REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.           OF 2010 (Arising out of Special Leave Petition (C) No.27615/08)

ORYX Fisheries Private Limited  ...Appellant(s)

- Versus -

Union of India and others ...Respondent(s)

J U D G M E N T

GANGULY, J.

1. Leave granted.  

2. The  appellant,  a  Private  Limited  Company  

engaged in the production, procurement and  

processing  and  export  of  sea-foods,  and  

other related products, agreed to supply MT  

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of pealed and undeveined (PUD) shrimps to  

one Cascade Marine Foods LLC (hereinafter  

referred  to  as,  “Cascade”},  a  company  

incorporated under the relevant laws of UAE  

at  Sharjah.  The  Purchase  Contract  dated  

26.09.2006,  was  signed  by  Pristine  Food  

Inc., a local agent of Cascade, and as per  

the  details  of  the  contract,  the  PUD  

Shrimps  were  to  be  Block  frozen-with  

mandatory labels on both individual block  

and master carton and the destination was  

Sharjah,  UAE.  By  a  subsequent  amendment  

dated 19.10.2006 to the purchase contract,  

the PUD quantity was increased to a total  

of 24 MT without changing other terms of  

the  purchase  contract.  Prior  to  the  

dispatch of the consignment, inspection was  

carried  out  by  Sakson  Fisheries  

Consultants,  local  agents  of  Cascade,  on  

18.10.2006, whereby it was found that there  

was  no  bad  odour.   Rather  there  was  a  

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fairly fresh smell and the quality of the  

consignment was found to be satisfactory.

3. On  25.10.2006,  the  consignment  was  

dispatched  from  Mumbai,  which  arrived  at  

Sharjah  Port  on  02.11.2006  via  Delivery  

Order, dated 06.11.2006.  The Director of  

Customs,  Sharjah,  was  requested  to  

authorize the release of the PUD Shrimps to  

Cascade.   Following  this,  on  07.11.2006  

Sharjah  Customs,  vide  its  Customs  

Declaration  Form,  stated  that  the  

consignment was not to be released before  

Health  Inspection.  It  appears  from  the  

facts  that  the  customs  and  health  

authorities of UAE, had inspected the PUD  

Shrimps’ quality and quantity and they were  

satisfied  that  it  was  fit  for  human  

consumption.  The  health  authorities  

resealed the consignment and numbered it as  

MSLA 18 J 550015, as against the original  

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seal no. YME 166813. It appears from the  

Store  Receipt  voucher  No.  9232  dated  

12.11.2006 of Cascade, the buyer, that they  

had  taken  possession  of  the  consignment.  

After a lapse of more than 10 days, Cascade  

alleged  that  the  PUD  Shrimp  was  of  very  

poor quality as it transpired from their  

analysis report dated 21.11.06.

4. As per the minutes of the meeting held on  

17.12.2006  in  the  office  of  Cascade  at  

Sharjah  which  was  attended  by  Mr.  S.D.  

Puranik  and  Mr.  P.R.  Sakthivel,  

respectively Managing Director and Director  

Marketing of the appellant and Mr. Vijay  

Paranjape, Group QA Manager Al-Kabeer and  

Ajit  Pillai,  General  Manager,  Cascade  

Marine Foods LLC, the appellant agreed to  

compensate  Cascade  to  the  extent  of  the  

value  of  the  defective  goods  and  the  

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minutes of the meeting were signed by all  

the aforementioned individuals.  

5. It has been mentioned in the note attached  

to  the  letter  dated  03.09.2007  sent  by  

Cascade  to  the  Secretary,  Ministry  of  

Commerce, Government of India that Cascade  

was asked by the appellant on 21.12.2006 to  

issue necessary samples to Mr. Celestine of  

M/s  Starfish  Trading  FZE  and  several  

samples were handed over to him.  The fact  

that the samples were handed over to M/s  

Starfish  Trading  FZE  has  been  disputed  

because the appellant’s stand before this  

Court was that Cascade failed to hand-over  

the  necessary  samples  to  the  said  M/s  

Starfish Trading FZE.

6. The appellant called upon Cascade to hand  

over the consignment to one Freshly Frozen  

Foods  LLC  and  as  a  result  of  that  1081  

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cartons of goods were delivered to the cold  

store designated by Freshly Frozen Foods on  

14.04.2007 vide Cascade Store Issue Voucher  

0390. Freshly Frozen Foods could retrieve  

only 25 kgs from 4 MT of product they had  

thawed out and they had directed Cascade to  

take  back  the  material.  When  the  

Municipality  Audit  found  out  that  the  

validity of PUD shrimp packages had expired  

they  compulsorily  destroyed  the  entire  

consignment of shrimps and the destruction  

cost was debited to Cascade. As a result,  

Cascade by its facsimile transmission dated  

13.08.2007 informed the appellant that they  

rejected  the  entire  consignment  and  they  

enclosed a Debit Note No.CMF/DN/108/07 for  

US$  86,104.00  which  represented  the  

material cost and destruction charges and  

requested the appellant to settle the same  

at the earliest.

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7. On  3.09.2007  Cascade  by  its  letter  

addressed  to  Chairman,  Marine  Products  

Export  Development  Authority  (for  short,  

MPEDA),  made  a  quality  complaint  on  the  

shipment effected by the appellant for a  

value of US$ 83000 and a claim of total  

loss arising from intentional cheating by  

way of delivery of decomposed shrimp, unfit  

for human consumption.

8. The  Deputy  Director,  MPEDA,  the  third  

respondent by its letter dated 12.09.2007  

forwarded  the  quality  complaint  made  by  

Cascade and sought clarification from the  

appellant regarding the same. To that the  

appellant vide its letter dated 18.09.2007  

stated that the consignment that they had  

sent  was  of  standard  quality  and  also  

pointed out that they were very doubtful  

whether the sample shown to the appellant’s  

officers  during  their  visit  to  Cascade’s  

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factory  and  the  analysis  report  dated  

21.11.2006  pertained  to  the  consignment  

sent by them.  

9. In addition to this, Cascade, through its  

advocates,  served  a  legal  notice  on  the  

appellant on 23.09.2007 asking it to pay  

US$ 83104 plus destruction costs within 7  

days  of  receipt  of  the  notice  and  on  

failing  to  do  so,  appropriate  legal  

proceedings would be filed in India and UAE  

to recover the said amount. The appellant,  through its Advocate, replied on 17.10.2007  

denying  that  the  entire  consignment  of  

shrimps  exported  by  the  appellant  had  

deteriorated  in  quality.  In  furtherance  

they  also  denied  any  liability  to  

compensate  Cascade  for  the  value  of  the  

goods  along  with  storage  charges,  

distribution  costs  of  USD  83104  plus  

destruction costs as alleged.

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10. The third respondent vide its letter dated  

25.10.2007,  addressed  to  the  appellant,  

directed  it  to  settle  the  dispute  with  

Cascade urgently by 10.11.2007, which was  

duly  replied  to  by  the  appellant  in  the  

negative  by  its  letter  dated  11.11.2007.  

After  a  series  of  correspondence  between  

the  appellant  and  the  third  respondent,  

finally  the  third  respondent  decided  on  

20.11.2007 to convene a joint meeting on  

5.12.2007 between the appellant and Cascade  

to find out an amicable settlement of the  

issue in the presence of the officers of  

MPEDA. The appellant in order to amicably  settle the dispute offered Cascade 25% of  

the value of the goods exported, by way of  

deferred payment against adjustments, from  

future  supplies,  in  the  presence  of  

officers of MPEDA, Cochin.

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11. However,  Cascade  refused  to  accept  the  

same. Then the third respondent issued a  

show cause notice dated 23.01.2008. As per  

the show cause notice the MPEDA called upon  

the  appellant  to  show  cause  why  their  

certificate of registration should not be  

cancelled.

12. The  appellant  replied  to  the  show  cause  

notice  vide  its  letter  dated  4.2.2008  

seeking  to  refute  the  allegations  levied  

upon it and further stated that MPEDA would  

not  be  justified  in  canceling  its  

certificate of registration on the above-

mentioned grounds.

13. Third respondent without giving any reason  

and  without  giving  the  appellant  any  

personal hearing held, vide its order dated  

19.3.2008,  that  the  registration  

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certificate  of  the  appellant  stood  

cancelled.

14. Being  aggrieved  by  the  said  order,  the  

appellant  appealed  before  the  second  

respondent  under  Rule  44  of  the  Marine  

Products  Export  Development  Authority  

Rules,  1972  (hereinafter  referred  to  as,  

“the  MPEDA  Rules”).   The  appellate  body  

fixed a personal hearing on 28.04.2008. The  

appellant  vide  letter  dated  26.05.2008  

addressed to the appellate body stated that  

despite  several  attempts  made  by  the  

appellant  to  resolve  the  dispute  with  

Cascade  as  advised  by  the  MPEDA,  the  

attempts  proved  futile  and  once  again  

requested appellate body to adjudicate the  

dispute on merits as well as to revoke the  

order of cancellation.  

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15. The second respondent vide its letter dated  

20.06.2008 informed the appellant that no  

more  personal  hearing  was  required  and  

directed them to send any further evidence  

of  proof  of  settlement  with  Cascade,  if  

any. On 19-08-2008, the second respondent  

passed an order holding, inter alia, that:  

“……The appellant in a very unethical way,  had reneged on the promises made earlier.  It is also clear that the appellant company  has  made  every  attempt  to  disown  its  responsibility  for  supplying  poor  quality  seafood to M/s. Cascade Marine Foods LLC,  Sharjah.  Even during the personal hearing  before the undersigned on the 28th April, the  appellant was given ample time to settle the  matter.   Time  was  also  given  beyond  the  deadline  fixed.   However,  the  appellant  seems to have taken a decision not to settle  the complaint.

The  appellant’s  contention  that  they  were  pressured  to  sign  the  documents  is  quite illogical and unjustifiable because if  they  had  any  difference  of  opinion  they  could have recorded then and there.  Hence  there  is  ample  evidence  that  this  is  definitely a case of cheating of M/s. Orxy  Fisheries by shipping substandard material  to M/s. Cascade Marine that brought heavy  loss to one of the leading buyers in UAE.  Such  erring  and  unrepentant  exporters  if  they continue to export seafood from India  could easily damage the reputation of India  among buyers abroad.

In view of the facts and circumstances  as mentioned above, this appellate authority  finds no lapse on the part of the Deputy  Director  in  canceling  the  registration  of  the appellant as an exporter.

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I,  therefore  disallow  the  appeal  and  uphold the order of cancellation issued by  the Deputy Director, RO, Mumbai.”    

16. Being  aggrieved,  by  the  order  dated  

19.03.2008  and  19.08.2008,  the  appellant  

preferred a Writ Petition No.2251 of 2008,  

before the High Court of Bombay.  The High  

Court found no error of law on the face of  

record,  and  upheld  the  findings  of  the  

appellate authority and dismissed the writ  

petition by an order dated 16.10.2008.  

17. Assailing  the  High  Court’s  order,  this  

Court was moved on a Special Leave Petition  

whereupon this Court on 28.11.2008 issued  

notice and continued the stay granted by  

the High Court on 16.10.2008.  

18. In the backdrop of these facts the first  

question which falls for consideration of  

this Court is whether the respondents in  

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cancelling the registration certificate of  

the  appellant  acted  fairly  and  in  

compliance  with  principles  of  natural  

justice  and  also  whether  the  respondents  

acted with an open mind.

19. It is obvious that in passing the impugned  

order of cancellation, the respondents were  

acting  in  a  quasi-judicial  capacity  and  

also they were acting in exercise of their  

statutory powers.  Indisputably, the third  

respondent while purporting to cancel the  

registration  certificate  was  acting  in  

exercise of his power under Rule 43 of the  

MPEDA Rules.   

20. The show cause notice dated 23.01.2008 was  

issued by the third respondent in exercise  

of this power.

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21. For  a  proper  appreciation  of  the  points  

involved, the show cause notice is set out  

in etenso:

“Sub: SHOW CAUSE NOTICE

Your attention is invited to our HQ’s  letter  No.IV/53/06-MS/HO  dated  25.10.2007  and  subsequent  joint  meeting  with  the  buyer  held  at  our  Head  office  on  5th  September,  2007  on  the  trade  complaint  received  from  M/s  Cascade  Marine  Foods  LLC, Sharjah.

At  the  meeting  it  was  convincingly  proved that the cargo shipped by you to  the  above  mentioned  buyer  was  defective  and  you  have  not  so  far  settled  the  complaint. Therefore, in exercise of the  powers  vested  in  me  vide  Office  Order  Part-II No.184012005 dated 25.11.2005 read  with Rule 43 of the MPEDA Rules, I hereby  call  upon  you  to  show  cause  why  the  Certificate of Registration as an Exporter  granted to you should not be cancelled for  reasons given below:

1. It has been proved beyond doubt that    you have sent substandard material to  M/s  Cascade  Marine  Foods,  LLC,  Sharjah.

2. You  have  dishonoured  your  written  agreement  with  M/s  Cascade  Marine  Foods,  LLC,  Sharjah  to  settle  the  complaint made by the buyer as you had  agreed to compensate to the extent of  the value of defective cargo sent by  you  and  have  now  evaded  from  the  responsibility.

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3. This irresponsible action have brought  irreparable  damage  to  India’s  trade  relation with UAE.  

Your  reply  should  reach  the  undersigned within 10 days from the date  of receipt of this letter failing which it  will  be  presumed  that  you  have  no  explanation to offer and we will proceed  with  action  for  cancellation  of  your  registration  certificate  without  further  notice to you. If ultimately a decision is  reached  to  deregister  you  under  the  provisions  of  the  MPEDA  Rules,  it  will  automatically entail de-registration under  Registration Exporters’ policy also.”  

22. Relying on the underlined portions in the  

show cause notice, learned counsel for the  

appellant urged that even at the stage of  

the show cause notice the third respondent  

has completely made up his mind and reached  

definite conclusion about the alleged guilt  

of the appellant.  This has rendered the  

subsequent proceedings an empty ritual and  

an idle formality.

23. This Court finds that there is a lot of  

substance in the aforesaid contention.   16

24. It is well settled that a quasi-judicial  

authority, while acting in exercise of its  

statutory power must act fairly and must  

act with an open mind while initiating a  

show  cause  proceeding.  A  show  cause  

proceeding  is  meant  to  give  the  person  

proceeded against a reasonable opportunity  

of  making  his  objection  against  the  

proposed charges indicated in the notice.   

25. Expressions like “a reasonable opportunity  

of  making  objection”  or  “a  reasonable  

opportunity of defence” have come up for  

consideration  before  this  Court  in  the  

context of several statutes.  

26. A Constitution Bench of this Court in Khem  Chand v.  Union  of  India  and  others,  reported in AIR 1958 SC 300, of course in  

the  context  of  service  jurisprudence,  

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reiterated  certain  principles  which  are  

applicable in the present case also.

27. Chief  Justice  S.R.  Das  speaking  for  the  

unanimous Constitution Bench in Khem Chand  (supra)  held  that  the  concept  of  

‘reasonable  opportunity’  includes  various  

safeguards and one of them, in the words of  

the learned Chief Justice, is:

“(a) An opportunity to deny his guilt and  establish his innocence, which he can only  do if he is told what the charges leveled  against  him  are  and  the  allegations  on  which such charges are based;”  

28. It is no doubt true that at the stage of  

show  cause,  the  person  proceeded  against  

must  be  told  the  charges  against  him  so  

that he can take his defence and prove his  

innocence.   It  is  obvious  that  at  that  

stage  the  authority  issuing  the  charge-

sheet, cannot, instead of telling him the  

charges,  confront  him  with  definite  

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conclusions of his alleged guilt.  If that  

is done, as has been done in this instant  

case,  the  entire  proceeding  initiated  by  

the  show  cause  notice  gets  vitiated  by  

unfairness  and  bias  and  the  subsequent  

proceeding become an idle ceremony.   

29. Justice is rooted in confidence and justice  

is the goal of a quasi-judicial proceeding  

also.   If  the  functioning  of  a  quasi-

judicial  authority  has  to  inspire  

confidence in the minds of those subjected  

to  its  jurisdiction,  such  authority  must  

act with utmost fairness. Its fairness is  

obviously to be manifested by the language  

in which charges are couched and conveyed  

to the person proceeded against.  In the  

instant case from the underlined portion of  

the show cause notice it is clear that the  

third respondent has demonstrated a totally  

close  mind  at  the  stage  of  show  cause  

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notice  itself.   Such  a  close  mind  is  

inconsistent  with  the  scheme  of  Rule  43  

which is set out below.  The aforesaid rule  

has been framed in exercise of the power  

conferred under Section 33 of The Marine  

Products Export Development Authority Act,  

1972 and as such that Rule is statutory in  

nature.

30. Rule  43  of  the  MPEDA  Rules  provides  as  

follows:

“43. Cancellation of registration  Where  the  Secretary  or  other  officer  is  satisfied that any person has obtained a  certificate of registration by furnishing  incorrect  information  or  that  he  has  contravened any of the provisions of this  rule or of the conditions mentioned in the  certificate of registration, or any person  who  has  been  registered  as  an  exporter  fails  during  the  period  of  twelve  consecutive  months  to  export  any  of  the  marine products in respect of which he is  registered, or if the secretary or other  officer is satisfied that such person has  become  disqualified  to  continue  as  an  exporter,  the  Secretary  or  such  officer  may, after giving the person who holds a  

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certificate  a  reasonable  opportunity  of  making  his  objections,  by  order,  cancel  the registration and communicate to him a  copy of such order.”

31. It is of course true that the show cause  

notice cannot be read hyper-technically and  

it is well settled that it is to be read  

reasonably.  But  one  thing  is  clear  that  

while  reading  a  show-cause  notice  the  

person who is subject to it must get an  

impression that he will get an effective  

opportunity  to  rebut  the  allegations  

contained  in  the  show  cause  notice  and  

prove  his  innocence.  If  on  a  reasonable  

reading of a show-cause notice a person of  

ordinary prudence gets the feeling that his  

reply to the show cause notice will be an  

empty ceremony and he will merely knock his  

head  against  the  impenetrable  wall  of  

prejudged opinion, such a show cause notice  

does  not  commence  a  fair  procedure  

especially when it is issued in a quasi-

judicial  proceeding  under  a  statutory  

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regulation  which  promises  to  give  the  

person  proceeded  against  a  reasonable  

opportunity of defence.

32. Therefore,  while  issuing  a  show-cause  

notice, the authorities must take care to  

manifestly keep an open mind as they are to  

act  fairly  in  adjudging  the  guilt  or  

otherwise of the person proceeded against  

and specially when he has the power to take  

a punitive step against the person after  

giving him a show cause notice.

33. The principle that justice must not only be  

done  but  it  must  eminently  appear  to  be  

done as well is equally applicable to quasi  

judicial  proceeding  if  such  a  proceeding  

has to inspire confidence in the mind of  

those who are subject to it.

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34. A somewhat similar observation was made by  

this  Court  in  the  case  of  Kumaon  Mandal  Vikas Nigam Limited v. Girja Shankar Pant &  others, (2001) 1 SCC 182.  In that case,  this court was dealing with a show cause  

notice  cum  charge-sheet  issued  to  an  

employee.   While  dealing  with  the  same,  

this Court in paragraph 25 (page 198 of the  

report) by referring to the language in the  

show cause notice observed as follows:

“25. Upon consideration of the language in  the show-cause notice-cum-charge-sheet, it  has been very strongly contended that it  is clear that the Officer concerned has a  mindset even at the stage of framing of  charges  and  we  also  do  find  some  justification in such a submission since  the chain is otherwise complete.”  

35. After paragraph 25, this Court discussed in  

detail  the  emerging  law  of  bias  in  

different jurisdictions and ultimately held  

in paragraph 35 (page 201 of the report),  

the true test of bias is:

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“35. The test, therefore, is as to whether  a mere apprehension of bias or there being  a real danger of bias and it is on this  score  that  the  surrounding  circumstances  must  and  ought  to  be  collated  and  necessary conclusion drawn therefrom — in  the  event  however  the  conclusion  is  otherwise  inescapable  that  there  is  existing  a  real  danger  of  bias,  the  administrative  action  cannot  be  sustained:”

36. Going  by  the  aforesaid  test  any  man  of  

ordinary  prudence  would  come  to  a  

conclusion  that  in  the  instant  case  the  

alleged  guilt  of  the  appellant  has  been  

prejudged at the stage of show cause notice  

itself.

37. The  appellant  gave  a  reply  to  the  show  

cause notice but in the order of the third  

respondent  by  which  registration  

certificate of the appellant was cancelled,  

no reference was made to the reply of the  

appellant,  except  saying  that  it  is  not  

satisfactory.   The  cancellation  order  is  

totally a non-speaking one.  The relevant  24

portion of the cancellation order is set  

out:-

“Sub:  Registration  as  an  Exporter  of  Marine Products under MPEDA Rules 1972.

Please  refer  to  the  Show  Cause  Notice  No.10/3/MS/2006/MS/3634  dated  23.01.2008  acknowledged  by  you  on  28/01/2008  directing  you  to  show  cause  why  the  certificate of registration as an exporter  No.MAI/ME/119/06  dated  03/03/2006  granted  to you as Merchant Exporter should not be  cancelled for the following reasons:-

1. It has been  proved beyond doubt that  you have sent sub-standard material to  M/s.  Cascade  Marine  Foods,  L.L.C.,  Sharjah.

2. You  have  dishonoured  your  written  agreement  with  M/s.  Cascade  Marine  Foods,  L.L.C,  Sharjah  to  settle  the  complaint made by the buyer as you had  agreed to compensate to the extent of  the value of the defective cargo sent  by you and have now evaded from the  responsibility.

3. This irresponsible action has brought  irreparable  damage  to  India’s  trade  relation with UAE.

Your  reply  dated  04/02/2008  to  the  Show Cause Notice is not satisfactory  because  the  quality  complaint  raised  by M/s. Cascade Marine Foods, L.L.C,  Sharjah  have  not  been  resolved  amicably.  Therefore,  in  exercise  of  the power conferred on me vide Rule 43  of the MPEDA Rules, read with office  order  Part  II  No.1840/2005  dated  25/11/2006,  I  hereby  cancel  the  

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Registration  Certificate  No.MAI/ME/119/06  dated  03/03/2006  issued  to  you.  The  original  Certificate  of  Registration  issued  should be returned to this office for  cancellation immediately.

In  case  you  are  aggrieved  by  this  order of cancellation, you may prefer  an appeal to the Chairman within 30  days of the date of receipt of this  order vide Rule 44 of the MPEDA Rules.

38. Therefore, the bias of the third respondent  

which was latent in the show cause notice  

became patent in the order of cancellation  

of  the  registration  certificate.  The  

cancellation  order  quotes  the  show  cause  

notice  and  is  a  non-speaking  one  and  is  

virtually no order in the eye of law. Since  

the same order is an appealable one it is  

incumbent on the third respondent to give  

adequate reasons.

39. On  the  question  whether  the  entire  

proceeding for cancellation of registration  

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initiated  by  the  show  cause  notice  and  

culminating in the order of cancellation is  

vitiated by bias we can appropriately refer  

to  the  succinct  formulation  of  the  

principle by Lord Reid in Ridge v. Baldwin  and others (1964 A.C. 40). The Learned Law  Lord, while dealing with several concepts,  

which  are  not  susceptible  of  exact  

definition, held that by fair procedure one  

would mean that what a reasonable man would  

regard  as  fair  in  the  particular  

circumstances (see page 65 of the Report).  

If  we  follow  the  aforesaid  test,  we  are  

bound  to  hold  that  the  procedure  of  

cancellation registration in this case was  

not a fair one.

40. On the requirement of disclosing reasons by  

a quasi- judicial authority in support of  

its  order,  this  Court  has  recently  

delivered a judgment in the case of Kranti  27

Associates Pvt. Ltd. & Anr. v.  Sh. Masood  Ahmed Khan & Others on 8th September 2010.  

41. In  M/s  Kranti  Associates (supra),  this  Court after considering various judgments  

formulated certain principles in para 51 of  

the judgment which are set out below

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

b. A  quasi-judicial  authority  must  record  reasons in support of its conclusions.

c. Insistence on recording of reasons is meant  to  serve  the  wider  principle  of  justice  that justice must not only be done it must  also appear to be done as well.  

d. Recording  of  reasons  also  operates  as  a  valid restraint on any possible arbitrary  exercise of judicial and quasi-judicial or  even administrative power.  

e. Reasons reassure that discretion has been  exercised by the decision maker on relevant  grounds  and  by  disregarding  extraneous  considerations.  

f. Reasons  have  virtually  become  as  indispensable  a  component  of  a  decision  making process as observing principles of  natural justice by judicial, quasi-judicial  and even by administrative bodies.

g. Reasons facilitate the process of judicial  review by superior Courts.  

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h. The ongoing judicial trend in all countries  committed to rule of law and constitutional  governance  is  in  favour  of  reasoned  decisions based on relevant facts. This is  virtually  the  life  blood  of  judicial  decision  making  justifying  the  principle  that reason is the soul of justice.

  i. Judicial  or  even  quasi-judicial  opinions  

these  days  can  be  as  different  as  the  judges  and  authorities  who  deliver  them.  All  these  decisions  serve  one  common  purpose which is to demonstrate by reason  that  the  relevant  factors  have  been  objectively  considered.  This  is  important  for sustaining the litigants’ faith in the  justice delivery system.

  j. Insistence on reason is a requirement for  

both  judicial  accountability  and  transparency.

k. If a Judge or a quasi-judicial authority is  not  candid  enough  about  his/her  decision  making  process  then  it  is  impossible  to  know  whether  the  person  deciding  is  faithful to the doctrine of precedent or to  principles of incrementalism.

 l. Reasons  in  support  of  decisions  must  be  

cogent, clear and succinct. A pretence of  reasons or ‘rubber-stamp reasons’ is not to  be  equated  with  a  valid  decision  making  process.

m. It cannot be doubted that transparency is  the sine qua non of restraint on abuse of  judicial  powers.  Transparency  in  decision  making  not  only  makes  the  judges  and  decision  makers  less  prone  to  errors  but  also  makes  them  subject  to  broader  scrutiny. (See David Shapiro in Defence of  Judicial  Candor  (1987)  100  Harward  Law  Review 731-737).

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n. Since  the  requirement  to  record  reasons  emanates  from  the  broad  doctrine  of  fairness  in  decision  making,  the  said  requirement is now virtually a component of  human  rights  and  was  considered  part  of  Strasbourg  Jurisprudence.   See  (1994)  19  EHRR  553,  at  562  para  29  and  Anya vs.  University  of  Oxford,  2001  EWCA  Civ  405,  wherein the Court referred to Article 6 of  European Convention of Human Rights which  requires, “adequate and intelligent reasons  must be given for judicial decisions”.

o. In all common law jurisdictions judgments  play a vital role in setting up precedents  for the future.  Therefore, for development  of law, requirement of giving reasons for  the  decision  is  of  the  essence  and  is  virtually a part of “Due Process”.   

42. In  the  instant  case  the  appellate  order  

contains  reasons.  However,  absence  of  

reasons  in  the  original  order  cannot  be  

compensated by disclosure of reason in the  

appellate order.  

43. In  Institute  of  Chartered  Accountants  of  India v.  L.K. Ratna and others,(1986) 4  SCC 537, it has been held:

“……after the blow suffered by the initial  decision, it is difficult to contemplate  complete  restitution through an appellate  decision. Such a case is unlike an action  

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for money or recovery of property, where  the execution of the trial decree may be  stayed  pending  appeal,  or  a  successful  appeal may result in refund of the money  or  restitution  of  the  property,  with  appropriate  compensation  by  way  of  interest or mesne profits for the period  of deprivation. And, therefore, it seems  to us, there is manifest need to ensure  that  there  is  no  breach  of  fundamental  procedure in the original proceeding, and  to avoid treating an appeal as an overall  substitute  for  the  original  proceeding.”  (See para 18, pages 553-554 of the report)

44. For  the  reasons  aforesaid,  this  Court  

quashes the show cause notice as also the  

order dated 19.03.2008 passed by the third  

respondent. In view of that, the appellate  

order has no legs to stand and accordingly  

is quashed.

45. We  are  constrained  to  observe  that  

unfortunately this aspect of the matter was  

not  considered  by  the  High  Court.  We  

cannot, therefore, approve the order of the  

High  Court  and  the  same  is  accordingly  

quashed.  The  cancellation  of  the  

registration certificate of the appellant  

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is  set  aside  and  we  declare  the  

registration  to  be  valid  if  it  is  not  

vitiated for any other reason.  

46. We,  however,  make  it  clear  that  if  the  

authorities  are  so  inclined,  they  can  

proceed from the stage of show cause notice  

afresh but strictly in accordance with law  

and following the fair procedure indicated  

in this judgment.

47. The appeal is allowed. Parties are left to  

bear their own costs.  

.......................J. (G.S. SINGHVI)

.......................J. (ASOK KUMAR GANGULY)

New Delhi October 29, 2010

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