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PETITIONER: BHAGAT RAJA

       Vs.

RESPONDENT: THE UNION OF INDIA & ORS.

DATE OF JUDGMENT: 29/03/1967

BENCH: MITTER, G.K. BENCH: MITTER, G.K. RAO, K. SUBBA (CJ) SHAH, J.C. SHELAT, J.M. BHARGAVA, VISHISHTHA

CITATION:  1967 AIR 1606            1967 SCR  (3) 302  CITATOR INFO :  D          1969 SC 329  (13)  F          1970 SC1302  (6)  R          1971 SC 862  (90)  R          1971 SC2021  (4)  E          1977 SC 567  (23,24,25)  RF         1984 SC1361  (28)

ACT: Mines  & Minerals (Regulation and Development Act, 1957,  s. 30  and Rules 54 & 55 made under the Act-state  Government’s order refusing mining lease to one party  and granting it to another-Central  Government  whether  in  deciding  revision under r. 55 should pays ’speaking order’.

HEADNOTE: The  appellant  was one of several applicants for  a  mining lease  in  Andhra  Pradesh.  The  State  Government  however granted it to ’respondent No. 3. The appellant then filed an application in revision, under s. 30 of the Mines & Minerals (Regulation and Development) Act, 1957, read with r. 54,  to the  Union  of  India.  Respondent No.  3  filed  a  counter statement and the State Government filed its comments.   The appellant  filed a rejoinder.  The Union Government  without hearing the appellant rejected his revision application.  An appeal was filed before this Court.  The question that  fell for  consideration  was  whether it was  necessary  for  the Government of India to give reasons for its decision in view of  the  provisions  of the Act and  the  Rules  or  aliunde because  the decision was liable to be questioned in  appeal to this Court. HELD : (i) In exercising its powers of revision under r.  55 the Central Government discharges functions which are quasi- judicial.   The decisions of tribunals in India are  subject to  the supervisory powers of the High Court under Art.  227 of  the Constitution and of appellate powers of  this  court under  Art.  136.  Both the High Court and  this  Court  are placed  under a great disadvantage if no reasons  are  given and  the  revision  is dismissed curtly by the  use  of  the single word ’rejected’ or ’dismissed’.  In such a case  this

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Court can probably only exercise its appellate  jurisdiction satisfactorily  by examining the entire records of the  case and  after  giving a hearing come to its conclusion  on  the merits  of  the  case.   This  would  certainly  be  a  very unsatisfactory  method of dealing with the appeal.  [308E-F; 309B-C] If  the  State  Government  gives  sufficient  reasons   for accepting the application of one party and rejecting that of others,  as it must, and the Central Government  adopts  the -reasoning  of the State Government, this Court may  proceed to examine whether the reasons given are sufficient for  the purpose  of  upholding the decision.  But when  the  reasons given  in the order of the State Government are  scrappy  or nebulous  and  the Central Government makes  no  attempt  to clarify the same, this Court, in appeal may have to  examine the  case de novo, without anybody being the wiser  for  the -review  by  the Central Government.   The  same  difficulty would  arise  where the State Government gives a  number  of reasons  some  of which are good and some are  not  and  the Central  Government  gives its decision  without  specifying those reasons which according to it are sufficient to uphold the  order  of the State Government.  That is  why  in  such circumstances, what is known as a ’speaking order’ is called for. [309C-F] 3 03 A ’speaking order’ is all the more necessary in the case  of a  decision under r. 55 because there is provision  for  new material  being placed before the Central  Government  which was  not  there before the State  Government,  and  further, because the decision, affecting important rights of parties, is given in a summary manner without a hearing being allowed to the parties.     A  party  is entitled to  know  why  the decision has gone against him.   [320G-321B] The  absence  in  r. 55 of any  provision  for  giving  such reasons  is not decisive of the matter in view of the  above considerations. [315H] Shivji Nathubhai v. The Union of India, [1960] 2 S.C.R. 775, M.P.  Industries  v. Union, [1966] 1 S.C.R.  466,  Harinagar Sugar  Mills  Ltd. v. Shyam Sundar  Jhunihunwala,  [1962]  2 S.C.R. 339 and Sardar Govindraov.  State,  [1965]  1  S.C.R. 678, followed. Nandram  Hunatram, Calcutta v. Union of India,  A.I.R.  1966 S.C.1922 and Commissioner of Income-tax v. K. V. Pilliah, 43 I.T.R. 411, distinguished. Rex v. Northumberland Compensation Appeal Tribunal Ex  parte Shaw,  [1951]  1 K.B. 711, Vedachala Mudaliar  v.  State  of Madras, A.I.R. 1952 Madras 276, Rantayya v. State of Andhra, I.L.R. 1956 Andhra 712, Annamalai v. State of Madras, A.I.R. 1957 Andhra Pradesh 738 and Joseph v. Superintendent of Post Offices, Kottayam, I.L.R. 1961 11 Kerala 245, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 2596 and 2597 of 1966. Appeals  by special leave from the Orders dated May 2,  1966 and  June 22, 1966 of the Government of India,  Ministry  of Mines  and Metals, New Delhi on application is filed by  the appellant  under  Rule 54 of the Mineral  Concession  Rules, 1960. S.   J.  Sorabji,  A.  J.  Rana, J. R.   Gagrat  and  B.  R. Agarwal, or the appellant (in both the appeals). G.   N.  Dikshit,  R.  N. Sachthey for  S.  P.  Nayyar,  for

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respondent No. 1 (in both the appeals). P.   Ram  Reddy and B. Parthasarathy, for respondent  No.  2 (in both the appeals). M.   C. Setalvad, B. Dutta, and O. C. Mathur, for respondent No. 3 (in both the appeals). The Judgment of the Court was delivered by Mitter,  J. These two appeals by special leave, are  Iimited to  the question as to whether in dismissing a revision  and confirming  the  order of the State of Andhra  Pradesh,  the Union of India was bound to make a speaking order.  The text of  the  order  is  the same in both  the  cases,  the  only difference being in 304 the  situs  and the area in respect of which the  lease  was applied for.  One of the orders runs as follows              "New Delhi, the 22nd June, 1966".               I  am  directed  to  refer  to  your  revision               application dated 14-12-1964 and letter  dated               28-1-1966 on the above subject and to say that               after  careful  consideration of  the  grounds               stated  therein, the Central  Government  have               come to the conclusion that there is no  valid               -ground  for interfering with the decision  of               the  Government  of Andhra  Pradesh  rejecting               your application for grant of mining lease for               asbestos  over  an  area  of  Ac.1  13-50   in               Brahmanapalii   village,  Cuddapah   District,               Andhra Pradesh.  Your application for revision               is, therefore, rejected." The  facts  leading to the two appeals are as follows  :  In response  to a notification dated January 8, 1964  published in  the  State  Gazette by  the  Andhra  Pradesh  Government inviting applications under r. 58 of the rules framed  under the  Mines  and Minerals (Regulation and  Development)  Act, 1957 (hereinafter referred to as the Rules and the Act)  the appellant submitted two applications in the prescribed  form viz.,  Form "I" for areas aggregating Ac. 113-50 in  village Brahmanapalli  and Ac. 13-10 in village Ippatta both in  the district of Cuddapah for mining asbestos.  Respondent No.  3 also made similar applications on the same date.   According to  the  appellant his applications complied  with  all  the requirements  of  Form "I" while those of respondent  No.  3 were defective in some respects.  Besides the appellant  and the  respondent No. 3, there was only one other  person  who applied  for a prospecting licence which was  rejected  off- hand.   As between the appellant and the respondent  No.  3, the Government of Andhra Pradesh preferred the latter.   The relevant  portion  of the order dated 19th October  1964  in respect  of the village Brahmanapalli under s. 10(3) of  the Act was as follows :               "As  between the other applicants  Sri  Bhagat               Raja and M/s.  Tiffin’s Barytes, Asbestos and,               Paints   Ltd.,  the  Government  prefer   M/s.               Tiffin’s  Barytes......  as  they  are  having               adequate  general  experience  and   technical               knowledge,   and  are  old  lessees   in   the               district, without any arrears of mineral  dues               to   the   Government.    The   mining   lease               application  of Sri Bhagat Raja for the  areas               covered  by  the mining lease  application  of               M/s.   Tiffin’s Barytes, Asbestos  and  Paints               Ltd. is rejected."               305 The  text  of the Order with regard to  village  Ippatta  is practically the same.

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The   appellant  filed  application  in  revision   in   the prescribed  form i.e. Form ’N’ under s. 30 of the  Act  read with r. 54 to the Union of India on December 14, 1964.   The appellant  tried to bring out in his  revision  applications that  the  financial  condition of the  3rd  respondent  was extremely  precarious  as would be evidenced  by  documents, copies  whereof  were  annexed to  his  petition.   The  3rd respondent  filed  a  counter  statement  to  the   revision application  in  April 1965.  In March  1966  the  appellant received  the comments of the Andhra Pradesh  Government  on his revision applications.  The appellant filed rejoinder to the counter statements of the 3rd respondent in May 1965 and to  the comments of the Andhra Pradesh Government  in  April 1966.   He  also asked for the grant of a  personal  hearing before  the  decision  of  the case  which  was  not  given. Ultimately, his applications were rejected by orders  quoted hereinabove. Various grounds of appeal were taken in the application  for special  leave  to appeal preferred by the  appellant.   An, attempt has been made therein to show that respondent No.  3 had  no  experience in asbestos mining, that  its  financial position  was very unsatisfactory and that  its  application for  mining lease was not in proper form.  A  complaint  was also  made  that  in  rejecting  the  applicant’s   revision applications  the Union of India was bound to  give  reasons for its decision as it was exercising quasi judicial  powers under  s.  30  of  the Act read with rr.  54  and  55,  that principles  of  natural justice and fairplay  requiring  the divulgence of the grounds were violated and that a  personal hearing  should have been given to the appellant before  the disposal of the revision applications. We are not called upon in this case to go into the merits of the  case but only to examine the question as to whether  it was  necessary for the Government of India to  give  reasons for  its decision in view of the provisions of the  Act  and the Rules or aliunde because  the decision was liable to  be questioned in appeal to this Court.     It  is necessary  to take note of a few provisions ofthe Act and the   relevant rules framed thereunder to ascertain the scope of a  party’s right to, apply for a lease and the powers and duties of the Government in accepting or rejecting the some.  The preamble to  the  Act shows that its object was to  provide  for  the regulation  of mines and the development of  minerals  under the control of the Union of India.  Under s. 4(1) no  person can  undertake any prospecting or mining operations  in  any area,  except  under and in accordance with  the  terms  and conditions  of  a  prospecting licence  or  a  mining  lease granted  under the Act and the Rules.  Under sub-s.  (2)  of the section 306               "No prospecting licence or mining lease  shall               be  granted otherwise than in accordance  with               the provisions of this Act and the rules mad.-               , thereunder." S.5 lays down certain conditions which a person desiring to have  a  mining lease must fulfil.  S. 8  provides  for  the period  for which a mining lease may be granted.   Under  s. 10(1)  an application for a mining lease has to be  made  to the State Government concerned in the prescribed form.  Sub- s. (3) of S.10 runs as follows :               "On  receipt  of  an  application  under  this               section,  the  State  Government  may,  having               regard  to the provisions of this Act and  any               rules  made  thereunder, grant  or  refuse  to               grant the licence or lease."

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Under  sub-s. (2) of s. 11 a person whose application for  a licence is received earlier than those of others shall  have a preferential right for the grant thereof over the  others. The   proviso   to  this  sub-section  enacts   that   where applications  are  received  on  the  same  day,  the  State Government,  after  taking into  consideration  the  matters specified in sub-s. (3), may grant the mining lease to  such one  of  the  applicants as it may  deem  fit.   Sub-s.  (3) specifies the matters referred to in sub-s. (2) and they are as follows : -               (a)   any special knowledge or experience  in,               prospecting  operations or mining  operations,               as   the  case  may  be,  possessed   by   the               applicant;               (b)   the    financial   resources   of    the               applicant;               (c)   the nature and quality of the  technical               staff               employed  or to be employed by the  applicant;               and   (d)  such  other  matters  as   may   be               prescribed. ’S.  13(1) enables the Central Government to make rules  for regulating  the  grant of prospecting  licences  and  mining leases.   Under  s.19 any mining lease granted,  renewed  or acquired in contravention of the provisions of the Act is to be void and of no effect.  Power of revision of the order of the  State Government is given to the Central Government  in the following terms:               "The Central Government may, of its own motion               or  on application made within the  prescribed               time by the aggrieved party, revise any  order               made by a State Government or other  authority               in  exercise of the powers conferred on it  by               or under this Act." Rules were made by the Central Government under s.13 of  the Act known as the Mineral Concession Rules, 1960.  R.22 pres- cribes  that an application for the grant of a mining  lease must be made to the State Government in Form "I" accompanied by a 307 fee  of Rs. 200/-, a deposit of Rs. 5001- and an  income-tax clearance certificate.  Under r. 26 the State Government  is obliged to give reasons for refusal to grant a mining lease. Any  person  aggrieved  by  an  order  made  by  the   State Government  may prefer an application for revision under  r. 54 in Form ’N’.  In every such application against the order of the State Government refusing to grant a mining lease,  a person to whom a lease has been granted must be impleaded as a  party.   R. 55 originally framed in 1960 was  amended  in July 1965.  Under the amended r.55 the position is as follows:-               "(1) On receipt of an application for revision               under  r. 54, copies thereof shall be sent  to               the State Government and to all the  impleaded               parties   calling  upon  them  to  make   such               comments as they may like to make within three               months   of   the  date  of   issue   of   the               communication and if no comments are  received               within that period, it is to be presumed  that               the  party omitting to make such comments  has               none to make.               (2)   On  receipt  of the  comments  from  any               party under Sub-rule (1), copies thereof  have               to be, sent to the other parties calling  upon               them to make further comments as they may like

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             to make within one month from the date of  the               issue of the communication.               (3)   The     revision    application,     the               communications    containing   comments    and               counter-conmments referred to in sub-rules (1)               and  (2)  shall constitute the record  of  the               case.               (4)   After  considering the records  referred               to in sub-rule (3), the Central Government may               confirm, modify or set aside the order or pass               such other order in relation thereto as it may               deem just and proper." From  the above, it will be amply clear that  in  exercising its  powers of revision under r. 55 the  Central  Government must take into consideration not only the material which was before  the  State  Government  but  comments  and  counter- comments,  if any, which the parties may make regarding  the order  of the State Government.  In other words, it is  open to  the parties to show how and where the  State  Government had  gone wrong, or, why the order of the  State  Government should be confirmed.  A party whose application for a mining lease  is turned down by the State Government  is  therefore given  an opportunity of showing that the  State  Government had taken into consideration irrelevant matters or based its decision  on grounds which were not justified.  At the  time when  applications  for  a licence  are  made  by  different parties to the State Government. they are not L5Sup/67-7 308 given  an opportunity of showing any defects or demerits  in the  applications  of the others or why  their  applications should be Preferred to others.  The State Government has  to make  up its mind by considering the applications before  it as to which party is to be preferred to the other or others. S.11(3), as already noted, prescribes the matters which  the State  Government must consider before selecting one out  of the  numerous applicants.  But the possibility of the  State Government being misled in its consideration of the  matters cannot be ruled out.  It may be that a party to whom a lease is  directed to be granted has in fact no special  knowledge or experience requisite for the mining operations or it  may be  that  his  financial resources have  not  been  properly disclosed.   It may also be that the nature and  quality  of the technical staff employed or to be employed by him is not of  the requisite standard.  In an application for  revision under r. 55 it will be open to an aggrieved party to contend that  the  matters covered by sub-s. (3) of s. 11  were  not properly examined by the State Government, or that the State Government  had not before it all the available material  to make  up  its mind with respect thereto before  grant  in  a licence.   In  a case where complaints of  this  nature  are made, of necessity, the Central Government has to scrutinise matters   which   were  not  canvassed  before   the   State Government.   A  question  may arise in  such  cases  as  to whether  the order of the Central Government in the form  in which  it  was  made  in  this  case  would  be  sufficient, specially  in view of the fact that the correctness  thereof may be tested in appeal to this Court. It  is  now well-settled that in exercising  its  powers  of revision  under  r.  55 the  Central  Government  discharges functions which are quasi judicial : see Shivji Nathubhai v. The Union of India & Ors. (1) and M. P. Industries v.  Union (1).  In the latter case one of    us  (our  present   Chief Justice) said (at p. 471) :               "The  entire  scheme  of the  rules  posits  a               judicial procedure and the Central  Government

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             is constituted as a tribunal to dispose of the               said  revision.  Indeed this Court  in  Shivji               Nathubhai v. The Union of India (supra)  rules               that  the  Central Government  exercising  its               power  of  review under r. 54 of  the  Mineral               Concession Rules, 1949, was acting  judicially               as  a tribunal.  The new rule, if at  all,  is               clearer  in  that regard  and  emphasises  the               judicial  character of the proceeding.  If  it               was  a tribunal, this Court under Art. 136  of               the  Constitution  can  entertain  an   appeal               against  the order :of the Central  Government               made  in  exercise of  its  revisional  powers               under r. 55 of the Rules." (1) [1960]2 S.C.R. 775. (2) [1966] 2 S. C. R. 466. 309 Let us now examine the question as to whether it was  incum- bent  on the Central Government to give any reasons for  its decision on review.  It was argued that the very exercise of judicial or quasi judicial powers in the case of a  tribunal entailed upon it an obligation to give reasons for  arriving at  a  decision for or against a party.   The  decisions  of tribunals in India are subject to the supervisory powers  of the  High Courts under Art. 227 of the Constitution  and  of appellate  powers  of this Court under Art.  136.   It  goes without  saying that both the High Court and this Court  are placed  under a great disadvantage if no reasons  are  given and  the  revision  is dismissed curtly by the  use  of  the single  word "rejected", or, "dismissed".  In such  a  case, this   Court  can  probably  only  exercise  its   appellate jurisdiction satisfactorily by examining the entire  records of  the  case  and  after  giving  a  hearing  come  to  its conclusion on the merits of the appeal.  This will certainly be a very unsatisfactory method of dealing with the  appeal. Ordinarily,  in  a case like this, if the  State  Government gives  sufficient reasons for accepting the  application  of one party and rejecting that of the others, as it must,  and the  Central  Government adopts the reasoning of  the  State Government,  this Court may proceed to examine  whether  the reasons  given are sufficient for the purpose  of  upholding the  decision.  But, when the reasons given in the order  of the State Government are scrappy or nebulous and the Central Government makes no attempt to clarify the same, this Court, in  appeal  may  have to examine the case  de  novo  without anybody  being  the  wiser for the  review  by  the  Central Government.   If  the  State Government gives  a  number  of reasons  some  of which are good and some are not,  and  the Central  Government merely endorses the order of  the  State Government without specifying those reasons which  according to  it  are  ,sufficient to uphold the order  of  the  State Government, this Court, in appeal, may find it difficult  to ascertain  which  are  the grounds which  weighed  with  the Central  Government  in  upholding the order  of  the  State Government.   In  such  circumstances, what is  known  as  a "speaking order" is called for. The  order of the Central Government of June 22, 1966 is  so worded as to be open to the construction that the  reviewing authority  was primarily concerned with finding out  whether any  grounds  had  been made out for  interfering  with  the decision  of  the  State Government.  In  other  words,  the Central Government was not so much concerned to examine  the grounds  or  the  reasons  for the  decision  of  the  State Government  but to find out whether here was any  cause  for disturbing  the  same  Prima facie the order does  not  show

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that  the reviewing authority had any thought of  expressing its own reasons for maintaining the decision arrived at.  If detailed reasons had been given by the 310 State Government and the Central Government had indicated clearly  that it was accepting the reasons for the  decision of  the State Government, one would be in a position to  say that the reasons, for the grant of a lease to a person other than  the appellant were obvious.  But, where as  here,  the State  Government does not find any fault or defect  in  the application  of  the  unsuccessfully  applicant  and  merely prefers another on the ground that "he had adequate  general experience  and  technical knowledge and was an  old  lessee without any arrears of mineral dues" it is difficult to  say what turned the scale in favour of the successful  applicant excepting the fact that he was known to the State Government from  before.  We do not want to express any views  on  this but  if  this be a proper test, then no new entrant  in  the field  can have any chance of success where there is in  old lessee  competing  with  him.   The  order  of  the  Central Government  does  not  bring  out any  reason  for  its  own decision  except  that no ground for interference  with  the decision arrived at was established. Now we propose to examine some decisions of this Court where the  question as to whether the reviewing  authority  should give reasons for its decisions was gone into.  In  Harinagar Sugar  Mills v. Shyam Sundar Jhunjhunwala(1) this Court  had to  consider  whether  the  Central  Government   exercising appellate  powers  under s.111 of the  Companies  Act,  1956 before  its  amendment  in 1960 was  a  tribunal  exercising judicial  functions  and as such, subject to  the  appellate jurisdiction   of   this  Court  under  Art.  136   of   the Constitution and whether the Central Government had acted in excess of its jurisdiction, or acted illegally otherwise  in directing the company to register the transfer or  transfers in  favour  of  the respondents.   There,  the  articles  of association of the company concerned gave the directors  the right in their absolute discretion and without assigning any reason  to refuse to register any transfer of  shares.   The directors  declined to register some shares in the  name  of the transferees who applied to the High Court at Bombay  for orders  under  s. 38 of the Indian Companies Act,  1913  for rectification  of the share register on the ground that  the board  of  directors had exercised their  right  mala  fide, arbitrarily and capriciously.  The High Court rejected these petitions on the ground that controversial questions of  law and fact could not be tried in summary proceedings under  S. 38.   The transferees requested the directors once  more  to register  the  shares.  On their refusal to do  so,  appeals were  preferred to the Central Government under s.111(3)  of the  Indian  Companies Act, 1956 which had since  come  into operation.   The Joint Secretary, Ministry of  Finance,  who heard   the  appeals  declined  to  order  registration   of transfers (1)[1962] 2 S.C.R. 339 @ 357. 311 practically  on grounds similar to those put forward by  the High  Court of Bombay.  Thereafter, the original  holder  of the  shares transferred some shares to his son and  some  to his  daughter-in-id’",  and the  transferees  requested  the company to register the transfers. The  directors once  more refused.  Against the resolution of the directors,  separate appeals were preferred by the son and daughter-in-law of the original holder of the shares.  The Deputy Secretary to  the Government  of India set aside the resolution passed by  the

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board of directors and directed the company to register  the transfers.   No reasons were however given for  such  order. The  company came up in appeal to this Court under Art.  136 of  the  Constitution.   According to the  judgment  of  the majority of Judges, the exercise of authority by the Central Government  was  judicial as it had to adjudicate  upon  the rights  of contesting parties when there was a  lis  between them.  It was observed in that case that               "If the Central Government acts as a  tribunal               exercising judicial powers and the exercise of               that  power is subject to the jurisdiction  of               this court under Art 136 of the  Constitution,               we fail to see how the power of this court can               be  effectively exercised if reasons  are  not               given by the Central Government in support  of               its order." This  Court further held that there had been no  proper  the appeals,  no reasons having been given in support orders  of the  Deputy Secretary who heard them and result, the  orders were  quashed  with  a direction that the  be  re-heard  and disposed of according to law. In  Sardar  Govindrao v. State(1) the appellants who  to  be descendants  of  former ruling chiefs in same  districts  of Madhya Pradesh applied under the Central Provinces and Berar Revocation of Land Revenue Exemptions Act, 1948 for grant of money  or  pension as suitable maintenance  for  themselves. They  held estates in two districts on favourable  terms  as Jahgirdars Maufidars and Ubaridars and enjoyed, an exemption from paymnent of land revenue aggregating Rs. 27,828-5-0 per year.  On the passing of the Act, the exemption was lost and they  claimed  to be entitled to grant of money  or  pension under the provisions of the Act.  They applied to the Deputy Commissioner  who forwarded their applications to the  State Government.   These were rejected without any reasons  being given therefor.  The appellants filed a petition in the High Court  of Madhya Pradesh under Art. 226 of the  Constitution for  a writ of certiorari ’to quash the order of  the  State Government.   The High Court held that the State  Government "was (1)  [ 1965] 1 S. C.R. 678. 312 not  compelled to grant either money or pension because  the exercise  of the power under s. 5 was discretionary and  the petition,  therefore was incompetent." S. 5(3) of  the  C.P. and Berar Act provided as follows :-               "The Provincial Government may make a grant of               money or pension-               (i)   for  the  maintenance or upkeep  of  any               religious, charitable or public institution or               service of a like nature, or               (ii)  for  suitable maintenance of any  family               of a descendant from a former ruling chief." S.   6  ’barred  the jurisdiction of civil courts.   It  was observed by this Court .               "The Act lays down upon the Government a  duty               which   obviously  must  be  performed  in   a               judicial manner.  The appellants did not  seem               to  have  been heard at all.  The Act  bars  a               suit  and  there is all the more  reason  that               Government  must  deal. with such  case  in  a               quasi-judicial manner giving an opportunity to               the claimants to state their case in the light               of the report of the Deputy Commissioner.  The               appellants  were  also entitled  to  know  the               reason why their claim for the grant of  money

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             or pension was rejected by Government and  how               they were considered as not falling within the               class  of persons who it was clearly  intended               by   the  Act  to  be  compensated   in   this               manner........ As the order of Government does               not  fulfil the elementary requirements  of  a               quasijudicial  process we do not  consider  it               necessary to order a remit to the High Court." In  the  result  this  Court set  aside  the  order  of  the Government  and  directed the disposal of the  case  in  the light of the remarks made. In  M.  P. Industries v. Union(1) the order of  the  Central Government rejecting the revision application under r. 55 of the Mineral Concession Rules was couched in exactly the same language as the order in appeal before us (see at p. 475  of the  report)  One  cannot help  feeling  that  the  Ministry concerned have a special form which is to be used whenever a review application is to be rejected.  This may easily  lead anyone to believe that the review is a sham and nothing  but the  formal observance of the power -granted to the  Central Government.   In that case, all the three learned Judges  of this Court who heard the appeal were unanimous in dismissing it : some of the obser- (1)  [196] 1 S.C.R. 466. 313 vations  made bear repetition.  It was there argued that  if the   Central  Government  had  to  give  reasons  when   it functioned as a tribunals it would obstruct the work of  the Government  and lead to unnecessary delays.  As to  this  it said by our present Chief Justice :               "The Central Government functions only through               different   officers  and  in  this  case   it               functioned  through an Under  Secretary.   The               condition  of giving reasons is only  attached               to  an  order made by the Government  when  it               functions  judicially  as  a  tribunal  in   a               comparatively small number of matters and  not               in  regard to other administrative  orders  it               passes....               Our Constitution posits a welfare State.....In               the context of a welfare State, administrative               tribunals have come to stay.  Indeed, they are               the necessary concomitants of a welfare State.               But   arbitrariness   in   their   functioning               destroys  the concept of a welfare State  it-,               self  Self-discipline and supervision  exclude               or  at any rate minimise  arbitrariness.   The               least  a  tribunal can do is to  disclose  its               mind.  The compulsion of disclosure guarantees               consideration.  The condition to give  reasons               introduces clarity and excludes or at any rate               minimises arbitrariness; it gives satisfaction               to  the party against whom the order is  made;               and   it   also  enables   an   appellate   or               supervisory court to keep the tribunals within               bounds.  A reasoned order is a desirable  con-               dition of judicial disposal.                 . . . . . If tribunals can make orders with-               out  giving  reasons, the said  power  in  the               hands  of unscrupulous or  dishonest  officers               may  turn out to be a potent weapon for  abuse               of  power.  But, if reasons for an  order  are               given,  it will be an effective  restraint  on               such  abuse,  as the order,  if  it  discloses               extraneous or irrelevant considerations,  will

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             be   subject   to   judicial   scrutiny    and               correction.  A speaking order will at its best               be a reasonable and at its worst be at least a               plausible  one.   The  public  should  not  be               deprived of this only safeguard." It  was further observed in that case that the  position  of ordinary courts of law was different from that of  tribunals exercising judicial functions and it was said :               "A   Judge  is  trained  to  look  at   things               objectively, uninfluenced by considerations of               policy   or  expediency;  but,  an   executive               officer  generally  looks at things  from  the               standpoint  of  policy  and  expediency.   The               habit of                                    314               mind of an executive officer so formed  cannot               be   expected  to  change  from  function   to               function  or  from  act to  act.   So  it,  is               essential  that  some  restrictions  shall  be               imposed on tribunals in the matter of  passing               orders  affecting the rights of  parties;  and               the  least they should do is to  give  reasons               for  their  orders.   Even  in  the  case   of               appellate courts invariably reasons are given,               except when they dismiss an appeal or revision               in limine and that is because the appellate or               revisional  court  agrees  with  the  reasoned               judgment of the subordinate court or there are               no  legally permissible grounds  to  interfere               with it.  But the same reasoning cannot  apply               to an appellate tribunal, for as often as  not               the order of the first tribunal is laconic and               does  not give any reasons.  That apart,  when               we  insist upon reasons; we do  not  prescribe               any  particular form or scale of the  reasons.               The  extent  and  the nature  of  the  reasons               depend  upon  case  of  affirmance  where  the               original  tribunal gives bunal shall give  its               own  reasons  succinctly;  but in  a  case  of               affirmance  where the original tribunal  gives               adequate  reasons, the appellate tribunal  may               dismiss  the  appeal or the revision,  as  the               case  may  be, agreeing  with  those  reasons.               What  is  essential is that reasons  shall  be               given  by an appellate or revisional  tribunal               expressly  or by reference to those  given  by               the  original  tribunal.  The nature  and  the               elaboration of the reasons necessarily  depend               upon the facts of each case." It must be noted however that the above view was not  shared by  the  two  other Judges of the  Bench  constituting  this Court.  It was said by them :               "For the purpose of an appeal under Art.  136,               orders  of Courts and tribunals stand  on  the               same footing.  An order of court dismissing  a               revision  application often gives  no  reason,               but  this  is  not  a  sufficient  ground  for               quashing  it.   Likewise, an order of  an  ad-               minstrative  tribunal,’ rejecting  a  revision               application cannot be pronounced to be invalid               on  the  sole  ground that it  does  not  give               reasons for the rejection." They distinguished the case of Harinagar Sugar Mills Ltd.(1) on  the ground that the Central Government had reversed  the decision’ appealed without giving any reasons and the latter

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did  not  disclose  any apparent grounds  for  reversal  and added:               "There is a vital difference between the order               of               reversal   by the appellate authority in  that               case for no               (1)   [1962] 2 s.C.R. 339.               315               reason whatsoever and the order of  affirmance               by  the  revising  authority  in  the  present               case." As  has already began noted, the board of directors in  that case  did not give any reasons for the refusal  to  register and the Central Government adopting the same course reversed the  decision of the directors without giving  any  reasons. Clearly, the act of the Central Government there savoured of arbitrariness.   Under  the articles of association  of  the company, the directors were not obliged to give any reasons. Their  power of refusal was unrestricted if they acted  bona fide  or  in the interest of the company.  The  reversal  of their discretion clearly amounted to a finding that they had acted  arbitrarily or mala fide and one was; left  to  guess the  reasons  of the Central Government for coming  to  this conclusion.   As has already been said, when  the  authority whose  decision  is  to be reviewed gives  reasons  for  its conclusion and the reviewing authority affirms the  decision for the reasons given by the lower authority, one can assume that the reviewing authority found the reasons given by  the lower  authority  as acceptable to it; but where  the  lower authority  itself fails to give any reason other  than  that the successful applicant was an old lessee and the reviewing authority does not even refer to that ground, this Court has to  grope in the dark for finding out reasons for  upholding or rejecting the decision of the reviewing authority.  After all  a tribunal which exercises judicial  or  quasi-judicial powers can certainly indicate its mind as to why it acts  in a  particular  way and when important rights of  parties  of far-reaching  consequence to them are adjudicated upon in  a summary  fashion,  without giving a personal  hearing  where proposals  and counter-proposals are made and examined,  the least that can be expected is that the tribunal should  tell the party why the decision is going against him in all cases where the law gives a further right of appeal. On  behalf of the respondents, it was contended that  r.  55 which provided for a revision did not envisage the filing of fresh pleadings and fresh material but only invited comments of the parties with regard to the matter before the  Central Government.   It was argued that if after going through  the comments  and counter-comments the Central Government  found no  reason to arrive at a conclusion different from that  of the State Government, it was not called upon to disclose any grounds for its decision in review.  Our attention was drawn in particular to r. 26 of the Mineral Concession Rules which enjoined upon the State Government to communicate in writing the  reasons  for  any order refusing to grant  or  renew  a mining  lease.   The absence of any provision in r.  55  for giving such reasons was said to be decisive on the matter as indicative of the view of the legislature that there was  no necessity  for giving reasons for the order on  review.   We find  ourselves unable to accept this contention.  Take  the case 316 where  the  Central Government sets aside the order  of  the State Government without giving any reasons as in  Harinagar Sugar  Mills’  case(1).   The party  who  loses  before  the

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Central Government cannot know why he had lost it and  would be in great difficulty in pressing his appeal to the Supreme Court  and this Court would have to do the best it could  in circumstances which are not conducive to the proper disposal of  the  appeal.   Equally,  in a  case  where  the  Central Government   merely  affirms  the  order  of   the.    State Government,  it should make it clear in the order itself  as to  why it is affirming the same.  It is not suggested  that the Central Government should write out a judgment as courts of  law  are  wont  to do.  But we  find  no  merit  in  the contention  that  an  authortiy  which  is  called  upon  to determine and adjudicate upon the rights of parties  subject only  to  a  right of appeal to this  Court  should  not  be expected  to give an outline of the process of reasoning  by which they find themselves in agreement with the decision of the   State  Government.   As  a  matter  of  fact,  r.   26 considerably lightens the burden of the, Central  Government in  this  respect.   As the State  Government  has  to  give reasons,  the  Central  Government  after  considering   the comments  and counter-comments on the reasons given  by  the State Government should have no difficulty in making up  its mind as to whether the reasoning of the State Government  is acceptable  and to state as briefly as possible the  reasons for its own conclusion.  Our  attention  was drawn to a judgment of  this  Court  in Nandrant  Hunatram, Calcutta v. Union of  India(2).   There, one  of  the points made by the appellant in the  appeal  to this Court was that the order of the Central Government,  in review,  upholding  the  action  of  the  State   Government cancelling the mining lease granted to the appellant was bad inasmuch  as no reasons were given.  It was pointed  out  in the  judgment  in  that case that the facts  there  were  so notorious that the reasons for the action of the State  Gov- ernment  and  the confirmation of its order by  the  Central Government  were  too  obvious and  could  not  possibly  be questioned by anybody.  There the partners of the  appellant firm  had fallen out among themselves and none of  them  was willing to spend money on the colliery with the result  that the work came to a stand-still and the colliery began to get flooded.  At this juncture, Government stepped in and made a promise  to the essential workmen that their wages would  be paid  and  this saved the colliery.   Thereafter  the  Chief Inspector  of Mines was informed by one of the  partners  of the  appellant firm that the other partners were  preventing him from making payment for running expenses of the colliery and  that he was not in a position to perform his duties  as an,occupier.   He  accordingly  resigned  his  office.   Tre Manager also (1) [1962]2 S.C.R. 339. (2) A.I.R. 1966 S.C.R. 1922 resigned  and  the Sub-Divisional Officer  of  the  district informed  Government  that  the  situation  had  become   so alarming that some action on the part of the Government  was absolutely  necessary.   In spite of  notice,  the  partners refused  to  take  any  action  with  the  result  that  the Government took over the colliery and terminated the  lease. The revision application filed before the Central Government under r. 54 of the rules was turned down without giving  any reasons.   Negativing the contention of the  appellant  that the  order of the Central Government was bad in law  because no reasons were given, it was said by this Court that               "The  documents  on the record  quite  clearly               establish that the colliery was being  flooded               as   the   essential  services   had   stopped               functioning    and   but   for   the    timely

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             intervention of the State Government the  col-               liery   would  have  been  lost.    In   these               circumstances,  it  is quite  clear  that  the               action  of the State Government was  not  only               right but proper and this is hardly a case  in               which  any  action other  than  rejecting  the               application for revision was called for and  a               detailed order was really not required because               after  all the Central Government  was  merely               approving  of the action taken in the case  by               the  State Government, which stood  completely               vindicated.........  The action of  the  State               Government  far from being arbitrary  or  cap-               ricious  was perhaps the only one to take  and               all that the Central Government has done is to               approve of it." The  last  portion  of the passage was relied  upon  by  the counsel for the respondents in support of his argument  that as  the  order in review is merely in  confirmation  of  the action  of the State Government reasons need not  be  given. But  the above dictum cannot be considered dissociated  from the  setting  of  the circumstances in which  it  was  made. There it was plain as a pike-staff that the State Government had no alternative but to cancel the lease : the absence  of any reasons in the order on review could not possibly  leave anybody in doubt as to whether reasons were.  As a matter of fact  in the setting of facts, the reasons were  so  obvious that it was not necessary to set them out.  There is nothing in  this  decision which is contrary to M.P.  Industries  v. Union(1). What the decision says is that the reasons for the action of the  State  were  so  obvious  that  it  was   not necessary, on the facts  of the case, to repeat them in  the order of the Central Government. Our  attention  was also drawn to another judgment  of  this Court  in  Commissioner of Income-tax v. K.  V.  pilliah(2). One  of the questions in that case before the High Court  of Mysore (1) [1966] T. S. C. R. 466. (2) 43 1. T- R. 411. 318 under s. 66(2) of the Indian Income-tax Act was, whether, on the facts and in the circumstances of the case, the  Income- tax Appellate Tribunal was justified in sustaining both  the addition  ,of Rs. 41 142/- as income from business  and  Rs. 7,000/-  as cash credits, and whether such addition did  not result  in double taxation.  It was held by this Court  that the  question  whether Rs. 41,142/- was liable to  be  taxed fell to be determined under. the first question.  In respect of the other amount of Rs. 7,000/the Income-tax Officer  had held that the explanation of the assessee was untrue and the Appellate Assistant Commissioner and the Tribunal had agreed with that view.  In this setting of facts, it ,,was said  by this Court:               "The  Income-tax  Appellate  Tribunal  is  the               final  factfinding authority and  normally  it               should record its conclusion on every disputed               question  raised  before it, setting  out  its               reasons in support of its conclusion.  But, in               failing to record reasons, when the  Appellate               Tribunal fully agrees with the view  expressed               by  the Appellate Assistant  Commissioner  and               has  no other ground to record in  support  of               its  conclusion, it does not act illegally  or               irregularly,  mnerely  because  it  does   not               repeat the grounds of the Appellate  Assistant

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             Commissioner  on which the decision was  given               against  the assessee or the department.   The               criticism  made  by the High  Court  that  the               Tribunal  had "failed to perform its  duty  in               merely   affirming  the  conclusion   of   the               Appellate    Assistant    Commissioner"     is               apparently  unmerited.  On the merits  of  the               claim  for  exclusion  of the  amount  of  Rs.               7,000/-,  there  is no question of  law  which               could be said to arise out of the order of the               Tribunal." The  above  observations  were sought  to  be  pressed  into service ’by the counsel for the respondents ’but there, is a good deal of ,difference between that case and the one  with which  we  have to deal.  The High Court  there  was  merely called  upon to give its ,opinion on the statement of  facts set  out by the Appellate Tribunal.  It was for the  Income- tax  Officer in the first instance to accept or  reject  the explanation with regard to the cash credit.  It the  Income- tax  Officer found the assessee’s explanation  unacceptable, lie  had  to  say  why he did not  accept  it.   Unless  the assessee  in appeal was -able to point out to the  Appellate authorities  some  flaw in the reasoning of  the  Income-tax Officer,  it is not necessary for the appellate  authorities to  give their reasons independently.  The  ,explanation  of the  assessee  is either accepted or rejected;  but  in  the -case  which we have before us, the State Government has  to consider the merits and demerits of the applications and  to give its reasons why it prefers one to the other or  others. There  is a dispute between two or more  contesting  parties and the reasons for 319 preferring one to the other or others may be more than  one. It  is.  not  a  question  of  accepting  or  rejecting   an explanation.   In  our opinion, what was said in  the  above Income-tax  case will not apply in the case of a  review  by the Central Government of a decision of the State Government under the Act and the Rules. It may be of interest to note that in Rex v.  Northumberland Compensation   Appeal   Tribunal,  Ex   parte   Shaw(1)   an application was made in the King’s Bench Division in England for  an order of certiorari for the quashing of  a  decision reached  by the Compensation Appeal Tribunal  dismissing  an appeal  by Shaw against an award to him of compensation  for loss  of employment as a clerk to a Hospital  Board  payable under the National Health Service (Transfer of Officers  and Compensation) Regulations, 1948.  There the question of  the practice and procedure with regard to the issue of a writ of certiorari  was gone into at some length.  The  tribunal  in that  case had made a speaking order.  It was  contended  by the counsel for the tribunal that the King’s Bench  Division had  no power to examine the order in the case before it  on certiorari  oil  the  ground that certiorari  went  only  to defect  of  jurisdiction.   This was  turned  down  and  the Divisional  Court held that it had jurisdiction to quash  by certiorari  the  decision of an inferior tribunal  when  the latter  had  embodied the reasons for its  decision  in  its order and those reasons are bad in law.  For our purpose, we need only refer to the observations of Lord Goddard, C.J. at p. 724 of the report where he said : "I think it is beneficial in this case that we should do so, not  merely  having regard to the facts of  this  case,  but because so many tribunals have now been set up, all of whom, I  am certain, desire to do their duty in the best way,  and are  often  given  very difficult sets  of  regulations  and

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statutes  to  construe.   It certainly  must  be  for  their benefit,  and  I have no doubt but that they  wilt  welcome, that this court should be able to give guidance to them  if, in  making  their orders, they make  their  orders  speaking orders,  so that this court can then consider them  if  they are brought before the court on certiorari’." The  case for giving reasons or for making a speaking  order becomes  much stronger when the decision can  be  challenged not only by the issue of a writ of certiorari but an  appeal to this court. Counsel  for the respondents referred us to the  comment  on this  case  made by Sir C. K. Allen in his  Law  and  Orders (Second  Edition)  at p. 259 to p. 261.   According  to  the learned  author, the Northumberland Compensation case  might be  a great deterrent than encouragement to speaking  orders inasmuch as "the prospect (1)  [1951]1 K.B. 711. 320 of  having their mental process set forth in literary  form, might be ,extremely disagreeable to them" and up to the year 1956  did  not seem to have assisted greatly  the  means  of recourse   against  decisions  of  inferior   jurisdictions. Speaking  for ourselves, with great respect to  the  learned author,  we  do not think that the position of  the  Central Government  as  a  reviewing authority  tinder  the  Mineral Concession  Rules can be equated with an appellate  tribunal of  the  type  whose decision was before  the  King’s  Bench Division in England.  If the State Government is enjoined by law  -to give its reasons, there is no reason why it  should be  difficult  for the appellate authority to  do  so.   The necessity and the desirability of tribunals making  speaking orders  has been adverted upon by different High  Courts  in India.   Thus in Vedachala Mudaliar v. -State  of  Madras(3) where the State Government of Madras set ,aside the order of the Central Road Traffic Board without giving ;any  reasons, it was observed that               "When  the  policy of the  Legislature  is  to               confer powers on administrative tribunals with               a duty to discharge their functions judicially               I  do  not see any reason why they  should  be               exempted from all those safeguards inherent in               its exercise of that jurisdiction. .               From  the  standpoint  of  fair  name  of  the               tribunals  and  also in the interests  of  the               public,  they  should  be,  expected  to  give               reasons  when  they set aside an order  of  an               inferior   tribunal..........   Further,    if               reasons for an order are given, there will  be               less  scope for arbitrary or partial  exercise               of  powers  and  the  order  ’ex  facie’  will               indicate whether extraneous circumstances were               taken  into consideration by the  tribunal  in               passing the order." Refrence  may also be made to Ramayya v. State of Andhra  (2 and Annamalai v. State of Madras(3).  To the same effect  is the  judgment  of  the  Kerala  High  Court  in  Joseph   v. Superintendent of Post Offices, Kottayam(1). We have already commented that the order of the Central Gov- ernment in this case is couched in the same language as  was used  in  the case before this court in M.P.  Industries  v. Union(5) in August 1965.  The old rule 55 was replaced by  a new rule which ,came into force on 19th July 1965.   Whereas the  old  rule directed the Central Government  to  consider comments  on the petition of review by the State  Government or  other authority only, the new rule is aimed  at  calling

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upon all the parties including the State -Government to make their  comments in the matter and the parties are given  the right to make further comments on those made by (1)  A.I.R. 1952 Madras 276. (3)  A.I.R. 1957 Andhra Pradesh 739. (2)  I.L.R. 1956 Andhra 712 (4)  I.L.R. 1961-11 Kerala 245.                   (5) [1966] 1 S.C.R. 466. 321 the  other  or others.  In effect, the parties are  given  a right to bring forth material which was not before the State Government.   It is easy to see that an  unsuccessful  party may  challenge the grant of a lease in favour of another  by pointing  out defects or demerits which did not come to  the knowledge  of the State Government.  The order in this  case does not even purport to show that the comments and counter- comments,  which were before the Central Government in  this case,  had  been considered.  It would certainly  have  been better  if  the order of 22nd June 1966 had shown  that  the Central  Government  had taken into  consideration  all  the fresh  material  adduced  before  it  and  for  the  reasons formulated  they  thought  that  the  order  of  the   State Government should not be disturbed. In the result, the appeals are allowed and the orders of the Central Government passed on 22nd June, 1966 are set  aside. The  Central  Government is directed to  decide  the  review applications  afresh in the light of the observations  made. The  appellant  will get his costs throughout from  the  3rd respondent. G.C.                                    Appeals allowed. 322