REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL ……… OF 2010                       (@ SLP (C) NO. 16466 OF 2009)

Assistant Commissioner, Commercial Tax Department, Works Contract & Leasing, Kota             …Appellant

                  Versus

M/s Shukla & Brothers          …Respondent

JUDGMENT

Swatanter Kumar, J.

1. Delay condoned.

2. Leave granted.

3. The present appeal under Article 136 of the Constitution of India is  

directed  against  the  Judgment  dated  29th February,  2008 passed by the  

High Court of Judicature for Rajasthan Bench at Jaipur in S.B. Sales Tax  

Revision  Petition  No.92  of  2007,  and  in  exercise  of  its  power  under  

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Section 86 of Rajasthan Sales Tax Act 1994 (for short ‘the Act’).  The  

impugned Order reads as under:-  

“After  having  carefully  gone  through  the  material on record, since after due consideration proper  discretion  has  already  been  used  by  the  Deputy  Commissioner (Appeals) as also Rajasthan Tax Board,  in the facts and circumstances, no further interference  is called for by this Court.

The revision petition is dismissed accordingly as  having no merits.”

4. The  Learned  Counsel  appearing  for  the  appellant,  Assistant  

Commissioner of Income Tax has argued that Order passed by the High  

Court  does not  record any reasons for  dismissing the Revision Petition  

preferred by the Department.  According to the Learned Counsel, various  

contentions raised as grounds in the Revision Petition and two questions of  

law formulated  by the  Department  for  consideration in the  High Court  

while impugning the judgment of the Rajasthan Tax Board, Ajmer have  

not  been  reverted  to  by  the  High  Court,  resulting  in  serious  prejudice  

caused to the present petitioner.  On merits as well, challenge has been  

raised to the Order of the Tax Board as well as that of the Order of the  

High Court.

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5. It may be necessary for that to refer to the basic facts giving rise to  

the present appeal.  The respondent claimed to be a contractor who has  

obtained  impartible  contract  of  constructing  400  shops  in  JP  Market,  

Chhota Talab, Kota.  As per the contract the shops were to be handed over  

to  Cloth  Merchant  Association,  Kota.   The  respondent  had  received  

Rs.95,26,276.00  in  the  year  1997-98  and  Rs.22,38,026.00  in  the  year  

1998-99.   The  assessing  authority  formed  an  opinion  and  recorded  a  

finding that the shutters and doors were not manufactured from tax paid  

raw material in impartible contract and as such shutter was excluded from  

labour charges in the above years,  and levied tax, interest,  penalty  and  

surcharge upon the respondent.  The order of the assessing authority dated  

19th July, 2000 and 22nd February, 2001 respectively were challenged by  

the  respondent  before  the  Deputy  Commissioner  (Appeals),  Kota  and  

intended that if the shutters were not installed in the shops, then as per the  

contract the shops would not have deemed to be complete.  Relying upon  

the judgments of the Supreme Court in Gannon Dunkerley & Co. (Madras)  

Ltd. - State of Madras [AIR 1958 SC 560] as well as State of Rajasthan  

Vs. Man Industrial Corporation [(2003) 7 SCC 522] it was contended that  

in  an  impartible  work  contract  as  per  the  terms  of  that  contract,  the  

material  has been used in work contract  and there  was no contract  for  

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manufacturing shutters.  Thus on account of execution of impartible work  

contract, the property was immovable and tax could not be levied thereon.

6. The appeal preferred by the respondent was accepted by the Deputy  

Commissioner vide his Order dated 23rd February, 2002.  This Order was  

assailed  in  appeal  by  the  Department  before  the  Rajasthan  Tax  Board  

which also came to be rejected vide Order dated 18th October, 2003.  The  

Board accepted the plea of the respondent that the shutters and doors were  

manufactured from tax paid raw material  in a work contract,  therefore,  

could not be the goods transferred for the purposes of levy of tax, holding  

the same not justifiable to set aside the levy of tax, penalty, interest  or  

surcharge.  Aggrieved from the Order of the Board dated 23rd February,  

2002, the appellant filed Tax Revision before the High Court and  inter  

alia and raised the following questions of law:-

A.   Whether  the  Rajasthan  Tax  Board  Ajmer  was  justified in dismissing the appeal of the petitioner in the  facts and as mentioned above?

B.   Whether  the  iron  rolling  shutters  &  doors  were  fixed by the assessee on the shops are taxable or not,  when  no  tax  was  paid  by  the  assessee  on  the  construction of iron rolling shutters and doors?

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7. As is evident from the facts narrated in the Revision Petition and the  

grounds raised besides raising the question of law, a factual controversy  

was also raised going to the very root of the case, that the rolling shutters  

& doors fixed by the respondent on the shops were not manufactured of  

tax paid material.  Thus, question of law, mixed questions of law and facts  

were  not  examined  by  the  High  Court  in  some  detail,  but  as  already  

noticed, by one line order the Revision Petition was dismissed.  During the  

course of hearing, we were informed that arguments were also addressed  

with reference to judgments of this Court which were also cited before the  

Board.  However we find no mention thereof in the impugned Order.  It  

was  also  contended that  similar  questions  do  arise  in  number  of  other  

cases, thus it was expected of the High Court to deal with the contentions  

rather than pass a cryptic order.

8. We do find that there is substance in the contention raised on behalf  

of the petitioner before us.  It would have been desirable if the High Court  

would  have  recorded  some  reasons  for  rejecting  the  Revision  Petition  

preferred by the Department.

9. The  increasing  institution  of  cases  in  all  Courts  in  India  and  its  

resultant burden upon the Courts has invited attention of all concerned in  

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the  justice  administration  system.   Despite  heavy  quantum of  cases  in  

Courts, in our view, it would neither be permissible nor possible to state as  

a  principle  of  law,  that  while  exercising  power  of  judicial  review  on  

administrative action and more particularly judgment of courts in appeal  

before the higher Court, providing of reasons can never be dispensed with.  

The doctrine of audi alteram partem has three basic essentials.  Firstly, a  

person against whom an order is required to be passed or whose rights are  

likely to be affected adversely must be granted an opportunity of being  

heard.   Secondly,  the  concerned  authority  should  provide  a  fair  and  

transparent procedure and lastly,  the authority concerned must apply its  

mind and dispose of the matter by a reasoned or speaking order.  This has  

been uniformly applied by courts in India and abroad.   

10. The Supreme Court in the case of S.N. Mukherjee v. Union of India  

[(1990) 4 SCC 594], while referring to the practice adopted and insistence  

placed  by  the  Courts  in  United  States,  emphasized  the  importance  of  

recording of reasons for decisions  by the administrative  authorities  and  

tribunals.  It said “administrative process will best be vindicated by clarity  

in its exercise”.  To enable the Courts to exercise the power of review in  

consonance  with  settled  principles,  the  authorities  are  advised  of  the  

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considerations  underlining  the  action  under  review.   This  Court  with  

approval stated:-

“the  orderly  functioning  of  the  process  of  review  requires that the grounds upon which the administrative  agency  acted  be  clearly  disclosed  and  adequately  sustained.”

11. In exercise of the power of judicial review, the concept of reasoned  

orders/actions has been enforced equally by the foreign courts as by the  

courts in India.  The administrative authority and tribunals are obliged to  

give reasons,  absence whereof  could render  the  order  liable  to  judicial  

chastise.  Thus, it will not be far from absolute principle of law that the  

Courts should record reasons for its conclusions to enable the appellate or  

higher Courts to exercise their jurisdiction appropriately and in accordance  

with law.  It is the reasoning alone, that can enable a higher or an appellate  

court to appreciate the controversy in issue in its correct perspective and to  

hold  whether  the  reasoning  recorded  by  the  Court  whose  order  is  

impugned, is  sustainable in law and whether  it  has adopted the correct  

legal  approach.   To  sub-serve  the  purpose  of  justice  delivery  system,  

therefore,  it  is  essential  that  the  Courts  should  record  reasons  for  its  

conclusions,  whether  disposing  of  the  case  at  admission  stage  or  after  

regular hearing.

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12. At  the  cost  of  repetition,  we  may  notice,  that  this  Court  has  

consistently taken the view that recording of reasons is an essential feature  

of dispensation of justice.  A litigant who approaches the Court with any  

grievance in accordance with law is entitled to know the reasons for grant  

or rejection of his prayer.  Reasons are the soul of orders.  Non-recording  

of reasons could lead to dual infirmities; firstly, it may cause prejudice to  

the  affected  party  and  secondly,  more  particularly,  hamper  the  proper  

administration  of  justice.   These  principles  are  not  only  applicable  to  

administrative or executive actions, but they apply with equal force and, in  

fact,  with a greater  degree of precision to judicial  pronouncements.   A  

judgment without reasons causes prejudice to the person against whom it  

is pronounced, as that litigant is unable to know the ground which weighed  

with the Court in rejecting his claim and also causes impediments in his  

taking adequate and appropriate grounds before the higher Court in the  

event  of  challenge  to  that  judgment.   Now,  we  may  refer  to  certain  

judgments of this Court as well as of the High Courts which have taken  

this view.

13. The  principle  of  natural  justice  has  twin  ingredients;  firstly,  the  

person  who  is  likely  to  be  adversely  affected  by  the  action  of  the  

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authorities should be given notice to show cause thereof and granted an  

opportunity  of  hearing  and  secondly,  the  orders  so  passed  by  the  

authorities  should  give  reason  for  arriving  at  any  conclusion  showing  

proper application of mind.  Violation of either of them could in the given  

facts  and circumstances  of  the  case,  vitiate  the  order  itself.   Such rule  

being applicable to the administrative authorities certainly requires that the  

judgment  of  the  Court  should  meet  with  this  requirement  with  higher  

degree of satisfaction.  The order of an administrative authority may not  

provide reasons like a judgment but the order must be supported by the  

reasons of rationality.  The distinction between passing of an order by an  

administrative or quasi-judicial authority has practically extinguished and  

both  are  required  to  pass  reasoned  orders.   In  the  case  of  Siemens  

Engineering and Manufacturing Co. of India Ltd. v. Union of India and  

Anr. [AIR 1976 SC 1785], the Supreme Court held as under:-

“6. ……If  courts  of  law  are  to  be  replaced  by  administrative  authorities  and tribunals,  as  indeed,  in  some  kinds  of  cases,  with  the  proliferation  of  Administrative Law, they may have to be so replaced,  it  is  essential  that  administrative  authorities  and  tribunals should accord fair and proper hearing to the  persons sought to be affected by their orders and give  sufficiently clear and explicit reasons in support of the  orders  made  by  them.  Then  alone  administrative  authorities  and  tribunals  exercising  quasi-judicial  function will be able to justify their existence and carry  

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credibility with the people by inspiring confidence in  the adjudicatory process. The rule requiring reasons to  be given in support of an order is, like the principle of  audi alteram partem, a basic principle of natural justice  which  must  inform  every  quasi-judicial  process  and  this rule must be observed in its proper spirit and mere  pretence of  compliance with  it  would not  satisfy  the  requirement of   law. …”                      

14. In the case of Mc Dermott International Inc. v. Burn Standard Co.  

Ltd. and Ors. (2006) SLT 345, the Supreme Court clarified the rationality  

behind providing of reasons and stated the principle as follows:-

“. .  .  Reason is a ground or motive for a belief or a  course  of  action,  a  statement  in  justification  or  explanation of belief or action.  It is in this sense that  the award must state reasons for the amount awarded.

       The rationale of the requirement of reasons is that  reasons  assure  that  the  arbitrator  has  not  acted  capriciously.  Reasons reveal the grounds on which the  Arbitrator  reached  the  conclusion  which  adversely  affects  the  interests  of  a  party.   The  contractual  stipulation  of  reasons  means,  as  held  in  Poyser  and  Mills’  Arbitration  in  Re,  `proper  adequate  reasons’.  Such reasons shall not only be intelligible but shall be a  reason connected with the case which the Court can see  is proper.  Contradictory reasons are equal to lack of  reasons. . . .”

15. In Gurdial Singh Fijji v. State of Punjab [(1979) 2 SCC 368], while  

dealing with  the  matter  of  selection of  candidates  who could be under  

review, if not found suitable otherwise, the Court explained the reasons  

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being a link between the materials on which certain conclusions are based  

and  the  actual  conclusions  and  held,  that  where  providing  reasons  for  

proposed supersession were essential,  then it  could not be held to be a  

valid reason that the concerned officer’s record was not such as to justify  

his selection was not contemplated and thus was not legal.  In this context,  

the Court held –  

“… “Reasons” are the links between the materials on  which  certain  conclusions  are  based  and  the  actual  conclusions.   The  Court  accordingly  held  that  the  mandatory  provisions  of  Regulation  5(5)  were  not  complied with by the Selection Committee.   That an  officer was “not found suitable” is the conclusion and  not  a  reason in  support  of  the  decision  to  supersede  him.  True,  that  it  is  not  expected that  the  Selection  Committee  should  give  anything  approaching  the  judgment of a Court, but it must at least state, as briefly  as it may, why it came to the conclusion that the officer  concerned was found to be not suitable for inclusion in  the Select List.”  

16. This principle has been extended to administrative actions on the  

premise that it applies with greater rigor to the judgments of the Courts.  

In State  of  Maharashtra  v.  Vithal  Rao Pritirao Chawan [(1981)  4  SCC  

129], while remanding the matter to the High Court for examination of  

certain issues raised, this Court observed:

“. .  .  It  would be for the benefit  of this Court that a  speaking judgment is given”.

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17. In  the  cases  where  the  Courts  have  not  recorded  reasons  in  the  

judgment, legality, propriety and correctness of the orders by the Court of  

competent  jurisdiction  are  challenged  in  absence  of  proper  discussion.  

The requirement of recording reasons is applicable with greater rigor to the  

judicial proceedings.  The orders of the Court must reflect what weighed  

with the Court in granting or declining the relief claimed by the applicant.  

In this regard we may refer to certain judgments of this Court.  

18. A Bench of Bombay High Court in the case of M/s. Pipe Arts India  

Pvt.  Ltd.  V.  Gangadhar  Nathuji  Golamare  [2008  (6)  Maharashtra  Law  

Journal 280], wherein the Bench was concerned with an appeal against an  

order, where prayer for an interim relief was rejected without stating any  

reasons  in  a  writ  petition  challenging  the  order  of  the  Labour  Court  

noticed,  that  legality,  propriety  and  correctness  of  the  order  was  

challenged  on  the  ground  that  no  reason  was  recorded  by  the  learned  

Single Judge while rejecting the prayer and this has seriously prejudiced  

the  interest  of  justice.   After  a  detailed  discussion  on  the  subject,  the  

Court held:-

“The Supreme Court  and different  High Courts  have  taken  the  view  that  it  is  always  desirable  to  record  

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reasons in support of the Government actions whether  administrative or  quasi  judicial.  Even if  the statutory  rules do not impose an obligation upon the authorities  still  it  is expected of the authorities concerned to act  fairly and in consonance with basic rule of law. These  concepts would require that any order, particularly, the  order which can be subject matter of judicial review, is  reasoned one. Even in the case of Chabungbambohal  Singh v. Union of India and Ors. 1995 (Suppl) 2 SCC  83, the Court held as under:

“His  assessment  was,  however,  recorded  as  "very good" whereas qua the appellant it had  been stated unfit. As the appellant was being  superseded by one of his juniors,  we do not  think  if  it  was  enough  on  the  part  of  the  Selection  Committee  to  have  merely  stated  unfit, and then to recommend the name of one  of  his  juniors.  No  reason  for  unfitness,  is  reflected in the proceedings,  as  against  what  earlier  Selection  Committees  had  done  to  which reference has already been made.”

In the case of Jawahar Lal Singh v.  Naresh Singh and  Ors. (1987) 2 SCC 222, accepting the plea that absence  of  examination of  reasons  by the  High Court  on the  basis  of  which  the  trial  Court  discarded  prosecution  evidence  and  recorded  the  finding of  an  acquittal  in  favour  of  all  the  accused  was  not  appropriate,  the  Supreme  Court  held  that  the  order  should  record  reasons.  Recording  of  proper  reasons  would  be  essential,  so  that  the  Appellate  Court  would  have  advantage of considering the considered opinion of the  High Court on the reasons which had weighed with the  trial Court.

In  the  case  of  State  of  Punjab  and  Ors.  v.  Surinder  Kumar and Ors. [(1992) 1 SCC 489], while noticing the  

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subjectivity  by  objectivity.  The  emphasis  on  recording reasons is that if the decision reveals  the "inscrutable face of the sphinx", it can, by its  silence,  render  it  virtually  impossible  for  the  Courts  to  perform  their  appellate  function  or  exercise  the  power  of  judicial  review  in  adjudging the validity of the decision. Right to  reason  is  an  indispensable  part  of  a  sound  judicial  system;  reasons  at  least  sufficient  to  indicate  an  application  of  mind  to  the  matter  before  Court.  Another  rationale  is  that  the  affected  party  can  know why the  decision  has  gone  against  him.  One  of  the  salutary  requirements  of  natural  justice  is  spelling  out  reasons  for  the  order  made;  in  other  words,  a  speaking-out.  The  "inscrutable  face  of  the  sphinx" is ordinarily incongruous with a judicial  or quasi-judicial performance.”

Following this very view, the Supreme Court in another  very recent judgment delivered on 22nd February, 2008,  in  the case  of  State  of  Rajasthan v.  Rajendra  Prasad  Jain  Criminal  Appeal  No.  360/2008  (Arising  out  of  SLP  (Crl.)  No.  904/2007)  stated  that  "reason  is  the  heartbeat of every conclusion, and without the same it  becomes lifeless."

Providing of reasons in orders is of essence in judicial  proceedings. Every litigant who approaches the Court  with  a  prayer  is  entitled  to  know  the  reasons  for  acceptance or rejection of such request.  Either of the  parties to the lis has a right of appeal and, therefore, it  is essential for them to know the considered opinion of  the Court to make the remedy of appeal meaningful. It  is the reasoning which ultimately culminates into final  decision which may be subject  to examination of the  appellate or other higher Courts. It is not only desirable  but,  in  view  of  the  consistent  position  of  law,  

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mandatory for the Court to pass orders while recording  reasons in support thereof, however, brief they may be.  Brevity  in  reasoning  cannot  be  understood  in  legal  parlance as absence of reasons. While no reasoning in  support  of  judicial  orders  is  impermissible,  the  brief  reasoning would suffice to meet the ends of justice at  least at the interlocutory stages and would render the  remedy  of  appeal  purposeful  and meaningful.  It  is  a  settled canon of legal jurisprudence that the Courts are  vested with discretionary powers but such powers are  to  be  exercised  judiciously,  equitably  and  in  consonance with the settled principles of law. Whether  or not,  such judicial  discretion has been exercised in  accordance  with  the  accepted  norms,  can  only  be  reflected by the reasons recorded in the order impugned  before the higher Court. Often it is said that absence of  reasoning may ipso facto indicate whimsical exercise  of  judicial  discretion.  Patricia  Wald,  Chief  Justice  of  the  D.C.  Circuit  Court  of  Appeals  in  the  Article,  Blackrobed  Bureaucracy  Or  Collegiality  Under  Challenge, (42 MD.L. REV. 766, 782 (1983), observed  as under:-

“My own guiding principle is that virtually every  appellate decision requires some statement of reasons.  The  discipline  of  writing  even  a  few  sentences  or  paragraphs  explaining  the  basis  for  the  judgment  insures a level of thought and scrutiny by the Court that  a  bare  signal  of  affirmance,  dismissal,  or  reversal  does not.”

The Court  cannot lose sight  of  the fact  that  a losing  litigant has a cause to plead and a right to challenge the  order if it is adverse to him. Opinion of the Court alone  can explain the cause which led to passing of the final  order.  Whether  an  argument  was  rejected  validly  or  otherwise, reasoning of the order alone can show. To  evaluate the submissions is obligation of the Court and  to know the reasons for rejection of its contention is a  legitimate  expectation  on  the  part  of  the  litigant.  

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Another  facet  of  providing  reasoning  is  to  give  it  a  value  of  precedent  which  can  help  in  reduction  of  frivolous  litigation.  Paul  D.  Carrington,  Daniel  J  Meador and Maurice Rosenburg, Justice on Appeal 10  (West 1976), observed as under:-

“When  reasons  are  announced  and  can  be  weighed,  the  public  can  have  assurance  that  the  correcting process is working. Announcing reasons can  also provide public understanding of how the numerous  decisions of the system are integrated. In a busy Court,  the  reasons  are  an  essential  demonstration  that  the  Court did in fact fix its mind on the case at hand. An  unreasoned decision has very little claim to acceptance  by the defeated party, and is difficult or impossible to  accept  as  an  act  reflecting  systematic  application  of  legal  principles.  Moreover,  the  necessity  of  stating  reasons not infrequently changes the results by forcing  the  judges to come to  grips  with nettlesome facts  or  issues  which  their  normal  instincts  would  otherwise  cause them to avoid.”

The reasoning in  the  opinion of  the Court,  thus,  can  effectively be analysed or scrutinized by the Appellate  Court.  The  reasons  indicated  by  the  Court  could  be  accepted  by  the  Appellate  Court  without  presuming  what  weighed  with  the  Court  while  coming  to  the  impugned  decision.  The  cause  of  expeditious  and  effective  disposal  would  be  furthered  by  such  an  approach.  A  right  of  appeal  could  be  created  by  a  special  statute  or  under  the  provisions  of  the  Code  governing the procedure. In either of them, absence of  reasoning may have the effect of negating the purpose  or right of appeal and, thus, may not achieve the ends  of justice.

It  will  be  useful  to  refer  words  of  Justice  Roslyn  Atkinson,  Supreme  Court  of  Queensland,  at  AIJA  Conference  at  Brisbane  on  September  13,  2002  in  

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relation  to  Judgment  Writing.  Describing  that  some  judgment could be complex,  in distinction to routine  judgments, where one requires deeper thoughts, and the  other could be disposed of easily but in either cases,  reasons they must have. While speaking about purpose  of the judgment, he said,

“The first matter to consider is the purpose of the  judgment. To my mind there are four purposes for any  judgment that is written: -

(1) to clarify your own thoughts; (2) to explain your decision to the parties; (3) to communicate the reasons for the decision to the  public; and (4) to provide reasons for an appeal Court to consider.”

Clarity of thought leads to proper reasoning and proper  reasoning is the foundation of a just and fair decision.  In  Alexander  Machinery  (Dudley)  Ltd.  v.  Crabtree  1974  ICR  120,  the  Court  went  to  the  extent  of  observing  that  "Failure  to  give  reasons  amounts  to  denial  of  justice".  Reasons  are  really  linchpin  to  administration  of  justice.  They  are  link  between  the  mind  of  the  decision  taker  and  the  controversy  in  question.  To  justify  our  conclusion,  reasons  are  essential.  Absence  of  reasoning  would  render  the  judicial order liable to interference by the higher Court.  Reasons  are the  soul  of  the  decision and its  absence  would render the order open to judicial chastism. The  consistent  judicial  opinion  is  that  every  order  determining  rights  of  the  parties  in  a  Court  of  law  ought not  to be recorded without  supportive reasons.  Issuing  reasoned  order  is  not  only  beneficial  to  the  higher Courts but is even of great utility for providing  public  understanding  of  law  and  imposing  self- discipline in the Judge as their discretion is controlled  by  well  established  norms.  The  contention  raised  before us that  absence of  reasoning in  the  impugned  order  would  render  the  order  liable  to  be  set  aside,  

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“I have perused the order  dated 27.5.2005 passed by  Respondent  2 and I  do not  find any illegality  in  the  order  so as  to interfere  under Article  226/227 of  the  Constitution of India.  The writ petition lacks merit and  is liable to be dismissed.”

and the Court concluded as under:-

“In view of the specific stand taken by the Department  in the affidavit  which we have referred to above, the  cryptic  order  passed  by  the  High  Court  cannot  be  sustained.  The  absence  of  reasons  has  rendered  the  High  Court  order  not  sustainable.  Similar  view  was  expressed  in  State  of  U.P. v.  Battan1.  About  two  decades  back  in  State  of  Maharashtra v.  Vithal  Rao  Pritirao Chawan2 the desirability of a speaking order  was highlighted. The requirement of indicating reasons  has been judicially recognised as imperative. The view  was reiterated in Jawahar Lal Singh v. Naresh Singh3.

In  Raj Kishore Jha v.  State  of Bihar4 this  Court  has  held that  reason is  the  heartbeat  of  every  conclusion  and without the same, it becomes lifeless. “8. … Right  to  reason  is  an  indispensable  part  of  a  sound  judicial  system;  reasons  at  least  sufficient  to  indicate  an  application  of  mind  to  the  matter  before  court. Another rationale is that the affected party can  know why the decision has gone against him. One of  the salutary requirements of natural justice is spelling  out reasons for the order made;.…”*

____________________________________________________________

1. (2001) 10 SCC 607

2. (1981) 4 SCC 129

3. (1987) 2 SCC 222

4. (2003) 11 SCC 519

*  As  observed in State of Orissa  vs. Dhaniram Lunar

   (2004) 5 SCC 568

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In  the  light  of  the  factual  details  particularly  with  reference  to  the  stand  taken  by  the  Horticulture  Department  at  length  in  the  writ  petition  and  in  the  light of the principles enunciated by this Court, namely,  right to reason is an indispensable part of sound judicial  system and reflect the application of mind on the part  of the court, we are satisfied that the impugned order of  the High Court cannot be sustained.”

19. Besides  referring  to  the  above well-established  principles,  it  will  

also be useful to refer to some text on the subject.  H.W.R. Wade in the  

book  “Administrative  Law,  7th Edition,  stated  that  the  flavour  of  said  

reasons  is  violative  of  a  statutory  duty  to  waive  reasons  which  are  

normally  mandatory.   Supporting  a  view  that  reasons  for  decision  are  

essential, it was stated:-

“…..A right to reasons is, therefore, an indispensable  part  of  a  sound  system  of  judicial  review.   Natural  justice  may  provide  the  best  rubric  for  it,  since  the  giving  of  reasons  is  required  by  the  ordinary  man’s  sense of justice…    

…..Reasoned  decisions  are  not  only  vital  for  the  purposes  of  showing  the  citizen  that  he  is  receiving  justice:  they  are  also  a  valuable  discipline  for  the  tribunal itself…..”

20. We  are  not  venturing  to  comment  upon  the  correctness  or  

otherwise of the contentions of law raised before the High Court in the  

present  petition,  but  it  was  certainly  expected  of  the  High  Court  to  

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record some kind of reasons for rejecting the revision petition filed by  

the  Department  at  the  very  threshold.   A  litigant  has  a  legitimate  

expectation of knowing reasons for rejection of his claim/prayer.  It is  

then alone, that a party would be in a position to challenge the order on  

appropriate grounds.  Besides, this would be for the benefit of the higher  

or the appellate court.  As arguments bring things hidden and obscure to  

the  light  of  reasons,  reasoned  judgment  where  the  law  and  factual  

matrix  of  the  case  is  discussed,  provides  lucidity  and foundation for  

conclusions or exercise of judicial discretion by the courts.  Reason is  

the very life of law.  When the reason of a law once ceases, the law  

itself  generally  ceases  (Wharton’s  Law  Lexicon).   Such  is  the  

significance of reasoning in any rule of law.  Giving reasons furthers the  

cause of justice as well as avoids uncertainty.  As a matter of fact it  

helps in the observance of law of precedent.  Absence of reasons on the  

contrary  essentially  introduces  an  element  of  uncertainty,  dis-

satisfaction and give entirely different dimensions to the questions of  

law raised before the higher/appellate  courts.   In our view, the court  

should provide its own grounds and reasons for rejecting claim/prayer  

of a party whether at the very threshold i.e. at admission stage or after  

regular hearing, howsoever precise they may be.  

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21. We would reiterate the principle that when reasons are announced  

and  can  be  weighed,  the  public  can  have  assurance  that  process  of  

correction  is  in  place  and  working.   It  is  the  requirement  of  law  that  

correction process of judgments should not only appear to be implemented  

but also seem to have been properly implemented.  Reasons for an order  

would  ensure  and  enhance  public  confidence  and  would  provide  due  

satisfaction  to  the  consumer  of  justice  under  our  justice  dispensation  

system.  It may not be very correct in law to say,  that there is a qualified  

duty imposed upon the Courts to record reasons.  Our procedural law and  

the established practice, in fact, imposes unqualified obligation upon the  

Courts to record reasons.  There is hardly any statutory provision under the  

Income Tax Act or  under  the Constitution itself  requiring recording of  

reasons  in  the  judgments  but  it  is  no  more  res  integra and  stands  

unequivocally settled by different judgments of this Court holding that, the  

courts and tribunals are required to pass reasoned judgments/orders.  In  

fact, Order XIV Rule 2 read with Order XX Rule 1 of the Code of Civil  

Procedure requires that, the Court should record findings on each issue and  

such findings which obviously should be reasoned would form part of the  

judgment, which in turn would be the basis for writing a decree of the  

Court.

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22. By practice adopted in all Courts and by virtue of judge made law,  

the concept  of reasoned judgment  has become an indispensable part  of  

basic rule of law and, in fact, is a mandatory requirement of the procedural  

law.  Clarity of thoughts leads to clarity of vision and proper reasoning is  

the  foundation  of  a  just  and  fair  decision.   In  the  case  of  Alexander  

Machinery (Dudley) Ltd. (supra), there are apt observations in this regard  

to say “failure to give reasons amounts to denial of justice”.  Reasons are  

the real live links to the administration of justice.  With respect we will  

contribute to this view.  There is a rationale, logic and purpose behind a  

reasoned judgment.  A reasoned judgment is primarily written to clarify  

own thoughts; communicate the reasons for the decision to the concerned  

and  to  provide  and  ensure  that  such  reasons  can  be  appropriately  

considered by the appellate/higher Court.  Absence of reasons thus would  

lead  to  frustrate  the  very  object  stated  hereinabove.   The  order  in  the  

present case is as cryptic as it was in the case of Sunil Kumar Singh Negi  

(supra).  Being a cryptic order and for the reasons recorded in that case by  

this Court which we also adopt, the impugned order in the present appeal  

should meet the same fate.

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23. In light of the above principles, now we will revert back to the facts  

of the present appeal.  It cannot be doubted that challenge was raised to the  

order of the Board before the High Court on alleged questions of law as  

well as mixed question of law and fact.  The contention that the respondent  

had not manufactured the shutters from the tax paid raw material and also  

that the contract in question was not impartible but a consequential item  

for completion of the contract required examination by the High Court.  In  

light of the judgments referred to and relied upon by the parties including  

the judgment of this Court, it is true that requirement of stating reasons for  

judicial orders necessarily does not mean a very detailed or lengthy order,  

but there should be some reasoning recorded by the Court for declining or  

granting relief  to the petitioner.   The purpose,  as already noticed,  is to  

make the litigant aware of the reasons for which the relief is declined as  

well as to help the higher Court in assessing the correctness of the view  

taken by the High Court  while  disposing off  a matter.   May be,  while  

dealing with  the  matter  at  the  admission stage  even recording of  short  

listening dealing with the merit of the contentions raised before the High  

Court may suffice, in contrast, a detailed judgment while matter is being  

disposed  off  after  final  hearing,  but  in  both  events,  in  our  view,  it  is  

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imperative for the High Court to record its own reasoning however short it  

might be.

24. We are unable to find any infirmity in the arguments advanced on  

behalf of the Department, that no reasons have been recorded for rejecting  

the  contentions  raised,  this  legal infirmity  has,  in  fact,  prejudicially  

affected the case of the appellant before us.  The judgment of the High  

Court must speak for itself to enable the higher Court to do complete and  

effective justice between the parties.   

25. For  the  reasons  afore-recorded  we  set  aside  the  order  dated  29th  

February, 2008 and remit the case to the High Court with a request to hear  

the case de novo and pass appropriate order in accordance with law.  To  

that extent the appeal is allowed.

26. There shall be no order as to costs.

........................................J.  [ S.H. KAPADIA ]

........................................J.       [ SWATANTER KUMAR ]

New Delhi April 15, 2010

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