the object of the Act. We presume for the sake of this judgment that the impugned amendment is not strictly in consonance with the objects enunciated when the Act was initially made. We fail to understand as to how such inconsistency will render the Act unconstitutional. The objects and reasons are not voted upon by the legislature. If the enactment is otherwise within the constitutionally permissible limits, the fact that there is a divergence between the objects appended to the Bill and the tenor of the Act, in our opinion, cannot be a ground for declaring the law unconstitutional.

75. In view of our abovementioned conclusions, we do not propose to examine other submissions regarding the correctness of the Gujarat High Court's declaration that the unamended definition of the expression "NPA" would continue to govern the situation in view of the Gujarat High Court's conclusion that the amended definition of NPA is unconstitutional.

76. All the writ petitions and the appeals are disposed of declaring that the amended definition of the expression "NPA" under Section 2(1)

(o) of the Act is constitutionally valid.

77. In the result, all the writ petitions either filed before this Court or filed before the Madras and Gujarat High Courts and the appeals Page 110 of 115 C/SCA/6331/2015 ORDER of the borrowers stand dismissed. The appeals of the CREDITORS are allowed.

Each of the writ petitioners/borrowers shall pay costs to the respective CREDITORS calculated at 1% of the amount outstanding on the date of the notice under Section 13(2) of the Act in each of the cases."

29. It requires to be noted that the Tribunal was examining the application for stay and not the main Securitization Application under Section 17 of the Act and therefore, the Tribunal was required to consider only the primafacie case of the petitioner. This Court is conscious of the fact that dismissal of applicant's petition before the Apex Court does not take away right of the petitioner to raise grievance against respondent No.1Bank in the legal proceedings of the Securitization Application filed by the petitioner under Section 17 of the Act.

However, in light of the fact that while examining primafacie case, the Tribunal has given its findings on merits and in facts and circumstances of this case, as observed above, the same cannot be termed as breach of Page 111 of 115 C/SCA/6331/2015 ORDER principles of natural justice and in opinion of this Court, permitting the petitioner to bypass the statutory remedy of filing an appeal would be against the very purpose and object of the Act as held by the Apex Court in the case of United Bank of India (supra). As per the principles enunciated by the Apex Court in the case of Keshavlal Khemchand and Sons Pvt. Ltd.

(supra), this is not a fit case for entertaining the present petition under Article 226 by bypassing the statutory remedy of appeal. It is true that alternative remedy is not an absolute bar; however, in facts of this case, the same does not warrant bypassing the statutory remedy. Even considering the facts of this case, the petitioner has been litigating before different forums including this Court and also the Apex Court and the points in issue raised by the petitioner even in this petition are entirely on merits of the main Securitization Application. The record indicates that the petitioner as well as the Page 112 of 115 C/SCA/6331/2015 ORDER Bank were heard extensively by the Tribunal and therefore, considering the same, when the petitioner has an alternative efficacious remedy, the present petition under Article 226 and/or Article 227 of the Constitution of India does not deserve to be entertained keeping in mind the ratio laid down by the Apex Court in the case of United Bank of India (supra) and Kanaiyalal Lalchand Sachdev (supra).

30. The judgments relied upon by the learned advocate for the petitioner therefore would not be applicable in facts of the present case and as observed hereinabove, it cannot be said that no reasons are given. The aspect which would touch the merit of the main application, in facts of this case, needs to be examined in a fullfledged appeal as provided under Section 18 of the Act. The petitioner has got an alternative efficacious remedy by way of filing an appeal and the petitioner deserves to be relegated to such an alternative remedy, leaving it open for the appellate authority to Page 113 of 115 C/SCA/6331/2015 ORDER examine the same in accordance with law if any appeal is filed by the petitioner. The facts and circumstances of the case on hand do not fall within the exceptions carved out by the Apex Court in the case of Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai & Ors.

reported in (1998) 8 SCC 1 and the facts do not lead to the conclusion that there is breach of principles of natural justice, which would enable this Court to exercise its extraordinary jurisdiction under Article 226 of the Constitution of India.

31. The impugned order is dated 19.3.2015 and the present petition is filed on 8.4.2015 and is being disposed of today and therefore, if any application of delay is filed by the petitioner, the appellate authority namely DRAT shall consider the same sympathetically and hear the appeal, if any, filed by the petitioner, on merits.

32. Even at the cost of repetition, it is provided Page 114 of 115 C/SCA/6331/2015 ORDER that though the learned advocates have also gone into the merits of the application which is decided by the Tribunal by the impugned order, the same is not examined by this Court in view of the fact that the petition is not being entertained on the ground of availability of alternative remedy.

33. Resultantly, the petition deserves to be dismissed and is hereby dismissed. Parties to bear their own costs.

(R.M.CHHAYA, J.) mrp Page 115 of 115

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